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Exam 6: Corporate-Level Strategy: Creating Value Through Diversification

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Question 41

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Casio, a giant electronic products producer, synthesizes it abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. It uses the same skills to produce card calculators, digital cameras, and other small electronics. These collective skills are known as

A) core competencies.
B) strategic resources.
C) shared activities.
D) economies of scope.

E) A) and D)
F) A) and C)

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Question 42

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Polaris, a manufacturer of snowmobiles, motorcycles, watercraft, and off-road vehicles, shares manufacturing operations across its businesses. It also has a corporate research and development facility and staff departments that support all of the Polaris operating divisions. This is an example of using

A) related diversification to acquire market value by leveraging core competencies.
B) related diversification to acquire economies of scope by sharing.
C) unrelated diversification to acquire financial synergies through portfolio management.
D) related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.

E) A) and C)
F) A) and B)

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Question 43

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When firms diversify into related businesses, the primary potential benefits come from horizontal relationships, which are businesses sharing intangible and tangible resources.

Lionsgate (a Canadian-American entertainment company) and Alibaba (a Chinese e-commerce company) created _________ to open the Chinese market for the Lionsgate streaming shows and movies. Alibaba profits by getting access to content to increase demand for its own set-top media boxes.

Corporate-level strategy focuses on gaining short-term revenue through managing operations in multiple businesses.

An advantage of a firm entering into a strategic alliance is that it does not have to share the wealth with its partners.

The downsides or limitations of mergers and acquisitions include all of the following except:

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. This is known as

A Cash Cow, in the BCG framework, refers to a business that has

An acquisition that results in ______________ indicates that expectations were not met.

In a study of 270 international mergers between 2000 and 2003 it was found that sales growth increased, earnings growth increased, and market valuations increased overall for the merged companies.

Unfriendly or hostile takeovers always occur when the stock of the company becomes undervalued.

One of the obligatory aspects of strategic alliances is the dependence on written contracts to delimit responsibilities and enforce compliance.

The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all of its food divisions. This is an example of using

Firms have several choices of diversification initiatives that can be used to create value. Which of the following is not one of them?

Many acquisitions ultimately result in divestiture.

Many leading high-tech firms such as Google, Apple, and Intel have dramatically enhanced their revenues, profits, and market values through a wide variety of diversification initiatives. Which of the following is not such an initiative?

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of

Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that the