chapter 6 practice questions Flashcards
- Zara, a Spanish clothing company, often uses strategic alliances when entering new geographic markets. Which of the following best explains the potential advantage for them?
A) gaining knowledge about different cultures and regulatory environments
B) increasing administrative costs in the value chain
C) developing and diffusing new technologies
D) eliminating costs in the value chain
A) gaining knowledge about different cultures and regulatory environments
- Which of the following is not a reason for merger and acquisition failures?
A) The acquiring company pays a large premium for the common stock of the target
company.
B) Top executives act in their best interests rather than those of the shareholders.
C) The acquisition leads to value creation.
D) The acquired company assets are poorly integrated into the acquiring company
business lines
C) The acquisition leads to value creation.
- Corporate-level strategy focuses on
A) gaining long-term revenue.
B) gaining short-term profits.
C) decreasing business locations.
D) managing investment bankers and their interests
A) gaining long-term revenue.
- Diversification initiatives include all the following except
A) mergers and acquisitions.
B) strategic alliances.
C) shareholder development.
D) joint ventures
C) shareholder development.
- Firms have several choices of diversification initiatives that can be used to create value. Which of the following is not one of them?
A) using related diversification to acquire economies of scope
B) using related diversification to acquire market power
C) using unrelated diversification to acquire financial synergies
D) using related diversification to acquire parenting and restructuring synergies
D) using related diversification to acquire parenting and restructuring synergies
- Proctor and Gamble is a large multinational organization that has many business sharing distribution resources. Diversification strategies take advantage of the ________ that exist in
their organization.
A) costs
B) employees
C) discontinuities
D) synergies
C) discontinuities
- Microsoft offered in 2016 to buy LinkedIn for 26.2 billion USD which was 50 percent higher than the value for LinkedIn the day before. This high premium offer was necessary for
Microsoft to complete ________ initiative.
A) a low cost
B) an internal development
C) a diversification
D) a divestiture
C) a diversification
- When a firm diversifies into ________ businesses, the primary potential benefits to be derived come from ________ relationships—those businesses that share intangible and tangible resources.
A) related; hierarchical
B) unrelated; hierarchical
C) related; horizontal
D) unrelated; horizontal
C) related; horizontal
- 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
A) strategic resources.
B) core competencies.
C) shared activities.
D) economies of scope
B) core competencies.
- Sharing core competencies is one of the primary potential advantages of diversification. For diversification to be most successful, it is important that the
A) products use similar distribution channels.
B) value chains of the firm be similar enough in at least one way to allow for the leveraging of the core competencies of the firm.
C) target market is the same, even if the products are very different.
D) methods of production are the same
B) value chains of the firm be similar enough in at least one way to allow for the leveraging of the core competencies of the firm.
- A firm should consider vertical integration when
A) the competitive situation is highly volatile.
B) customer needs are evolving.
C) the suppliers of raw materials to the firm are unable to maintain quality standards.
D) the suppliers of the firm willingly cooperate with the firm
C) the suppliers of raw materials to the firm are unable to maintain quality standards.
- ________ is when the corporate office helps subsidiaries make wise choices in their own
acquisitions, divestures, and new ventures, thereby creating value within business units.
A) Parenting
B) Restructuring
C) Leveraging core competencies
D) Increasing market power
A) Parenting
- Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using
A) deconstruction expertise.
B) parenting expertise.
C) excess personnel.
D) increased market positioning.
B) parenting expertise.
- Common steps in management restructuring include all the following except
A) tight financial control.
B) rewards based on meeting short- to medium-term performance goals.
C) penalties for missing short- to medium-term performance goals.
D) reduction in the number of middle-level managers
C) penalties for missing short- to medium-term performance goals.
- When using a BCG matrix, a ________ is a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow.
A) star
B) dog
C) cash cow
D) question mark
A) star
