Corporate-level Strategy Creating Value Through Diversification

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Questions Bank

Strategic Management Creating Competitive Advantages
Analyzing the External Environment of the Firm Creating Competitive Advantages
Assessing the Internal Environment of the Firm
Recognizing a Firm's Intellectual Assets Moving beyond a Firm's Tangible Resources
Business-Level Strategy Creating and Sustaining Competitive Advantages
Corporate-Level Strategy Creating Value through Diversification
International Strategy Creating Value in Global Markets
Entrepreneurial Strategy and Competitive Dynamics
Strategic Control and Corporate Governance
Creating Effective Organizational Designs
Strategic Leadership Creating a Learning Organization and an Ethical Organization
Managing Innovation and Fostering Corporate Entrepreneurship

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Question 1

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True/False

Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

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Question 2

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True/False

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

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Question 3

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True/False

Many acquisitions ultimately result in divestiture.

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Question 4

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True/False

Diversification initiatives must be justified by the creation of value for shareholders.

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Question 5

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True/False

Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

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Question 6

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For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation, it must at least create superior customer value and it must be difficultto imitate.

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Question 7

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Gillette developed the Fusion and Mach 3 shaving systems. These products created superior customer value as a result of the company core competency in research and development.

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Question 8

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It is necessary for a core competence to be difficult to imitate and to be non-substitutable.

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Question 9

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With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies from the interaction of the corporate office with outside stakeholders.

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Question 10

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Restructuring requires the corporate office to find either exceptionally performing firms with realized potential or firms in industries on the threshold of significant, negative change.

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Question 11

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Portfolio management should be considered as the primary basis for formulating corporate-level strategies.

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Question 12

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Diversified public corporations, such as Berkshire Hathaway and Virgin Group, create value through management expertise by improving plans and budgets. This is an example of a relateddiversification strategy.

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Question 13

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Portfolio models such as the BCG Portfolio matrix are limited in value because they only compare the SBU on four dimensions.

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Question 14

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A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

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Question 15

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Through joint ventures, firms can directly acquire the assets and competencies of other firms.

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Question 16

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The potential advantages of strategic alliances and joint ventures include entering new markets as well as developing and diffusing new technologies.

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Question 17

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In recent years, many high-tech firms such as Priceline.com have suffered from the negative impact of uncontrolled growth.

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Question 18

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Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.

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Question 19

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A golden parachute is a prearranged contract with managers specifying that, in the event of a hostile takeover, the target company managers will be paid a significant severance package.

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Question 20

Multiple Choice

The Coca-Cola acquisition of its bottlers failed because

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Coca-Cola had valuable competencies.

the bottling business required too much capital investment and time.

consumers consumed less because the distribution channel changed.

Coca-Cola spent less money on the distribution of concentrates and syrups.

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