Corporate-level Strategy: Creatingvalue Through Diversification

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Strategic Management: Creating Competitiveadvantages
Analyzing the External Environment Ofthe Firm: Creating Competitive Advantages
Assessing the Internal Environmentof the Firm
Recognizing a Firms Intellectual Assets: Moving Beyond a Firms Tangibleresources
Business-Level Strategy: Creating Andsustaining Competitive Advantages
Corporate-Level Strategy: Creatingvalue Through Diversification
International Strategy: Creating Valuein Global Markets
Entrepreneurial Strategy and Competitive Dynamics
Strategic Control and Corporategovernance
Creating Effective Organizational Designs
Strategic Leadership: Creating a Learning Organization and an Ethical Organization
Managing Innovation and Fosteringcorporate Entrepreneurship

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Question 1

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Research shows that the vast majority of acquisitions results in value creation rather than value destruction.

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Question 2

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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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Many acquisitions ultimately result in divestiture.

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Question 4

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At times,the only other people who may have benefited from a merger-acquisition were the shareholders of the acquired firms.

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Question 5

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Reasons for acquisition failure include: ineffective integration of the acquisition,too high of a premium paid for the common stock of the target company,or inability to understand how the assets of the acquired firm would fit with the lines of business of the existing company.

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Question 6

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

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Question 7

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All diversification moves,including those involving mergers and acquisitions,erode performance.

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Question 8

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

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Question 9

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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.

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Question 10

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Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

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Question 11

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Economies of scope are cost savings from leveraging core competencies or sharing unrelated activities among businesses in a corporation.

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Question 12

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Cooper Industries has followed a successful strategy of related diversification.There are few similarities in the products it makes or the industries in which it competes.

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Question 13

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Related diversification enables a firm to benefit from horizontal relationships across different businesses in the diversified corporation by leveraging core competencies and sharing activities.

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Question 14

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Economies of scope in a related diversification strategy result from the leveraging of core competencies and the sharing of activities such as production.

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Question 15

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Core competencies do not create value in a business.

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Question 16

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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 difficult to imitate.

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Question 17

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

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Question 18

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One of the criteria for a core competence is that the different businesses in the corporation must be similar in at least one important way related to the core competence.

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Question 19

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It is not necessary for a core competence to be difficult to imitate or to be nonsubstitutable.

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Question 20

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IBM leverages its competencies in computing technology to provide health care services.This is an example of a core competence being used across dissimilar businesses within the same corporation.

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