This question bank verified by Studydeets

Questions Bank

All Questions
Filter by:
Question 1
Free
True/False

Diversification is the process of a company entering new industries distinct from its core industry, using a multibusiness model.

Choose correct answer/s

True

False

Check answer
Question 2
Free
True/False

Free cash flow refers to additional funds from a government stimulus program.

Choose correct answer/s

True

False

Check answer
Question 3
Free
True/False

If a company generates free cash flow, that money technically belongs to shareholders.

Choose correct answer/s

True

False

Check answer
Question 4
Free
True/False

When a firm does not pay out its free cash flow to its shareholders, the shareholders bear an opportunity cost equal to their next best use of those funds.

Choose correct answer/s

True

False

Check answer
Question 5
Free
True/False

At Burger King, multiple items such as a cheeseburger, french fries, and a drink are combined together to create a complete meal. This is an example of diversification.

Choose correct answer/s

True

False

Check answer
Question 6
True/False

Sara Lee Corp., a clothing firm, purchased Platex Apparel Inc. This purchase helped to make Sara Lee Corp. one of the largest makers of women's apparel in the United States. Sara Lee Corp. utilized an acquisition strategy.

Choose correct answer/s
True
False
To unlock the question
Question 7
True/False

Transferring competencies across industries involves taking a distinctive competency developed in one industry and implanting it in an existing business unit in another industry.

Choose correct answer/s
True
False
To unlock the question
Question 8
True/False

Firms can create profitable new business units by leveraging their competencies.

Choose correct answer/s
True
False
To unlock the question
Question 9
True/False

A company's top managers do not need to have entrepreneurial capabilities for diversification to increase profitability.

Choose correct answer/s
True
False
To unlock the question
Question 10
True/False

One way a diversified company can increase its profitability is by acquiring inefficient or poorly managed companies and then restructuring them to improve their performance.

Choose correct answer/s
True
False
To unlock the question
Question 11
True/False

If a company's core skills are highly specialized and have few applications outside the core business, then a company should pursue a related diversification strategy.

Choose correct answer/s
True
False
To unlock the question
Question 12
True/False

A company can pursue relative diversification to enhance the competitive position of its core business.

Choose correct answer/s
True
False
To unlock the question
Question 13
True/False

Economies of scope arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because it can more effectively pool, share, and utilize resources or capabilities.

Choose correct answer/s
True
False
To unlock the question
Question 14
True/False

An advantage of unrelated diversification is that competencies can be shared and leveraged throughout the value chain activities.

Choose correct answer/s
True
False
To unlock the question
Question 15
True/False

An appropriate reason to diversify is to pool the risk from several business ventures to create a more stable income stream.

Choose correct answer/s
True
False
To unlock the question
Question 16
True/False

The coordination required to realize value from a diversification strategy based on transferring, sharing, or leveraging competencies is a major source of bureaucratic costs.

Choose correct answer/s
True
False
To unlock the question
Question 17
True/False

Research finds that the higher the number of business units in a company's portfolio, the easier it is for corporate managers to remain informed about the complexities of each business.

Choose correct answer/s
True
False
To unlock the question
Question 18
True/False

Companies with a strong track record of internal new venturing generally excel at research and development.

Choose correct answer/s
True
False
To unlock the question
Question 19
True/False

An advantage of a joint venture is that it allows a company to quickly gain entry into a new industry where barriers are high.

Choose correct answer/s
True
False
To unlock the question
Question 20
True/False

A company can increase the probability of success of an internal venture by constructing efficient scale manufacturing facilities ahead of demand.

Choose correct answer/s
True
False
To unlock the question