Exam 8: Corporate Strategy: Diversification and the Multibusiness Company

A) dedicated and undedicated resources.
B) adapted use of resources for a specific range of industry and business applications in contrast to more generalized applications found to be useful across a wide range of industry and business types.
C) committed value chain resources and capabilities as opposed to uncommitted resources driving sustainability and competitive advantages.
D) attached business uses compared to unattached resources relevant to strategic fit.
E) All of these.

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A) The ability to use existing technologies.
B) Cost savings in research and development areas.
C) Shorter times in getting new products to market.
D) Increased sales in both the parent company and the diversified businesses.
E) A greater number of innovative products or processes.

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A) to segregate manufacturing methods.
B) the ability to squeeze production into a smaller number of plants and significantly reduce overall production costs.
C) the ability to eliminate leverage with vendors in purchasing its supplies.
D) the chance to share in an increase in manufacturing costs.
E) None of these.

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A) internal development.
B) acquisition.
C) joint venture.
D) partnership.
E) All of these,provided management has expertise.

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A) Businesses with high industry attractiveness ratings should be given top priority and those with low industry attractiveness ratings should be given low priority.
B) Business subsidiaries with the brightest profit and growth prospects,attractive positions on the nine-cell matrix,and solid strategic and resource fits generally should head the list for corporate resource support.
C) The positions of each business in the nine-cell attractiveness-strength matrix should govern resource allocation.
D) Businesses with the most strategic and resource fits should be given top priority and those with the fewest strategic and resource fits should be given low priority.
E) Businesses with high competitive strength ratings should be given top priority and those with low competitive strength ratings should be given low priority.

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A) Broadening the company's business scope by making new acquisitions in new industries.
B) Increasing dividend payments to shareholders and/or repurchasing shares of the company's stock.
C) Restructuring the company's business lineup with a combination of divestitures and acquisitions to put a whole new face on the company's business makeup.
D) Pursuing multinational diversification and striving to globalize the operations of several of the company's business units.
E) Divesting weak-performing businesses and retrenching to a narrower base of business operations.

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A) Ascertaining the extent to which business units have value chain match-ups that offer opportunities to combine the performance of related value chain activities and reduce costs.
B) Ascertaining the extent to which business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another.
C) Ascertaining the extent to which business units are making maximum use of the parent company's competitive advantages.
D) Ascertaining the extent to which business units have value chain match-ups that offer opportunities to create new competitive capabilities or to leverage existing resources.
E) Ascertaining the extent to which business units present opportunities to share use of a well-respected brand name.

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A) certain businesses have questionable long-term potential.
B) a diversified company has businesses that have little or no strategic or resource fits with the "core" businesses that management wishes to concentrate on.
C) certain business units are weakly positioned and show poor prospects for providing a good return on investment.
D) market conditions in a once-attractive business have badly deteriorated.
E) All of these.

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A) results in increased profit margins and bigger total profits.
B) builds added long-term economic shareholder value by building a synergistic multibusiness company.
C) helps a company escape the rigors of competition in its present business.
D) leads to the development of a greater variety of distinctive competencies and competitive capabilities.
E) helps the company overcome the barriers to entering additional foreign markets.

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A) have value chain match-ups that offer opportunities to combine the performance of related value chain activities and reduce costs.
B) have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another.
C) have opportunities to share use of a well-respected brand name.
D) have value chain match-ups that offer opportunities to create new competitive capabilities or to leverage existing resources.
E) are cash cows and which ones are cash hogs.

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A) is a generalized resource that can be leveraged in unrelated diversification.
B) is a brand name that can steer a narrow assortment of business types.
C) represents a public disclosure spotlighting the corporate image.
D) represents an overall corporate marker covering its overriding image of sustainability and responsibility.
E) is a specialized resource designed to influence profit growth.

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A) to the role that a diversified corporation plays in nurturing its component businesses through the provision of top management expertise,disciplined control,financial resources,and capabilities.
B) to the help subsidiaries receive in performing better when they utilize astute high-level guidance from corporate executives.
C) to the corporation's ability to provide generalized support resources so as to create value by lowering companywide overhead costs by eliminating duplication of efforts.
D) To efforts to capitalize on the umbrella brands and enhance value proposition across businesses.
E) All of these.

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A) the main basis for competitive advantage and improved shareholder value is an increased ability to achieve economies of scope.
B) each business is on its own in trying to build a competitive edge and the consolidated performance of the businesses is likely to be no better than the sum of what the individual businesses could achieve if they were independent.
C) there is a strong chance that the combined competitive advantages of the various businesses will produce a 1 + 1 = 3 performance outcome as opposed to just a 1 + 1 = 2 performance outcome.
D) the main basis for improved shareholder value is strong cross-business financial fits.
E) the main basis for improved shareholder value is an increased ability to achieve economies of scale in the businesses it has entered.

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A) not compound the problem by taking a misguided approach toward unrelated diversification.
B) adopt a strategic approach to unrelated diversification that appends reduced shareholder value.
C) rely solely on leveraging generalized resources and the expertise of corporate executives.
D) attempt related diversification strategies only.
E) All of these.

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A) A spinoff.
B) A wholly-owned subsidiary.
C) A functional divesture.
D) Fully-diluted shares.
E) All of these.

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A) Checking whether the company's resources fit the requirements of its present business lineup.
B) Scrutinizing each industry/business to determine where the driving forces are considered strongest/weakest and how many profitable strategic groups the company has diversified into.
C) Ranking the performance prospects of the various businesses from best to worst and determining what the corporate parent's priorities should be in allocating resources to its different businesses.
D) Checking the competitive advantage potential of cross-business strategic fits.
E) Assessing the competitive strength of each business the company has diversified into and determining which ones are strong/weak contenders in their respective industries.

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A) the attractiveness test,the profitability test,and the shareholder value test.
B) the strategic fit test,the competitive advantage test,and the return-on-investment test.
C) the resource fit test,the profitability test,and the shareholder value test.
D) the attractiveness test,the cost-of-entry test,and the better-off test.
E) the shareholder value test,the cost-of-entry test,and the profitability test.

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