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Exam 6: Corporate-Level Strategy: Creating Value Through Diversification

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Question 51

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

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Question 52

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Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide.

A) strategic alliances; joint ventures
B) strategic alliances; mergers
C) mergers; acquisitions
D) mergers; joint ventures

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Question 53

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If a multinational firm is unable to understand how the acquired company's assets would fit with their own lines of business, this can lead to

In 2012, Microsoft admitted to a major _________ mistake when it wrote off essentially the entire 6.2 billion USD it paid for a digital advertising firm, aQuantive, that it purchased in 2007.

Diversification initiatives include all of the following except

Antitakeover tactics include all of the following except

Sprint and Nextel merged in 2005. The successful merger resulted in a 31 billion USD merger-related charge that lead to a 76 percent decrease in its value by late 2012.

Corporate-level strategy focuses on

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.

Poison pills always are used to protect the best interests of management.

Zara, a Spanish clothing company, operates stores in over 70 countries. When entering markets very distant from its home markets, Zara rarely uses local alliance partners to help it negotiate the different cultural and regulatory environments.

Loews Corporation, a conglomerate with 15 billion USD in revenues, competes across several industries including oil and gas, tobacco, watches, insurance, and hotels. Its related diversification strategy is to buy low and sell high as in the example where they bought six oil tankers for 5 million USD and then sold them eight years later for 50 million USD.

In analyzing the Cabot Corporation portfolio using the BDG matrix, the company decided to shift away from its core competence to unrelated areas of its business. The ensuing decline in assets indicated that it needed to return to its core competence in order to grow.

Novartis, formerly Ciba-Geigy, uses portfolio management to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of using A.related diversification to achieve value by leveraging pooled negotiating power to attain economies of scope. B.related diversification to acquire market power by leveraging pooled negotiating power. C.unrelated diversification to acquire financial synergies through portfolio management. D.related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.

The primary means by which a firm can diversify are __________, _________, and ________.

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.

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of using

According to the text, corporate restructuring includes

A firm should consider vertical integration when

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.