Chapter 08 Corporate Strategy: Diversification and the Multibusiness
Company Answer Key
Multiple Choice Questions
1.
The task of crafting corporate strategy for a diversified company encompasses
8-2
2.
Which one of the following is
not
one of the elements of crafting corporate strategy for a
diversified company?
8-3
3.
Diversification merits strong consideration whenever a single-business company
4.
Diversification ought to be considered when a
8-4
5.
Diversifying into new businesses can be considered a success only if it
6.
To create value for shareholders via diversification, a company must
8-5
7.
The three tests for judging whether a particular diversification move can create value for
shareholders are the
8-6
8.
To test whether a particular diversification move has good prospects for creating added
shareholder value, corporate strategists should use the
9.
The attractiveness test for evaluating whether diversification into a particular industry is likely
to build shareholder value involves determining whether
8-7
10.
The cost-of-entry test for evaluating whether diversification into a particular industry is likely
to build shareholder value involves determining whether
8-8
11.
The better-off test for evaluating whether a particular diversification move is likely to generate
added value for shareholders involves assessing whether the diversification move
8-9
12.
Which of the following statements about corporate diversification is
incorrect
?
8-10
13.
Acquisition of an existing business is an attractive strategy option for entering a promising
new industry because it
8-11
14.
Which one of the following is
not
a factor that makes it appealing to diversify into a new
industry by forming an internal start-up subsidiary to enter and compete in the target
industry?
8-12
15.
Diversifying into a new industry by forming a new internal subsidiary to enter and compete in
the target industry is attractive when
8-13
16.
A joint venture is an attractive way for a company to enter a new industry when
8-14
17.
A joint venture is an attractive way for a company to enter a new industry when
18.
The essential requirement for different businesses to be “related” is that
8-15
19.
Businesses are said to be “related” when
8-16
20.
Which of the following is an important appeal of a related diversification strategy?
8-17
21.
One strategic fit-based approach to related diversification would be to
8-18
22.
Opportunities for cross-business strategic fit exist
23.
Cross-business strategic fits can be derived from
8-19
24.
Economies of scope
8-20
25.
What makes related diversification an attractive strategy is the