Chapter 08 Corporate Strategy: Diversification and the Multibusiness Company
Answer Key
Multiple Choice Questions
1.
Diversification into new industries deserves strong consideration when a
2.
Diversification into a new industry cannot be considered a success unless it results in
3.
Diversification ought to be considered when a
4.
Diversifying into new businesses can be considered a success only if it
5.
It becomes particularly urgent for a company to consider diversification when there are
6.
To create value for shareholders via diversification, a company must
7.
In terms of strategy making, what is the difference between a one-business company and a diversified
company?
8.
The task of crafting a company’s overall corporate strategy for a diversified company encompasses all
of the following EXCEPT
9.
Which of the following is NOT one of the elements of crafting corporate strategy for a diversified
company?
10.
The decision to pursue diversification requires management to resolve which industries to enter and
whether to enter, and includes such decisions as the following, EXCEPT
11.
To take advantage of cross-business value chain relationships and strategic fit and turn them into a
competitive advantage requires that companies determine whether there are opportunities to strengthen
the business, which includes such tasks as all of the following, EXCEPT
12.
Establishing investment priorities and steering corporate resources into the most attractive business
units typically requires the company to decide on all of the following options, EXCEPT
13.
Initiating actions to boost the combined performance of the corporation‘s collection of businesses
includes all of the following strategic options, EXCEPT
14.
Diversification becomes a relevant strategic option for a company EXCEPT when it
15.
The three tests for judging whether a particular diversification move can create value for shareholders
are the
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16.
To test whether a particular diversification move has good prospects for creating added shareholder
value, corporate strategists should use
17.
The better-off test for evaluating whether a particular diversification move is likely to generate added
value for shareholders involves assessing whether the move will
18.
A company can best accomplish diversification into new industries by
19.
Apple’s $3 billion acquisition of Beats Electronics and Beats Music in 2014 was an attractive strategy
option for entering promising new industries in headphones and streaming music services because it
20.
An acquisition premium is the amount by which the price offered for an existing business exceeds the
21.
What is the name of the process for developing new businesses as an outgrowth of a company’s
established business operations?
22.
Which of the following is NOT a factor that makes it appealing to diversify into a new industry by
forming an internal startup subsidiary to enter and compete in the target industry?
23.
The big dilemma an acquisition-minded firm faces is whether to
24.
The transaction costs of completing a business agreement or deal of some sort, over and above the price
of the deal, can include all of the following EXCEPT
25.
The essential requirement for different businesses to be “related” is that
26.
Unrelated businesses
27.
A related diversification strategy involves building the company around businesses
28.
Which of the following is NOT one of the appeals of related diversification?
29.
Strategic fit between two or more businesses exists when one or more activities comprising their
respective value chains present opportunities
30.
One strategic fit based approach to related diversification would be to
31.
Which of the prime examples of strategic fit opportunities below are NOT related business activities?
32.
Businesses with strategic fit with respect to their supply chain activities perform better together because
of all of the following EXCEPT the
33.
Which of the following is NOT a contributing reason for businesses with strategic fit in R&D or
technology activities to perform better together?
34.
What is the difference between economies of scale and economies of scope?
35.
Which of the following statements about cross-business strategic fit in a diversified enterprise is NOT
accurate?
36.
What makes related diversification an attractive strategy?
37.
Economies of scope
38.
When discussing “economies of scope,” it involves understanding that they
39.
An economy of scope is BEST illustrated by being able to eliminate or reduce costs by
40.
A big advantage of related diversification is that it
41.
The basic premise of unrelated diversification is that
42.
With a strategy of unrelated diversification, an acquisition is deemed to have potential if it