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81.
Management's ranking of business units and establishing a priority for resource allocation should
82.
The tests of whether a diversified company's businesses exhibit resource fit do NOT include whether
83.
Which of the following is NOT part of the task of checking a diversified company's business lineup for
adequate resource fit?
84.
Which of the following is the BEST guideline for deciding what the priorities should be for allocating
resources to the various businesses of a diversified company?
85.
The options for allocating a diversified company's financial resources include all of the following
EXCEPT
86.
Which of the following is NOT a reasonable option for deploying a diversified company's financial
resources?
87.
Corporate strategy options for already diversified companies include all of the following EXCEPT
88.
The strategic options to improve a diversified company's overall performance do NOT include which of
the following categories of actions?
89.
Once a company has diversified into a collection of related or unrelated businesses and concludes that
some strategy adjustments are needed, which one of the following is NOT one of the main strategy
options that a company can pursue?
90.
A company that is already diversified may choose to broaden its business scope by building positions in
new related or unrelated businesses because of all of the following EXCEPT
91.
Retrenching to a narrower diversification base is
92.
When a corporate parent creates an independent company and divests it by distributing to its
stockholders new shares in the business, it is called
93.
Moves to improve a diversified company's overall performance do NOT include
94.
In which of the following instances is retrenching to a narrower diversification base NOT likely to be an
attractive or advisable strategy for a diversified company?
95.
When should a business NOT be divested?
96.
Strategies to restructure a diversified company's business lineup involve
97.
Corporate restructuring strategies
98.
Conditions that may make corporate restructuring strategies appealing include all of the following
EXCEPT
99.
Which of the following is NOT a good candidate for divestiture in a corporate restructuring effort?
Essay Questions
100.
Briefly discuss when it makes good strategic sense for a company to consider diversification.
101.
Identify and briefly discuss each of the three tests for determining whether diversification into a new
business is likely to build shareholder value.
102.
The attractiveness test is the most important test for determining whether diversification into a new
business is likely to result in 1 + 1 = 3 increases in shareholder value (as opposed to simply a 1 + 1 = 2
type of increase). True or false? Justify and explain your answer.
103.
Explain the relevance of the following as they relate to building shareholder value via diversification.
a. the industry attractiveness test
b. the cost of entry test
c. the better-off test
104.
Identify and briefly discuss each of the three options for entering new businesses. What are the driving
choice parameters for entry into new businesses and which one is the most popular in the sense of being
used most frequently?
105.
Carefully explain the difference between and the rationale for selecting a strategy of related
diversification and/or a strategy of unrelated diversification.
106.
Which is the better approach to diversification—a strategy of related diversification or a strategy of
unrelated diversification? Explain and support your answer.
107.
What is meant by the term strategic fit? What are the advantages of pursuing strategic fit and matchups
in choosing which industries to diversify into?
108.
Discuss the pros and cons of a strategy of unrelated diversification.
109.
Briefly explain the relevance of quantitatively measuring the competitive strength of each business in a
diversified company's business portfolio and determining which business units are strongest and
weakest. List the six steps involved in the process.
110.
What is the industry attractiveness test? How is it used to evaluate a diversified company's business
lineup? Why is it relevant?
111.
What is the relevance of quantitatively measuring the competitive strength of each business in a
diversified company's business portfolio and determining which business units are strongest and
weakest?
112.
What are the advantages and benefits of using an industry attractive-business strength matrix to evaluate
a diversified company's lineup of businesses?
113.
What is meant by the term "resource fit," as it applies to evaluating a diversified company's business
lineup?
114.
Explain the difference between a cash cow business and a cash hog business.
115.
Why is it pertinent in evaluating a diversified company's business lineup to rank a diversified company's
businesses on the basis of their future performance prospects?
116.
What factors should management consider when ranking business units and setting a priority for
resource allocation?
117.
What are the four main strategic paths that a diversified company can employ to improve the
performance of its overall business lineup?
118.
What might induce an already diversified company to enter additional businesses and broaden its
diversification base?
119.
An additional, and often very important motivating factor for adding new businesses is to complement
and strengthen the market position and competitive capabilities of one or more of its present businesses.
Explain and give three examples.
120.
Under what circumstances might a diversified firm choose to divest one or more of its businesses?
121.
Why has corporate restructuring become a popular strategy at many diversified companies over the past
decade?
122.
Identify and explain the meaning and strategic significance of each of the following terms.
a) Related diversification
b) Strategic fit
c) Economies of scope
d) Retrenching
e) Unrelated diversification
