The risk for firms that follow the unrelated diversification strategy in developed
economies is that
a. external investors tend to dump the stocks of conglomerates during economic
downturns.
b. conglomerates are typically owned by one powerful entrepreneur and do not survive
his/her retirement or death.
c. government regulations, especially in Europe, have periodically forced the
dissolution of conglomerates.
d. competitors can imitate financial economies more easily than they imitate economies
of scope.
Which of the following resources are more likely to create value in the diversification
process?
a. plant and equipment
b. tacit knowledge
c. excess capacity
d. financial resources
Establishing a wholly-owned subsidiary provides the quickest access to a new market.
a. True
b. False
A successful innovation will be less risky but less profitable than a successful
innovation.
a. incremental; radical
b. radical; incremental
c. alliance-generated; acquisition-generated
d. acquisition-generated; alliance-generated
High-level maintenance on aircraft is performed by the manufacturer. This service after
the sale means that in the aircraft industry
a. customers are relatively weak because of the high switching costs created by
frequent-flyer programs.
b. the industry is moving toward differentiation of services.
c. the competitive rivalry in the industry is severe.
d. the economic segment of the external environment has shifted, but airline strategies
have not changed.
The goal of the organization’s ________ is to point the firm in the direction of where it
would like to be in the years to come.
a. vertical
b. horizontal
c. functionally oriented
d. multidivisional
The threat from substitutes is high when
a. switching costs are high.
b. the substitute product’s price is lower than the industry product’s price.
c. the quality of the substitute product is lower than the quality of the industry’s product.
d. the substitute product stimulates new process innovations within the industry.
At the conclusion of the internal analysis, firms must identify their opportunities and
threats in resources, capabilities, and core competencies.
a. True
b. False
The high cost of transportation, expense of tariffs, and loss of control are three
disadvantages of exporting.
a. True
b. False
The CEO/chairman of PharmaPacifica was recently killed in an airplane crash. This
tragedy has thrown PharmaPacifica into turmoil as there is no one in the organization
qualified to step into the former CEO’s shoes. This is an example of
a. a failure of succession management.
b. managerial hubris.
c. the risk inherent in CEO duality.
d. excessive reliance on the internal managerial labor market.
The alliance between BP Plc and OAO Rosneft to extract oil from Russia’s Arctic
Ocean was managed using contracts, i.e., the cost minimization approach.
a. True
b. False