Quiz 5(b) - 1 Strategic Management Quiz 5(b) 0.5 negative...

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Strategic Management Quiz 5(b) 0.5 negative marks for each wrong answer Multiple Choice section 1- Important reasons for a company to consider diversification include: A) a desire to avoid putting all of its "eggs" in one industry basket. B) diminishing market opportunities and stagnating sales in its principal business. C) opportunities to leverage existing competencies and capabilities by expanding into businesses where  these same resource strengths are key success factors and valuable competitive assets attractive. D) an opportunity to lower costs by entering closely-related businesses and/or opportunity to transfer a  powerful and well-respected brand name to the products of other businesses and thereby increase the  sales and profits of these newly-entered businesses. E) All of these. 2- Which one of the principles is  not   accurate in considering   better-off test for evaluating  whether a particular diversification move is likely to generate added value for shareholders  involves: A) evaluating whether the diversification move will produce a 1 + 1 = 3 outcome such that the  company's different businesses perform better together than apart and the whole ends up being  greater than the sum of the parts. B) assessing whether the diversification move will make the company better off by increasing its  resource strengths and competitive capabilities. C) evaluating whether the diversification move will make the company better off by making it less  subject to the bargaining power of customers and/or suppliers. D) assessing whether an industry is attractive as the competitive conditions are conducive to earning  as good or better profits and return on investment than the company is earning in its present  businesses   E) assessing whether the diversification move will make the company better off by increasing its profit  margins and returns on investment. 3- The defining characteristic of related diversification (as opposed to unrelated diversification)  is: A) that each business the company has diversified into are utilizing similar competitive strategies. B) the presence of cross-business value chain relationships and strategic fits. C) that   each   business   the   company   has   diversified   into   has   very   similar   core   competencies   and  competitive capabilities. D) that the company has about the same number of cash cow businesses as it does cash hog businesses.
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This note was uploaded on 07/21/2011 for the course BUS 10001 taught by Professor All during the Spring '11 term at Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology.

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Quiz 5(b) - 1 Strategic Management Quiz 5(b) 0.5 negative...

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