chapter 8a

chapter 8a - Your Results: The correct answer for each...

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Your Results: The correct answer for each question is indicated by a . 1 INCORRECT Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? A) Picking the new industries to enter and deciding on the means of entry B) Initiating actions to boost the combined performance of the businesses the firm has entered C) Standardizing the resource fits across the group of businesses the company has diversified into D) Establishing investment priorities and steering corporate resources into the most attractive business units E) Pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage 2 INCORRECT 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. 3 INCORRECT To judge whether a particular diversification move has good potential for building added shareholder value, the move should pass the following tests: A) the attractiveness test, the barrier-to-entry test, and the growth test. B) the strategic fit test, the resource fit test, and the profitability test. C) the barrier-to-entry test, the growth test, and the shareholder value test. D) the attractiveness test, the cost-of-entry test, and the better-off test. E) the resource fit test, the strategic fit test, the profitability test, and the shareholder value test. 4 CORRECT The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves
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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 the diversification move will make the company better off by increasing its profit margins and returns on investment. E)
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This note was uploaded on 10/02/2011 for the course FIN 685 taught by Professor Grady during the Spring '11 term at Texas A&M.

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chapter 8a - Your Results: The correct answer for each...

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