Review Chapter 8 - Sample 1. The task of crafting corporate strategy for a diversified company encompasses 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) pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage. D) establishing investment priorities and steering corporate resources into the most attractive business units. E) All of these. 2. Which one of the following is not one of the elements of crafting corporate strategy for a diversified company? A) Picking new industries to enter and deciding on the means of entry B) Choosing the appropriate value chain for each business the company has entered C) Pursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantage D) Establishing investment priorities and steering corporate resources into the most attractive business units E) Initiating actions to boost the combined performance of the businesses the firm has entered 3. Diversification merits strong consideration whenever a single-business company A) has integrated backward and forward as far as it can. B) is faced with diminishing market opportunities and stagnating sales in its principal business. C) has achieved industry leadership in its main line of business. D) encounters declining profits in its mainstay business. E) faces strong competition and is struggling to earn a good profit. 4. Diversification becomes a relevant strategic option when a company A) spots opportunities to expand into industries whose technologies and products complement its present business. B) can leverage existing competencies and capabilities by expanding into industries where these same resource strengths are key success factors and valuable competitive assets. C) has a powerful and well-known brand name that can be transferred to the products of other businesses and thereby used as a lever for driving up the sales and profits of such businesses. D) can open up new avenues for reducing costs by diversifying into closely related businesses. E) All of these. 5. Diversification ought to be considered when A) a company's profits are being squeezed and it needs to increase its net profit margins and return on investment. B) a company lacks sustainable competitive advantage in its present business. C) a company begins to encounter diminishing growth prospects in its mainstay business. D) a company has run out of ways to achieve a distinctive competence in its present business. E) a company is under the gun to create a more attractive and cost-efficient value chain.
6. Diversification becomes a relevant strategic option in all but which one of the following situations? A) When a company spots opportunities to expand into industries whose technologies and
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