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Exam 6: Corporate-Level Strategy: Creatingvalue Through Diversification

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Question 51

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Which of the following is not a reason for merger and acquisition failures?

A) The acquiring company pays too high a premium for the common stock of the target company.
B) Top executives act in their best interests rather than those of the shareholders.
C) The acquired company assets are poorly integrated into the acquiring company business lines.
D) The acquisition leads to value creation.

E) B) and D)
F) A) and C)

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Question 52

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Antitakeover tactics include all of the following EXCEPT _________.

A) greenmail
B) poison pills
C) golden parachutes
D) golden handcuffs

E) C) and D)
F) A) and B)

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Question 53

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Verizon Wireless and ILS Technology have a _________ whereby Verizon integrates technology developed by ILS to improve its machine-to machine (M2M) data transmission systems.M2M systems allow firms to securely transmit data to and from various devices.

What are the primary benefits and risks associated with related diversification?

Gillette developed the Fusion and Mach 3 shaving systems that created superior customer value as a result of their core competency in research and development.

Sharing core competencies is one of the primary potential advantages of diversification.In order for diversification to be most successful,it is important that _____________.

Cooperative relationships such as __________ have potential advantages such as entering new markets,reducing manufacturing (or other) costs in the value chain,and developing and diffusing new technologies.

Explain the uses and limitations of portfolio management matrices such as the growth-share matrix developed by the Boston Consulting Group (BCG).

Core competencies do not create value in a business.

Corporate-level strategy focuses on gaining short-term revenue through managing operations in multiple businesses.

Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

What are the primary benefits and risks associated with unrelated diversification?

Portfolio management matrices generally consist of two axes that reflect industry or market growth and the market share of a business.

Portfolio management matrices are applied to what level of strategy?

A Cash Cow,in the BCG framework,refers to a business that has _______________.

One of the obligatory aspects of strategic alliances is the dependence on written contracts to delimit responsibilities and enforce compliance.

Sharing activities across business units can provide two primary benefits: cost savings and revenue enhancements.

In the BCG Matrix,a business that has a low market share in an industry characterized by high market growth is termed a ____________.

In managing the corporate portfolio,the BCG matrix would suggest that __________.

Cooper Industries has followed a successful strategy of related diversification.There are few similarities in the products it makes or the industries in which it competes.