Deck 8: Corporate-Level Strategy

Question 1

An asset's natural owner can make the asset perform better than any other owner

Answer 1

True
The definition of the natural owner of an asset is exactly that

Question 2

Ease of implementation and communication are major disadvantages of multi-factor portfolio matrices

Answer 2

True
Multi-factor matrices are more complex than simple growth/share matrices, but do have other offsetting advantages

Question 3

Share buybacks obviate principal/agent problems

Answer 3

False
Buy backs are unrelated to the principal/agent problem

Question 4

Short-run survival considerations may jeopardize longer-term success

Question 5

Strategy at the corporate level is fundamentally similar to strategy at the business unit level

Question 6

In a diversified firm most value is created at the corporate level

Question 7

There is significant uncertainty about the impact of corporate activities on corporate performance

Question 8

Decentralization has been one response to turbulent market conditions

Question 9

Senior managers rarely have to cope with competing stakeholder demands

Question 10

The corporate centre is responsible for allocating resources across the firm's business portfolio

Question 11

Shareholders can diversify their interests at very high cost

Question 12

Managing relationships with financial markets is a job for business unit managers

Question 13

More than one style of corporate parenting can be successful

Question 14

The results of financial analyses of investment alternatives are unambiguous

Question 15

Financial analysis techniques provide valuable insight on strategic matters

Question 16

Portfolio analytic techniques are a useful way to augment traditional financial analyses

Question 17

Cash flow is more important than accounting profit for almost all purposes

Question 18

The growth/share matrix has no technical problems

Question 19

Related diversification should reduce the variability of a firm's cash flow

Question 20

It is not possible for a profitable firm to go bankrupt

Question 21

There is no formula for the optimal capital structure

Question 22

Share buybacks are always unattractive to shareholders when compared to dividends

Question 23

The best strategies are riskless

Question 24

Perceived risk is less important than actual risk