Question 1

If the businesses in the corporate portfolio are not worth more under the management of the corporation than they would be under any other ownership,then the corporate-level strategy has failed.

Accepted Answer

This statement is true. The primary goal of corporate-level strategy is to create value for the company as a whole, and one way to do this is by ensuring that the businesses within the corporate portfolio are worth more under the management of the corporation than they would be under any other ownership. If this is not the case, then the corporate-level strategy has failed to create value for the company.

Question 2

In the Chapter 6 Opening Case,GE achieved growth and diversification through mergers and acquisitions.

Accepted Answer

The opening case of Chapter 6 highlights GE's growth and diversification through mergers and acquisitions, making the statement true.

Question 3

Procter & Gamble (P&G)has a paper towel and baby diaper business that both use paper products. This is an example of value created through the sharing of activities.

Accepted Answer

P&G is able to create value by sharing activities between its paper towel and baby diaper businesses, both of which use paper products. This allows the company to achieve economies of scale and leverage its resources more efficiently.

Question 4

A firm uses a corporate-level diversification strategy for a variety of reasons all of which have to do with ways to create value.

Accepted Answer

The answer of A firm uses a corporate-level diversification strategy...

Question 5

All of Krispy Kreme's revenues come from its one main product,doughnuts. It can be considered a classic example of a firm following a related constrained strategy.

Accepted Answer

The answer of All of Krispy Kreme's revenues come from...

Question 6

United Technologies,Textron,Samsung,and Hutchison Whampoa Limited are examples of diversified firms that have no relationships between their businesses. These firms all use the strategy of unrelated diversification.

Accepted Answer

These firms are examples of unrelated diversification, which means they have no relationships between their businesses.

Question 7

Decisions to expand a firm's portfolio of businesses to reduce managerial risk can have a positive effect on the firm's value.

Accepted Answer

The answer of Decisions to expand a firm's portfolio of...

Question 8

Compared with related constrained firms,related linked firms share fewer resources and assets between their businesses,concentrating instead on transferring knowledge and core competencies between the businesses.

Accepted Answer

Related linked firms focus on transferring knowledge and core competencies between their businesses rather than sharing resources and assets. In contrast, related constrained firms share resources and assets between their businesses.

Question 9

An effective corporate strategy creates aggregate returns across all businesses that exceed what those returns would be without the strategy and contributes to the firm's strategic competitiveness and ability to earn above- average returns.

Accepted Answer

An effective corporate strategy should create synergies among the businesses and contribute to the firm's competitive advantage, leading to greater overall returns for the company.

Question 10

Corporate-level strategies are strategies a firm uses to diversify its operations from a single business competing in a single market into several product markets and,most commonly,into several businesses.

Accepted Answer

The answer of Corporate-level strategies are strategies a firm uses...

Question 11

Revenues for United Parcel Service (UPS)are derived from the following business segments: 60 percent from U.S. package delivery operations,22 percent from international package delivery,and 18 percent from non- packaging operations. The best description of the corporate level strategy of UPS is unrelated diversification.

Accepted Answer

The answer of Revenues for United Parcel Service (UPS)are derived...

Question 12

Successful product diversification is expected to increase the variability in the firm's profitability since the earnings are generated from several different business units.

Accepted Answer

Successful product diversification typically reduces the variability in a firm's profitability by spreading risk across different business units, which can stabilize earnings.

Question 13

Antitrust regulation,tax laws,and low performance are all value-neutral reasons why firms engage in diversification.

Accepted Answer

Antitrust regulation, tax laws, and low performance are external factors that can affect a firm's decision to diversify, and are not related to ethical or moral considerations. Therefore, they can be considered value-neutral reasons for diversification.

Question 14

GE (discussed in the Chapter 6 Opening Case)is an example of a firm that used its corporate strategy to achieve competitive advantage by selecting and managing a group of different businesses competing in different product markets.

Accepted Answer

The answer of GE (discussed in the Chapter 6 Opening...

Question 15

A major advantage of diversification is that overall monitoring costs are reduced,since each separate business comes under the control of corporate headquarters.

Accepted Answer

Diversification can increase monitoring costs as corporate headquarters must oversee a wider range of businesses, each with its own unique challenges and requirements.

Question 16

In a money-making effort,a small private university has decided to institute consulting services using its business faculty as consultants whose services would be sold to clients. This university is attempting to use its faculty to gain economies of scope.

Accepted Answer

Economies of scope refer to the cost savings achieved by producing multiple products or services using the same resources, in this case, using the business faculty to provide consulting services in addition to their teaching duties. This allows the university to maximize the use of its resources and generate additional revenue streams.

Question 17

Economies of scope are cost savings resulting from a firm successfully leveraging,either through sharing or transferring,some of its capabilities and competencies developed in one business to another business.

Accepted Answer

Economies of scope refer to cost savings achieved through sharing or transferring capabilities and competencies across different businesses within a firm.

Question 18

Related linked firms share more resources and assets between their businesses than do related constrained firms.

Accepted Answer

The answer of Related linked firms share more resources and...

Question 19

GE (discussed in the Chapter 6 Opening Case)is an example of a firm following the related constrained diversification strategy (i.e.,different businesses that are highly related).

Accepted Answer

GE is known for following a related linked diversification strategy, where its businesses are related but not highly constrained, allowing for some level of operational and strategic independence.

Question 20

When firms share activities across units,they are often able to achieve increased value.

Accepted Answer

Sharing activities across units can lead to economies of scale and reduced costs, ultimately resulting in increased value for the firm.

Quiz 6: Corporate-Level Strategy.