Question 1

The Publicis Groupe has three major groups of business (advertising,media,and digital)that share resources and capabilities. Publicis Groupe is using a diversification strategy.

Accepted Answer

The Publicis Groupe's three major groups of business, advertising, media, and digital, share resources and capabilities, indicating that they are related to each other. However, the company is using a constrained diversification strategy since it is operating in related businesses that have some overlap in their resources and capabilities, enabling the company to leverage its expertise across all three business units.

Question 2

The ultimate test of the value of a corporate-level strategy is whether the

Accepted Answer

The ultimate test of the value of a corporate-level strategy is whether the businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership. This is because the primary objective of a corporate-level strategy is to create value for the company as a whole, not just for individual business units. If the businesses in the company's portfolio are worth more under the company's management than they would be under any other ownership, then the company is creating value through its corporate-level strategy.

Question 3

Wm. Wrigley Jr. Company once made only chewing gum. When Wrigley bought Life Savers (a line of candy mints)and Altoids (a line of breath mints)from Kraft,chewing gum then constituted less than 95 percent of revenues. Thus,Wrigley

Accepted Answer

The answer of Wm. Wrigley Jr. Company once made only...

Question 4

Which acquisition would be considered the LEAST related?

Accepted Answer

The acquisition of a travel agency by an upscale restaurant chain is the least related because the two businesses operate in completely different industries with no overlap in product or service offerings. The other options involve businesses in related industries or with related services, such as purchasing a chemical laboratory specializing in food flavorings, acquiring a landscape architecture firm for a chain of garden centers, or a hospital acquiring a long-term care nursing home.

Question 5

A firm that earns less than 70 percent of revenue from its dominant business and has direct connections between its businesses is engaging in diversification.

Accepted Answer

The answer of A firm that earns less than 70...

Question 6

GE (Chapter 6 Opening Case)is unusual in that it

Accepted Answer

The opening case states that GE is one of the few large diversified firms that have been successful over time, making it a unique company in terms of its ability to thrive with a diversified business model. Options A, B, and D are not accurate statements in relation to the opening case.

Question 7

Revenues for United Parcel Service (UPS)come 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. Which best describes the corporate level strategy of UPS?

Accepted Answer

UPS's revenue predominantly comes from package delivery operations, indicating a dominant business strategy where the company focuses on a single core business area.

Question 8

Corporate-level strategy is concerned with and how to manage these businesses.

Accepted Answer

Corporate-level strategy focuses on determining the scope of businesses the firm should be in, including what product markets and businesses to engage in. A and D are more specific examples of strategic decisions that fall under the overall corporate-level strategy. C is a consideration for the financial performance of the portfolio of businesses, but it is not the primary driver of corporate-level strategy.

Question 9

The Publicis Groupe uses the digital technology from its digital business to enhance the advertising products in its advertising group. This sharing of activities is characteristic of the______diversification strategy.

Accepted Answer

The answer of The Publicis Groupe uses the digital technology...

Question 10

Usually a company is classified as a single business firm when revenues generated by the dominant business are greater than percent.

Accepted Answer

The answer of Usually a company is classified as a...

Question 11

The main difference between the related constrained level of diversification and the related linked level of diversification is

Accepted Answer

The related constrained level of diversification involves sharing resources and activities among businesses that are related but not necessarily in the same industry, while the related linked level of diversification involves sharing resources and activities among businesses that are specifically related to each other in some way (such as through common technology or other ties). The percentage of total organizational profitability that comes from the dominant business and whether the diversification is value-creating or value-neutral are factors that could apply to either level of diversification. Whether the diversification is vertical or horizontal is not a factor in comparing related constrained and related linked diversification.

Question 12

Knowing that their firms could be acquired if they are not managed successfully encourages executives to use value-creating diversification strategies.

Accepted Answer

When firms are at risk of being acquired if they do not perform well, executives are incentivized to pursue value-creating diversification strategies in order to increase the firm's overall value and competitiveness. This can help protect the firm from potential acquisition and ensure its long-term success.

Question 13

The more "constrained" the relatedness of diversification,

Accepted Answer

The answer of The more "constrained" the relatedness of diversification,
...

Question 14

The term "conglomerates" refers to firms using the______diversification strategy.

Accepted Answer

Conglomerates use unrelated diversification, which means they enter into industries that are not related to their current business lines. This allows them to spread their risk across different industries and potentially maximize their profits. Related constrained diversification involves entering into businesses that share similar products, markets, or technologies with the firm's existing business lines, while related linked diversification involves sharing activities and resources between different business units. Global is not a diversification strategy.

Question 15

The more sharing of resources and activities among businesses,the more diversification.

Accepted Answer

Constrained diversification involves sharing resources and activities among businesses to achieve synergy and efficiency.

Question 16

The lowest level of diversification is the______level.

Accepted Answer

Single-business is the lowest level of diversification where a company operates in only one industry or market. It has a narrow product line and relies on a single set of customers, suppliers, and business processes. Therefore, this is the best choice for the lowest level of diversification.

Question 17

Firms use corporate-level diversification strategies for all the following reasons EXCEPT

Accepted Answer

The answer of Firms use corporate-level diversification strategies for all...

Question 18

Hutchison Whampoa Limited (HWL)has businesses in ports and related services,telecommunications,property and hotels,retail and manufacturing,and energy and infrastructure. HWL makes no efforts to share activities or transfer core competencies among the businesses. HWL is following a strategy of diversification.

Accepted Answer

HWL's businesses have no connection or synergy with each other, indicating an unrelated diversification strategy. Additionally, the fact that they do not share activities or core competencies reinforces this conclusion.

Question 19

GE (Chapter 6 Opening Case)was diversified and manages businesses that have only a few links between them.
This corporate-level strategy is best described as______diversification.

Accepted Answer

GE's strategy is best described as related linked diversification because it manages businesses with only a few links between them, indicating some level of relatedness but not as constrained as related constrained diversification.

Question 20

As noted in the Chapter 6 Opening Case,GE is now a major player in the "clean energy" industry such as wind turbines and solar power. A major reason GE moved in this direction was

Accepted Answer

The Chapter 6 Opening Case notes that GE's move into the clean energy industry was partly a response to its poor record on environmental issues. This suggests that B is the most likely reason for the move. While factors such as portfolio focus and diversification may have played a role, they are not explicitly mentioned in the case. The option of guaranteed profitability is also not mentioned, and is unlikely given the uncertainties of the energy market.

Quiz 6: Corporate-Level Strategy.

The Publicis Groupe has three major groups of business (advertising,media,and digital) that share resources and capabilities. Publicis Groupe is using a diversification strategy.