Question 1

In terms of strategy evaluation, which of the following terms refers to the competitive stance of the corporate strategy and whether it is creating inimitable advantages?

Accepted Answer

Advantage refers to the aspect of strategy evaluation that assesses whether the corporate strategy is providing the company with a competitive edge that is difficult for competitors to imitate. This involves looking at how unique and sustainable the benefits gained from the strategy are, ensuring the company maintains a strong position in the market.

Question 2

A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of

Accepted Answer

This is an example of a strategic alliance, where two companies from potentially different sectors or markets collaborate on a specific project, such as researching new technology, without merging their overall businesses.

Question 3

The term "golden parachute" refers to

Accepted Answer

Golden parachutes are substantial benefits guaranteed to company executives in the event they are terminated following a takeover. This can include severance pay, stock options, and bonuses, designed to provide financial security to the executives after their departure from the company.

Question 4

Which of the following tests considers the potential for synergy as advantage emerges for a new business because of its association with another company?

Accepted Answer

The better-off test evaluates whether a new business will gain a competitive advantage or contribute to the competitiveness of other businesses within the corporation due to synergies. This test specifically looks at the potential benefits of integration or association with another company.

Question 5

Which of the following statements regarding internal development as a means of diversification is ?

Accepted Answer

The answer of Which of the following statements regarding internal...

Question 6

Real options analysis is most appropriate when

Accepted Answer

Real options analysis is most appropriate when there are sequential investments, meaning that a small initial investment can lead to subsequent investments. Real options analysis helps managers make decisions by considering the various options they have, based on insights gained from observing the market and the environment. As subsequent investments depend on how the market unfolds, managers need to adapt their decisions accordingly, which is possible with real options analysis.

Question 7

The two principal means by which firms achieve synergy through market power are: pooled negotiating power and corporate parenting.

Accepted Answer

The two principal means by which firms achieve synergy through market power are pooled negotiating power (the improvement in bargaining position relative to suppliers and customers) and vertical integration (an expansion or extension of the firm by integrating preceding or successive production processes).

Question 8

The downsides or limitations of mergers and acquisitions include all of the following, except

Accepted Answer

Mergers and acquisitions are often pursued as a faster means to enter new markets and acquire skills and competences, contrasting with the slower process of organic growth.

Question 9

An anti-takeover tactic called a ___________ is when a firm offers to buy shares of their stock from a company planning to acquire their firm at a higher price than the unfriendly company paid for it.

Accepted Answer

Greenmail refers to the strategy where a target company buys back its own shares at a premium from a potential acquirer, effectively paying them off to stop the takeover attempt.

Question 10

In terms of strategy evaluation, which of the following terms describes whether the diversification strategy is in alignment with the organization's goals and objectives?

Accepted Answer

The answer of In terms of strategy evaluation, which of...

Question 11

In terms of strategy evaluation, which of the following terms refers to the fit between the corporate-level strategy and the external environment?

Accepted Answer

Consonance refers to the degree to which a strategy is in line with the external environment, ensuring that the strategy is capable of adapting to external changes and trends.

Question 12

When Canadian family-controlled firm Schneider's wanted to block Maple Leaf Foods, they looked to Springfield as a

Accepted Answer

A white knight is a third party that makes a friendly takeover offer to a target company that is facing a hostile takeover from another party. In this case, Schneider's sought a friendly entity to help fend off the unwelcome advances of Maple Leaf Foods, making the white knight strategy the correct choice.

Question 13

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

Accepted Answer

Sharing activities across business units can lead to cost savings by reducing duplication of efforts and resources, and revenue enhancements by leveraging complementary strengths and capabilities.

Question 14

An anti-takeover tactic called greenmail is

Accepted Answer

Greenmail is prohibited in Canada as a tactic to fend off hostile takeovers. This involves a company purchasing its own shares at a premium from a potential acquirer to prevent the takeover, a practice that Canadian regulations do not allow.

Question 15

Which of the following tests evaluates such factors as entry barriers, supplier bargaining power, and the number of substitute products available?

Accepted Answer

The attractiveness test evaluates factors such as entry barriers, supplier bargaining power, and the number of substitute products available, which are all key components in assessing the attractiveness of an industry or market.

Question 16

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.

Accepted Answer

Joint ventures and strategic alliances are forms of cooperative relationships that allow companies to enter new markets, reduce costs, and develop new technologies by pooling resources and capabilities. Mergers and acquisitions, while also strategies for growth and expansion, typically involve one company taking over another, rather than cooperating as equals or near-equals.

Question 17

Loblaw Companies Limited, with a strong presence in Ontario and western Canada, gained a footprint into the Quebec market by

Accepted Answer

Loblaw Companies Limited expanded its presence into the Quebec market by acquiring Provigo, a move that allowed it to gain a significant footprint in the region.

Question 18

In terms of strategy evaluation, which of the following terms refers to the capacity of the firm to achieve what it is embarking on?

Accepted Answer

Feasibility refers to the capacity of the firm to achieve what it is embarking on, considering the resources and capabilities available.

Question 19

Options exist when the owner of the option has

Accepted Answer

Options give the owner the right, but not the obligation, to engage in a transaction. If the owner chooses not to exercise their option, they can simply let it expire. Therefore, option holders have the flexibility to choose whether or not to enter into a transaction, based on market conditions and their own financial goals.

Question 20

A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence.

Accepted Answer

A newly acquired business can benefit from a corporation's core competence even if its products are not similar, through shared knowledge, processes, or technology that enhance competitive advantage across different products or markets.

Quiz 6: Corporate-Level Strategy: Creating Value Through Diversification