Question 1

A firm that earns less than 70% 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 2

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

Accepted Answer

The answer of The more sharing of resources and activities...

Question 3

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

Accepted Answer

The related constrained and related linked levels of diversification both involve sharing resources and activities among businesses, but the main difference is the level of sharing. Related constrained diversification involves a high level of resource sharing, where businesses have overlapping resources and activities. Related linked diversification involves a lower level of resource sharing, where businesses share only a few resources or activities. Option A is incorrect because the percentage of profitability from the dominant business can be a factor in both levels of diversification. Option C is incorrect because both levels of diversification can involve vertical or horizontal diversification. Option D is incorrect because both levels of diversification can create value if executed properly.

Question 4

The use of poison pills increases the chance that a poorly performing firm will be taken over.

Accepted Answer

Poison pills are defensive mechanisms designed to make a company less attractive to potential acquirers. They are typically implemented by a company's management in order to deter hostile takeovers. Therefore, the use of poison pills decreases the chance that a poorly performing firm will be taken over.

Question 5

The lowest level of diversification is the ____ level.

Accepted Answer

Single business level means that the company is solely focused on one business with no diversification. Therefore, it is the lowest level of diversification.

Question 6

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

Accepted Answer

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Question 7

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

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Question 8

The Publicis Groupe (Chapter 6 Strategic Focus) 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 Publicis Groupe is using its digital technology from its digital business to enhance the advertising products in its advertising group. This implies that the group is using a related constrained diversification strategy, also known as a vertical integration strategy. This strategy involves sharing activities and resources among business units that are related to each other, such as using the technology from one business unit to improve the products or services of another business unit in the same industry or market.

Question 9

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

Accepted Answer

The opening case states that GE is unusual because it is one of the few large diversified firms that have been successful over time, indicating that it is able to compete in multiple industries and maintain a strong track record of performance. Therefore, option C is the correct choice. Options A, B, and D are incorrect because they do not accurately reflect the unique characteristic of GE described in the opening case.

Question 10

Which acquisition would be considered the LEAST related?

Accepted Answer

The least related acquisition is when an upscale restaurant chain acquires a travel agency. These two industries have very little overlap in terms of products, services, or target demographics.

Question 11

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 means that the corporate-level strategy should be able to create value through synergies between businesses and improve their performance, resulting in a higher overall value for the portfolio of businesses. The ultimate measure of success is whether the businesses in the portfolio are worth more under the management of the company than they would be if they were owned by someone else.

Question 12

The Publicis Groupe (Chapter 6 Strategic Focus) has three major groups of business (advertising, media, and digital) which share resources and capabilities. Publicis Groupe is using a _____________ diversification strategy.

Accepted Answer

Publicis Groupe is using a related constrained diversification strategy, as their three major groups of business (advertising, media, and digital) share resources and capabilities. This allows them to leverage their existing capabilities and resources in new markets or businesses that are related to their current operations.

Question 13

Golden parachutes protect managers from the negative consequences of over-diversifying a firm.

Accepted Answer

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Question 14

The more "constrained" the relatedness of diversification,

Accepted Answer

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

Question 15

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 operates primarily in the package delivery industry, with a focus on both domestic and international operations. The majority of its revenue (82%) comes from package delivery, indicating that it is a dominant business. This suggests that UPS is focused on developing and maintaining its position within this industry through strategic investments and operational initiatives.

Question 16

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

As noted in the Chapter 6 Opening Case, GE had a poor record in environmental issues, particularly in relation to PCB contamination. Moving into the "clean energy" industry was seen as a way for the company to overcome and correct this record, while also taking advantage of a growing market for renewable energy sources.

Question 17

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

Accepted Answer

This statement is true. The fear of being acquired due to poor management can result in executives implementing diversification strategies to increase the value of their firm and make it less attractive to potential acquirers.

Question 18

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

Accepted Answer

Corporate-level strategy is concerned with determining what product markets and businesses a firm should be in, and how to manage these businesses. It involves decisions about diversification, portfolio management, and resource allocation across a company's various business units. The other options listed are more specific operational decisions that may be part of the overall corporate-level strategy but are not the sole focus.

Question 19

Without strict governance mechanisms, the majority of executives will act in their own self-interest rather than acting as positive stewards of firm resources.

Accepted Answer

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Question 20

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

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Quiz 6: Corporate-Level Strategy