Question 1

Discuss the major corporate-level strategy formulation responsibilities.How are they different from business-level strategy formulation responsibilities?

Accepted Answer

The answer of Discuss the major corporate-level strategy formulation responsibilities.How...

Question 2

When an organization can use the same physical resources for multiple purposes,it is taking advantage of:
A)Intangible relatedness
B)Tangible relatedness
C)Limited scope
D)Dominant industry relationships
E)Goodwill

Accepted Answer

Tangible relatedness refers to the ability to use the same physical resources for multiple purposes. This can lead to cost savings and greater efficiency within the organization. Intangible relatedness refers to the sharing of intangible resources such as knowledge or technology, while limited scope refers to focusing on a narrow range of products or services. Dominant industry relationships and goodwill are not relevant to this scenario.

Question 3

Successful strategic alliances are characterized by all of the following except:
A)Careful planning and execution
B)Selection of partners with complementary resources
C)Effective use of coordinating mechanisms
D)Potential for financial economies
E)Selection of an appropriate governance method

Accepted Answer

Strategic alliances are primarily formed to leverage complementary strengths, access new markets, share risks, and enhance competitive positioning rather than just achieving financial economies. Financial benefits may result, but they are not a defining characteristic.

Question 4

If all of the businesses of an organization are related to a common "core" business,the organization is probably pursuing which corporate strategy?
A)Prospector
B)Cost focus
C)Vertical integration
D)Defender
E)Related diversification

Accepted Answer

Related diversification strategy involves expanding an organization's operations into industries that are related to the existing business. In this case, all the businesses of the organization are related to a common core business, suggesting that the organization is pursuing a related diversification strategy. The other options, such as defender, cost focus, and vertical integration, do not necessarily entail having all businesses related to a core business.

Question 5

Which factors have been found to lead to unsuccessful mergers and acquisitions? Which factors are related to success?

Accepted Answer

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Question 6

Strategic alliances:
A)Slow the speed of entry into a new field or market
B)Are considered a more risky diversification option than mergers
C)Encourage the entry of new competitors
D)Are often motivated by the desire to share resources across companies
E)Are associated with low levels of administrative costs

Accepted Answer

Strategic alliances are often motivated by the desire to share resources across companies, such as technology or distribution channels. This can lead to cost savings and increased efficiency. However, strategic alliances do not necessarily slow the speed of entry into a new field or market, and they may not encourage the entry of new competitors. While they may be less risky than mergers, they still carry some risk. The level of administrative costs associated with strategic alliances can vary depending on the specific arrangement.

Question 7

One of the advantages of internal venturing is that:
A)It is a fast way to enter new markets
B)It is much less risky than other strategies
C)Proprietary information need not be shared with other companies
D)Profits are shared with other companies
E)None of the above

Accepted Answer

One of the advantages of internal venturing is that proprietary information need not be shared with other companies. This means that the company can maintain control over their intellectual property and technology, which can be a significant advantage in highly competitive industries. However, entering new markets quickly or minimizing risk may not necessarily be advantages of internal venturing. Profits are also not necessarily shared with other companies unless there are specific joint ventures or partnerships in place.

Question 8

Which of the following is most likely to occur as a result of an acquisition?
A)Increase in financial leverage
B)Increase in profitability
C)Increase in R&D
D)Increase in patents
E)Both C and D are correct

Accepted Answer

An acquisition often leads to an increase in financial leverage as the acquiring company may take on debt to finance the purchase.

Question 9

In the Boston Consulting Group Matrix,cash cows:
A)Have high growth rates and low relative market share
B)Have low growth rates and high relative market share
C)Have low growth rates and low relative market share
D)Have high growth rates and high relative market share
E)Have low growth rates and low profitability

Accepted Answer

Cash cows are products or business units with low growth rates but high relative market share. They generate a lot of revenue but require minimal investment to maintain their position in the market. These products/business units tend to have high profitability and are often seen as stable and reliable sources of income.

Question 10

When skills developed in one area can be applied to another area,which of the following results?
A)Intangible relatedness
B)Tangible relatedness
C)Specialized scope
D)Focus
E)Goodwill

Accepted Answer

Skills that can be transferred from one area to another create intangible relatedness, as they are not physical assets but rather capabilities or knowledge that can be applied across different contexts.

Question 11

Why might an organization choose to diversify?

Accepted Answer

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Question 12

Mergers are more likely to be successful if:
A)They are expensive
B)They are friendly
C)They involve high premiums
D)The managers of the acquired firm leave to make way for new managers
E)There is less money spent on R&D during the first year after acquisition

Accepted Answer

Research has shown that in friendly mergers, where both companies have a mutual desire to merge, there is usually better integration and cooperation between the companies, leading to a higher likelihood of success. Expensive mergers may put a strain on the finances of the acquiring company, and high premiums may lead to resentment from shareholders of the acquiring company. The departure of the managers of the acquired company may cause disruption and loss of valuable knowledge and skills. Less money spent on R&D may lead to a decrease in innovation and competitiveness in the long run.

Question 13

Two organizations or business units have similar management processes,cultures,systems,and structures.These similarities are best described as:
A)Synergy
B)Managerial hubris
C)Business intelligence
D)Tangible relatedness
E)Organizational fit

Accepted Answer

Organizational fit refers to the degree to which organizations or business units share similar management processes, cultures, systems, and structures. This concept emphasizes the compatibility between entities, which can facilitate smoother integrations, collaborations, or mergers.

Question 14

What are the requirements for achieving synergy through the combination of businesses?

Accepted Answer

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Question 15

In the Boston Consulting Group Matrix,stars:
A)Have high growth rates and low relative market share
B)Have low growth rates and high relative market share
C)Have low growth rates and low relative market share
D)Have high growth rates and high relative market share
E)Have low growth rates and low profitability

Accepted Answer

Stars have high growth rates and high relative market share. This means that they are in a growing market and have a significant share of that market. Stars often require significant investment to maintain their growth and market position, but have the potential to become cash cows in the future.

Question 16

What is on the two axes of the Boston Consulting Group Matrix?
A)Stars and cash cows
B)Business growth rate and relative competitive position
C)Market share and relative competitive position
D)Profitability and business growth rate
E)Business growth rate and cash flow

Accepted Answer

The two axes of the Boston Consulting Group Matrix are the business growth rate (vertical axis) and relative competitive position (horizontal axis). This helps in categorizing a company's products or services into four segments: stars, question marks, cash cows, and dogs. The position of a product on this matrix helps in determining the investment and divestment decisions for a company.

Question 17

Strategic alliances:
A)Result in complete control by one firm
B)Incur low administrative costs
C)Entail a risk of opportunism by partners to the venture
D)Are desirable in all environments
E)Typically result in unfavorable stock market reactions

Accepted Answer

Strategic alliances entail the risk of opportunism by partners to the venture, as each partner may have different goals and interests.

Quiz 6: Corporate Strategies

Discuss the major corporate-level strategy formulation responsibilities.How are they different from business-level strategy formulation responsibilities?

When an organization can use the same physical resources for multiple purposes,it is taking advantage of:

Successful strategic alliances are characterized by all of the following except:

If all of the businesses of an organization are related to a common "core" business,the organization is probably pursuing which corporate strategy?

Which factors have been found to lead to unsuccessful mergers and acquisitions? Which factors are related to success?

Strategic alliances:

One of the advantages of internal venturing is that:

Which of the following is most likely to occur as a result of an acquisition?

In the Boston Consulting Group Matrix,cash cows:

When skills developed in one area can be applied to another area,which of the following results?

Why might an organization choose to diversify?

Mergers are more likely to be successful if:

Two organizations or business units have similar management processes,cultures,systems,and structures.These similarities are best described as:

What are the requirements for achieving synergy through the combination of businesses?

In the Boston Consulting Group Matrix,stars:

What is on the two axes of the Boston Consulting Group Matrix?

Strategic alliances: