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Exam 6: Corporate-Level Strategy

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Question 61

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Which of the following is NOT a limitation directly relating to vertical integration?

A) bureaucratic costs
B) the loss of flexibility through investment in specific technologies
C) capacity balance and coordination problems from changes in demand
D) imitation of core technology by potential competitors

E) All of the above
F) B) and C)

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Question 62

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The _________________diversification strategy creates value in two ways. First, since the core competence has already been developed in one business, the firm does not have to allocate resources to develop it. Second, since the resource is intangible, competitors cannot easily imitate it.

A) related constrained
B) unrelated
C) related linked
D) dominant business

E) A) and C)
F) B) and D)

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Question 63

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Contract manufacturers who manage their customers' entire product line, and offer services ranging from inventory management to delivery and after-sales services are prime examples of vertical integration.

When diversification results in two companies, such as UPS and FedEx, simultaneously competing in the same product areas or geographic markets, this is called ____ competition.

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.

A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external capital market can for all the following reasons EXCEPT

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.

Describe the primary reasons a firm pursues increased diversification.

In the Chapter 6 Strategic Focus, the Publicis Groupe has three major groups of businesses, each in a highly related but unique market area: advertising, media, and digital. This form of diversification strategy is known as related linked.

One method of facilitating the transfer of competencies between firms is to

Multipoint competition occurs when

What is the similarity between high-technology firms and service-based firms that makes them risky as restructuring candidates?

Which acquisition would be considered the LEAST related?

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

The "conglomerate discount" occurs in large, highly diversified businesses and results from analysts not knowing how to value the vast array of large businesses with complex financial reports.

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

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

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.

Extensive outsourcing contributes to the firm's core competencies and helps the firm transfer those competencies to other business units in the diversified firm.

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.