MGMT 5560 CH 8 & 9 EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026

MGMT 5560 CH 8 & 9 EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026 Which of the following is not a good strategic reason why a company that is already diversified may choose to broaden its business base by building positions in new related or unrelated businesses? - Answers Because it is desirable to make new acquisitions in order to complement and strengthen the market position and competitive capabilities of one or more of its present businesses Because rapidly changing conditions (either favorable or unfavorable) in one or more of a company's core businesses make it desirable to expand into other industries Because the company has an imbalance of cash cow and cash hog businesses Because the company's growth is sluggish and it needs the sales and profit boost that a new business can provide The top-level executive task of crafting a diversified company's overall or corporate strategy includes which of the following? - Answers Choosing which one of the five generic competitive strategies that each of the company's different businesses will purse Choosing the most appropriate value chain for each of the company's different businesses to implement and employ Specifying the type of competitive advantage that each different company business should pursue Picking new industries to enter and deciding on the means of entry Deciding whether to combine and merge all of the company's businesses into a single unified operation or to operate them as separate stand-alone divisions Which of the following is the best example of unrelated diversification? - Answers A producer of men's apparel acquiring a maker of golf equipment Assessments of the long-term attractiveness of each industry represented in a diversified company's lineup of businesses should be based on - Answers Selecting a set of industry attractiveness measures, weighting the importance of each measure, rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned importance weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain a weighted overall attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a groupWb Which one of the following is not among the strategic options for improving a diversified company's overall performance? - Answers Sticking closely with the existing business lineup and pursuing the opportunities these businesses present Broadening the company's business scope by making new acquisitions in new industries Restructuring the company's business lineup and putting a whole new face on the company's business makeup Implementing a common competitive strategy for all the company's business units and striving for the same competitive advantage Divesting certain businesses and retrenching to a narrower base of business operations Which of the following is not part of the procedure for evaluating the pluses and minuses of a diversified company's strategy and deciding what actions to take to improve the company's performance? - Answers Checking for conflicts/incompatibility among the competitive strategies of the company's different businesses Different businesses are said to be "unrelated" when - Answers they have dissimilar value chains containing no competitively useful cross-business relationships or strategic fits Diversifying into related businesses where competitively valuable strategic fit benefits can be captured and turned into a competitive advantage over business rivals whose operations do not offer comparable strategic-fit benefits - Answers is what fuels 1 + 1 = 3 gains in shareholder value--the necessary outcome for satisfying the better-off test and proving the business merit of a company's diversification effort Economies of scope - Answers are cost-saving efficiencies that stem directly from strategic fits along the value chains of related businesses Diversification becomes a prime strategic option for a single-business company in all but which one of the following situations? - Answers When a company has a greater number of resource/capability deficiencies than resource/capability strengths Which of the following is not one of the appeals of related diversification? - Answers It is particularly well-suited for minimizing business risk and capturing valuable industry attractiveness fits The difference between a "cash-cow" business and a "cash hog" business is that - Answers a cash cow business produces internal cash flows over and above what is needed to find operations and capital investment whereas the internal cash flows of a cash hog business are too small to fully fund its operating needs and capital requirements The nine-cell attractiveness-strength matrix provides strong logic for - Answers fully finding the resource needs of competitively strong businesses in attractive industries, investing selectively in businesses with intermediate positions on the grid, and getting rid of competitively weak businesses in unattractive industries unless they either generate sizable cash flows that the corporation can usefully deploy elsewhere or have important strategic value despite their competitive weakness For there to be reasonable expectations of producing added long-term shareholder value, a move to diversify into a new business must pass which of the following tests? - Answers The better-off test, the cost of entry test, and the industry attractiveness test Which of the following is not something that corporate executives committed to a strategy of unrelated diversification can do to aid efforts to achieve companywide financial results above and beyond what the individual businesses could achieve as stand-alone entities? - Answers Be shrewd in identifying opportunities to acquire new businesses that possess exceptionally good resource fits and/or that can significantly boost sales and market share by incorporating use fo the parent company's technological expertise A business unit's relative market share is - Answers calculated by dividing a business's percentage share of total industry sales volume by the percentage share held by its largest rival--it is a better indicator of a business's competitive strength than is a simple percentage measure of market share; this is because a company with a 15% market share is in a much stronger competitive position if its largest rival has a market share of 10% (which means its relative market share is 1.5) than it is if its largest rival has a 30% market share (in which case the company's relative market share is only 0.5) Which of the following are negatives or disadvantages of pursuing unrelated diversification strategies? - Answers No potential for competitive advantage beyond any benefits of corporate parenting and what each individual business can generate on its own Based on Figure 8.1, which of the following would not be something to look for in identifying a diversified company's strategy? - Answers Actions over the past few years to substitute global strategies for multi-country strategies in one or more business units Which of the following is the best example of related diversification? - Answers A producer of golf clubs and golf bags acquiring a maker of golf shoes and golf apparel