MGMT 425 EXAMS TEST PAPER ANSWERS AND
QUESTIONS SET A+
✔✔GE was diversified and manages businesses that have only a few links between
them. This corporate-level strategy is best described as diversification.
a. related constrained
b. related linked
c. unrelated
d. conglomerate - ✔✔B
✔✔THE Ultimate test of the value of a corporate-level strategy is whether the:
a. corporation earns a great deal of money.
b. top management team is satisfied with the corporation's performance.
c. businesses in the portfolio are worth more under the management of the company in
question than they would be under any other ownership.
d. businesses in the portfolio increase the firm's financial returns. - ✔✔C
✔✔USUALLY a company is classified as a single business firm when revenues
generated by the dominant business are greater than _______ percent.
a. 99
b. 95
c. 90
d. 70 - ✔✔B
✔✔THE More sharing of resources and activities among businesses, the more
______________ diversification.
a. linked
b. constrained
c. integrated
d. intense - ✔✔B
,✔✔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?
a. single business
b. dominant business
c. related constrained
d. related linked - ✔✔B
✔✔THE Publicis Groupe has three major groups of business (advertising, media, and
digital) that share resources and capabilities. Publicis Groupe is using a
_____________ diversification strategy.
a. related linked
b. related constrained
c. unrelated
d. dominant - ✔✔B
✔✔THE Term "conglomerates" refers to firms using the __________________
diversification strategy.
a. unrelated
b. related constrained
c. related linked
d. global - ✔✔A
✔✔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. dominant business
b. related constrained
c. related linked
d. unrelated - ✔✔D
✔✔FIRMS Use corporate-level diversification strategies for all the following reasons
EXCEPT:
a. value-creating.
b. value-neutral.
c. value-reducing.
d. value-diversifying. - ✔✔D
✔✔WHICH of the following is a value-reducing reason for diversification?
a. enhancing the strategic competitiveness of the entire company
b. expanding the business portfolio in order to diversify managerial employment risk
c. gaining market power relative to competitors
, d. conforming to antitrust regulation - ✔✔B
✔✔AN Office management firm has developed a system for efficiently organizing small
medical and dental practices both through proprietary software and through unique
training programs for staff. It has recently acquired a firm specializing in providing
management services for veterinary practices. The office management firm is hoping to:
a. achieve economies of scope.
b. implement vertical integration.
c. achieve financial economies through an unrelated acquisition.
d. acquire specialized talent from the veterinary management company. - ✔✔A
✔✔OPERATIONAL relatedness is created by __________ of _____________.
a. sharing; core competencies.
b. sharing; activities.
c. transferring; core competencies.
d. transferring; activities. - ✔✔B
✔✔PROCTER & Gamble (P&G) has a paper towel and baby diaper business, both of
which use paper products. The firm's paper production plant produces inputs for both
businesses. P&G most likely uses the _______________ diversification strategy to
create ___________ .
a. related constrained; operational relatedness.
b. related linked; corporate relatedness.
c. related constrained; corporate relatedness.
d. related linked; operational relatedness. - ✔✔A
✔✔RESEARCH Has shown that horizontal acquisitions:
a. tend to have disappointing financial results in the long run.
b. are being replaced by virtual acquisitions.
c. result in lower levels of performance than unrelated acquisitions.
d. are able to use activity sharing to successfully create economies of scope. - ✔✔D
✔✔A Noted professional art academy has founded an "artists and friends" travel
company specializing in tours for artists to scenic locales, using its faculty as traveling
teachers. In addition, the art academy has purchased a framing company to both make
frames for academy art works, but also to sell museum-quality framing services to the
public. The art academy is engaging in ________________ diversification based on
relatedness.
a. operational
b. corporate
c. intellectual
d. constrained - ✔✔A
✔✔THE _________________ diversification strategy creates value in two ways. First,
since the core competence has already been developed in one business, the firm does
QUESTIONS SET A+
✔✔GE was diversified and manages businesses that have only a few links between
them. This corporate-level strategy is best described as diversification.
a. related constrained
b. related linked
c. unrelated
d. conglomerate - ✔✔B
✔✔THE Ultimate test of the value of a corporate-level strategy is whether the:
a. corporation earns a great deal of money.
b. top management team is satisfied with the corporation's performance.
c. businesses in the portfolio are worth more under the management of the company in
question than they would be under any other ownership.
d. businesses in the portfolio increase the firm's financial returns. - ✔✔C
✔✔USUALLY a company is classified as a single business firm when revenues
generated by the dominant business are greater than _______ percent.
a. 99
b. 95
c. 90
d. 70 - ✔✔B
✔✔THE More sharing of resources and activities among businesses, the more
______________ diversification.
a. linked
b. constrained
c. integrated
d. intense - ✔✔B
,✔✔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?
a. single business
b. dominant business
c. related constrained
d. related linked - ✔✔B
✔✔THE Publicis Groupe has three major groups of business (advertising, media, and
digital) that share resources and capabilities. Publicis Groupe is using a
_____________ diversification strategy.
a. related linked
b. related constrained
c. unrelated
d. dominant - ✔✔B
✔✔THE Term "conglomerates" refers to firms using the __________________
diversification strategy.
a. unrelated
b. related constrained
c. related linked
d. global - ✔✔A
✔✔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. dominant business
b. related constrained
c. related linked
d. unrelated - ✔✔D
✔✔FIRMS Use corporate-level diversification strategies for all the following reasons
EXCEPT:
a. value-creating.
b. value-neutral.
c. value-reducing.
d. value-diversifying. - ✔✔D
✔✔WHICH of the following is a value-reducing reason for diversification?
a. enhancing the strategic competitiveness of the entire company
b. expanding the business portfolio in order to diversify managerial employment risk
c. gaining market power relative to competitors
, d. conforming to antitrust regulation - ✔✔B
✔✔AN Office management firm has developed a system for efficiently organizing small
medical and dental practices both through proprietary software and through unique
training programs for staff. It has recently acquired a firm specializing in providing
management services for veterinary practices. The office management firm is hoping to:
a. achieve economies of scope.
b. implement vertical integration.
c. achieve financial economies through an unrelated acquisition.
d. acquire specialized talent from the veterinary management company. - ✔✔A
✔✔OPERATIONAL relatedness is created by __________ of _____________.
a. sharing; core competencies.
b. sharing; activities.
c. transferring; core competencies.
d. transferring; activities. - ✔✔B
✔✔PROCTER & Gamble (P&G) has a paper towel and baby diaper business, both of
which use paper products. The firm's paper production plant produces inputs for both
businesses. P&G most likely uses the _______________ diversification strategy to
create ___________ .
a. related constrained; operational relatedness.
b. related linked; corporate relatedness.
c. related constrained; corporate relatedness.
d. related linked; operational relatedness. - ✔✔A
✔✔RESEARCH Has shown that horizontal acquisitions:
a. tend to have disappointing financial results in the long run.
b. are being replaced by virtual acquisitions.
c. result in lower levels of performance than unrelated acquisitions.
d. are able to use activity sharing to successfully create economies of scope. - ✔✔D
✔✔A Noted professional art academy has founded an "artists and friends" travel
company specializing in tours for artists to scenic locales, using its faculty as traveling
teachers. In addition, the art academy has purchased a framing company to both make
frames for academy art works, but also to sell museum-quality framing services to the
public. The art academy is engaging in ________________ diversification based on
relatedness.
a. operational
b. corporate
c. intellectual
d. constrained - ✔✔A
✔✔THE _________________ diversification strategy creates value in two ways. First,
since the core competence has already been developed in one business, the firm does
