Strategic Management Chapter 6 Test
bank Exam Questions with Complete
Solutions
Whenever an organization diversifies, it represents investing a stockholder's funds in a
way in which the individual investor is unable. True or false? - Answer-false
Diversification that results in strengthening the value chain and increasing competitive
advantages is the best possible example of investing stockholders' funds in a way that
individual investors cannot. true or false? - Answer-true
When firms diversify into unrelated businesses, the primary potential benefits are
horizontal relationships, i.e. businesses sharing tangible and intangible resources. true
or false? - Answer-false
a newly acquired business must always have products that are similar to the existing
businesses' products to benefit from the corporation's core competence. true or false? -
Answer-false
sharing activities across business units can provide two primary benefits cost savings
and revenue enhancements. true or false? - Answer-true
sharing activities among business units can have a negative effect on a given
business's differentiation. true or false? - Answer-true
market power refers to cost savings from leveraging core competencies or sharing
activities among the businesses in a corporation. true or false? - Answer-false
The two principle means by which firms achieve synergy through market power are
pooled negotiating power and corporate parenting. true or false? - Answer-false
similar businesses working together or the affiliation of a business with a strong parent
can strengthen a firm's bargaining position relative to suppliers and customers. true or
false? - Answer-true
a firm that incorporates more processes toward the original source of raw materials is
an example of forward integration. true or false? - Answer-false
a publishing company that purchases a chain of bookstores to sell its books is an
example of unrelated diversification. true or false? - Answer-false
, one of the risks of vertical integration is that they may be problems associated with
unbalanced capacities or unfilled demands along a firm's value chain. true or false? -
Answer-true
vertical integration should be undertaken when demand for the organization's products
is very unstable. true or false? - Answer-false
market transactions do not involve transaction costs. true or false? - Answer-false
vertical integration is attractive when market transaction costs are higher than internal
admin costs. true or false? - Answer-true
according to the text, the 2 main sources of synergy is unrelated diversification are
parenting and financial synergies via portfolio management. true or false? - Answer-true
restructuring requires the corporate office to find either poorly performing firms with
unrealized potential or firms in industries on the threshold of significant, positive change.
true or false? - Answer-true
portfolio management should be considered as the primary basis for formulating
corporate level strategies. true or false? - Answer-false
portfolio management matrices generally costs of 2 axes that reflect industry or market
growth and the market share of a business. true or false? - Answer-true
the acquisition of 2 or more counter cyclical businesses is an example of using
diversification to reduce risk. true or false? - Answer-true
an advantage of mergers and acquisitions is that the can enable a firm to rapidly enter
new product markets. true or false? - Answer-true
among the disadvantages of acquisitions are the expensive premiums that are
frequently paid to acquire a business. true or false? - Answer-true
through joint ventures, firms can directly acquire the assets and competencies of other
firms. true or false? - Answer-false
the potential advantages of strategic alliances and joint ventures include entering new
markets as will as developing and diffusing new technologies. true or false? - Answer-
true
for strategic alliances to be effective, reliance on written contracts to delimit
responsibilities and enforce compliance is vital. true or false? - Answer-false
an advantage of a firm entering into a strategic alliance is that it does not have to share
the wealth with is partners. true or false? - Answer-false
bank Exam Questions with Complete
Solutions
Whenever an organization diversifies, it represents investing a stockholder's funds in a
way in which the individual investor is unable. True or false? - Answer-false
Diversification that results in strengthening the value chain and increasing competitive
advantages is the best possible example of investing stockholders' funds in a way that
individual investors cannot. true or false? - Answer-true
When firms diversify into unrelated businesses, the primary potential benefits are
horizontal relationships, i.e. businesses sharing tangible and intangible resources. true
or false? - Answer-false
a newly acquired business must always have products that are similar to the existing
businesses' products to benefit from the corporation's core competence. true or false? -
Answer-false
sharing activities across business units can provide two primary benefits cost savings
and revenue enhancements. true or false? - Answer-true
sharing activities among business units can have a negative effect on a given
business's differentiation. true or false? - Answer-true
market power refers to cost savings from leveraging core competencies or sharing
activities among the businesses in a corporation. true or false? - Answer-false
The two principle means by which firms achieve synergy through market power are
pooled negotiating power and corporate parenting. true or false? - Answer-false
similar businesses working together or the affiliation of a business with a strong parent
can strengthen a firm's bargaining position relative to suppliers and customers. true or
false? - Answer-true
a firm that incorporates more processes toward the original source of raw materials is
an example of forward integration. true or false? - Answer-false
a publishing company that purchases a chain of bookstores to sell its books is an
example of unrelated diversification. true or false? - Answer-false
, one of the risks of vertical integration is that they may be problems associated with
unbalanced capacities or unfilled demands along a firm's value chain. true or false? -
Answer-true
vertical integration should be undertaken when demand for the organization's products
is very unstable. true or false? - Answer-false
market transactions do not involve transaction costs. true or false? - Answer-false
vertical integration is attractive when market transaction costs are higher than internal
admin costs. true or false? - Answer-true
according to the text, the 2 main sources of synergy is unrelated diversification are
parenting and financial synergies via portfolio management. true or false? - Answer-true
restructuring requires the corporate office to find either poorly performing firms with
unrealized potential or firms in industries on the threshold of significant, positive change.
true or false? - Answer-true
portfolio management should be considered as the primary basis for formulating
corporate level strategies. true or false? - Answer-false
portfolio management matrices generally costs of 2 axes that reflect industry or market
growth and the market share of a business. true or false? - Answer-true
the acquisition of 2 or more counter cyclical businesses is an example of using
diversification to reduce risk. true or false? - Answer-true
an advantage of mergers and acquisitions is that the can enable a firm to rapidly enter
new product markets. true or false? - Answer-true
among the disadvantages of acquisitions are the expensive premiums that are
frequently paid to acquire a business. true or false? - Answer-true
through joint ventures, firms can directly acquire the assets and competencies of other
firms. true or false? - Answer-false
the potential advantages of strategic alliances and joint ventures include entering new
markets as will as developing and diffusing new technologies. true or false? - Answer-
true
for strategic alliances to be effective, reliance on written contracts to delimit
responsibilities and enforce compliance is vital. true or false? - Answer-false
an advantage of a firm entering into a strategic alliance is that it does not have to share
the wealth with is partners. true or false? - Answer-false
