WPC 480 Final Exam Questions and
Answers
Which iiof iithe iifollowing iiis iithe iibest iidefinition iiof iicorporate iistrategy? ii- iiAnswers ii-A
iifirms iiattempt iito iigain iia iicompetitive iiadvantage iiwhile iioperating iiin iiseveral iidifferent
iiindustries iior iimarkets iisimultaneously.
by iidefinition, iiis iia iistrategy iifor iimanaging iiseveral iibusinesses iiwithin iithe iisame iifirm.
iiThe iihope iiis iialways iithat iithe iicombination iiof iibusinesses iiwill iiproduce iigreater iiprofits
iithan iithose iibusinesses iiwould iido iias iimultiple, iiseparate, iistandalone iifirms.
What iiis iimost iilikely iian iiexplanation iifor iiwhy iia iifirm iithat iihas iino iineed iifor iia
iicorporate iistrategy iiwill iihave iito iiengage iiin iicorporate iistrategy iiif iithe iifirm iiis
iisuccessful? ii- iiAnswers ii-The iifirm iiwill iibe iimotivated iito iigrow iibeyond iithe iisize iiof iia
iisingle iiindustry iior iimarket.
SBU iiis iian iiacronym. iiWhat iidoes iiit iistand iifor? ii- iiAnswers ii-strategic iibusiness iiunit
What iiis iian iiSBU? ii- iiAnswers ii-A iiseperate iiline iiof iibusiness iiwithin iia iifirm iithat iihas iiits
iiown iicompetitive iistrategy
Backward iiintegration ii- iiAnswers ii-Buying iisuppliers iialong iithe iivalue iichain
Forward iiintegration ii- iiAnswers ii-Purchasing iibuyers iialong iithe iivalue iichain
Related iidiversification ii- iiAnswers ii-creating iiSBU's iithat iioperate iiin iidifferent iimarkets,
iirequiring iisimilar iicapabilities
Unrelated iidiversification ii- iiAnswers ii-Creating iiSBU's iithat iioperate iiin iia iidifferent
iimarket iithat iiis iiloosely iiinterconnected iiwithin iithe iifirm
Diversification iipremium ii- iiAnswers ii-stock iimarkets iivalue iithe iifirm iiat iimore iithan iithe
iisum iiof iivalues iiof iiseparate iiSBUs
Diversification iidiscount ii- iiAnswers ii-stock iimarkets iivalue iithe iifirm iiat iiless iithan iithe
iisum iiof iivalues iiof iiseparate iiSBUs
A iiconglomerate iiis iia iicorporation iiwith iiSBUs iithat iiare iimoderately iirelated. ii- iiAnswers
ii-False, iifirms iiwith iivery iilittle iirelatedness iibetween iieach iiother iiare iirun iiby iithe iisame
iicompany.
, Relatedness iibetween iiSBUs iiin iia iicorporation iiis iigenerally iiassociated iiwith iilower
iiperformance iiand iigreater iirisk iiof iifailure iiof iithe iicorporate iistrategy. ii- iiAnswers ii-False
Which iiof iithe iifollowing iiis iithe iibest iiindicator iiof iithe iirelatedness iibetween iiSBU ii1 iiand
iiSBU ii2? ii- iiAnswers ii-Are iiSBU ii1 iiand iiSBU ii2 iicapable iiof iiswapping iimanagers iiin iia
iirelatively iishort iitime?
Relatedness iiis iia iiconcept iiin iistrategic iianalysis iithat iiraises iithe iiissue iiof iihow iicostly
iiit iiwould iibe iifor iia iisingle iifirm iito iimanage iiand iioperate iieffectively iitwo iibusinesses
iitogether.The iimore iirelated, iithe iiless iirisk iiand iidifficulty iifor iimanagers iito iibe iiin
iicharge iiof iiboth iifirms iibecause iithe iifirms iiare iivery iisimilar iiorganizations iifacing
iisimilar iiissues
In iicorporate iistrategy, iithere iiis iitwo iiseparate iitypes iiof iiintegration: iivertical iiintegration
iiand iicorporate iiintegration. iiWhat iiis iithe iibest iidefinition iiof iicorporate iiintegration? ii-
iiAnswers ii-The iidegree iito iiwhich iiSBUs iiare iiinterdependent iiupon iione iianother.
A iicorporate iistrategy iito iibe iisuccessful iimust iimake iimuch iimore iiprofits iiand/or iicreate
iimore iivalue iithan iiwhich iiof iithe iifollowing iibaseline iidefinitions iiof iivalue? ii- iiAnswers ii-
The iisum iiof iithe iivalue iiof iithe iiSBUs iias iiindependent iifirms.
With iia iiwell iidesigned iisystem iiof iigovernance iiit iiis iipossible iito iiessentially iieliminate
iiany iiprincipal-agent iiproblems iiof iiopportunism iibetween iishareholders iiand iitop
iimanagers iiof iithe iifirm. ii- iiAnswers ii-False
no iiincentive iisystem iiis iiperfect iiand iiin iibusiness iiorganizations, iithere iiare iibuilt-in
iiconflicts iibetween iimotivation
Adverse iiselection ii- iiAnswers ii-Choosing iian iiaction iithat iiis iisuboptimal iifor iia iifirms
iioverall iiinterest
Moral iihazard ii- iiAnswers ii-The iiincentive iifor iitaking iion iigreater iirisk iiwhen iiinvesting
iiother iipeoples iimoney
Opporotunism ii- iiAnswers ii-Consciously iipursuing iione's iiown iiinterests iiat iithe iiexpense
iiof iia iiprincipal iior iiemployer
Information iiAsymmetry ii- iiAnswers ii-Specialization iiin iithe iicorporation iileads iito
iimanagement iibeing iiunable iito iiverify iithe iiadvice iiand iidata iigiven iiby iia iispecialist
Externalities ii- iiAnswers ii-a iicost iior iidamage iidone iiby iithe iifirm iibut iisomeone iielse iiis
iiharmed iior iipaying iifor iiit
One iiway iito iireduce iithe iiproblem iiof iiopportunism iiby iitop iimanagers iiof iipublic
iicorporations iiis iiif iitop iimanagers iiare iicompensated iimostly iion iithe iilong-term iistock
iivalue iiof iithe iifirm. ii- iiAnswers ii-True, iiopportunism iiis iistealing iiby iian iiagent iifrom iitheir
iiprincipal
Answers
Which iiof iithe iifollowing iiis iithe iibest iidefinition iiof iicorporate iistrategy? ii- iiAnswers ii-A
iifirms iiattempt iito iigain iia iicompetitive iiadvantage iiwhile iioperating iiin iiseveral iidifferent
iiindustries iior iimarkets iisimultaneously.
by iidefinition, iiis iia iistrategy iifor iimanaging iiseveral iibusinesses iiwithin iithe iisame iifirm.
iiThe iihope iiis iialways iithat iithe iicombination iiof iibusinesses iiwill iiproduce iigreater iiprofits
iithan iithose iibusinesses iiwould iido iias iimultiple, iiseparate, iistandalone iifirms.
What iiis iimost iilikely iian iiexplanation iifor iiwhy iia iifirm iithat iihas iino iineed iifor iia
iicorporate iistrategy iiwill iihave iito iiengage iiin iicorporate iistrategy iiif iithe iifirm iiis
iisuccessful? ii- iiAnswers ii-The iifirm iiwill iibe iimotivated iito iigrow iibeyond iithe iisize iiof iia
iisingle iiindustry iior iimarket.
SBU iiis iian iiacronym. iiWhat iidoes iiit iistand iifor? ii- iiAnswers ii-strategic iibusiness iiunit
What iiis iian iiSBU? ii- iiAnswers ii-A iiseperate iiline iiof iibusiness iiwithin iia iifirm iithat iihas iiits
iiown iicompetitive iistrategy
Backward iiintegration ii- iiAnswers ii-Buying iisuppliers iialong iithe iivalue iichain
Forward iiintegration ii- iiAnswers ii-Purchasing iibuyers iialong iithe iivalue iichain
Related iidiversification ii- iiAnswers ii-creating iiSBU's iithat iioperate iiin iidifferent iimarkets,
iirequiring iisimilar iicapabilities
Unrelated iidiversification ii- iiAnswers ii-Creating iiSBU's iithat iioperate iiin iia iidifferent
iimarket iithat iiis iiloosely iiinterconnected iiwithin iithe iifirm
Diversification iipremium ii- iiAnswers ii-stock iimarkets iivalue iithe iifirm iiat iimore iithan iithe
iisum iiof iivalues iiof iiseparate iiSBUs
Diversification iidiscount ii- iiAnswers ii-stock iimarkets iivalue iithe iifirm iiat iiless iithan iithe
iisum iiof iivalues iiof iiseparate iiSBUs
A iiconglomerate iiis iia iicorporation iiwith iiSBUs iithat iiare iimoderately iirelated. ii- iiAnswers
ii-False, iifirms iiwith iivery iilittle iirelatedness iibetween iieach iiother iiare iirun iiby iithe iisame
iicompany.
, Relatedness iibetween iiSBUs iiin iia iicorporation iiis iigenerally iiassociated iiwith iilower
iiperformance iiand iigreater iirisk iiof iifailure iiof iithe iicorporate iistrategy. ii- iiAnswers ii-False
Which iiof iithe iifollowing iiis iithe iibest iiindicator iiof iithe iirelatedness iibetween iiSBU ii1 iiand
iiSBU ii2? ii- iiAnswers ii-Are iiSBU ii1 iiand iiSBU ii2 iicapable iiof iiswapping iimanagers iiin iia
iirelatively iishort iitime?
Relatedness iiis iia iiconcept iiin iistrategic iianalysis iithat iiraises iithe iiissue iiof iihow iicostly
iiit iiwould iibe iifor iia iisingle iifirm iito iimanage iiand iioperate iieffectively iitwo iibusinesses
iitogether.The iimore iirelated, iithe iiless iirisk iiand iidifficulty iifor iimanagers iito iibe iiin
iicharge iiof iiboth iifirms iibecause iithe iifirms iiare iivery iisimilar iiorganizations iifacing
iisimilar iiissues
In iicorporate iistrategy, iithere iiis iitwo iiseparate iitypes iiof iiintegration: iivertical iiintegration
iiand iicorporate iiintegration. iiWhat iiis iithe iibest iidefinition iiof iicorporate iiintegration? ii-
iiAnswers ii-The iidegree iito iiwhich iiSBUs iiare iiinterdependent iiupon iione iianother.
A iicorporate iistrategy iito iibe iisuccessful iimust iimake iimuch iimore iiprofits iiand/or iicreate
iimore iivalue iithan iiwhich iiof iithe iifollowing iibaseline iidefinitions iiof iivalue? ii- iiAnswers ii-
The iisum iiof iithe iivalue iiof iithe iiSBUs iias iiindependent iifirms.
With iia iiwell iidesigned iisystem iiof iigovernance iiit iiis iipossible iito iiessentially iieliminate
iiany iiprincipal-agent iiproblems iiof iiopportunism iibetween iishareholders iiand iitop
iimanagers iiof iithe iifirm. ii- iiAnswers ii-False
no iiincentive iisystem iiis iiperfect iiand iiin iibusiness iiorganizations, iithere iiare iibuilt-in
iiconflicts iibetween iimotivation
Adverse iiselection ii- iiAnswers ii-Choosing iian iiaction iithat iiis iisuboptimal iifor iia iifirms
iioverall iiinterest
Moral iihazard ii- iiAnswers ii-The iiincentive iifor iitaking iion iigreater iirisk iiwhen iiinvesting
iiother iipeoples iimoney
Opporotunism ii- iiAnswers ii-Consciously iipursuing iione's iiown iiinterests iiat iithe iiexpense
iiof iia iiprincipal iior iiemployer
Information iiAsymmetry ii- iiAnswers ii-Specialization iiin iithe iicorporation iileads iito
iimanagement iibeing iiunable iito iiverify iithe iiadvice iiand iidata iigiven iiby iia iispecialist
Externalities ii- iiAnswers ii-a iicost iior iidamage iidone iiby iithe iifirm iibut iisomeone iielse iiis
iiharmed iior iipaying iifor iiit
One iiway iito iireduce iithe iiproblem iiof iiopportunism iiby iitop iimanagers iiof iipublic
iicorporations iiis iiif iitop iimanagers iiare iicompensated iimostly iion iithe iilong-term iistock
iivalue iiof iithe iifirm. ii- iiAnswers ii-True, iiopportunism iiis iistealing iiby iian iiagent iifrom iitheir
iiprincipal
