SEVI 3013 Chapter 6 UPDATED Exam
Questions and CORRECT Answers
What should senior management's primary motivation be for implementing a diversification
strategy? - CORRECT ANSWER - to create shareholder value
______ is when a firm enters a different business in which it can benefit from leveraging core
competencies, sharing activities, or building market power. - CORRECT ANSWER - Related
diversification
______ refers to a firm's strategic resources that reflect the collective learning in the
organization. - CORRECT ANSWER - Core competencies
______ is when value-chain activities of two or more businesses are performed by only one of
the businesses. - CORRECT ANSWER - Sharing activities
While sharing activities may decrease costs, increase revenues, and enhance product
differentiation, it sometimes can have an unintended negative effect, such as ______. -
CORRECT ANSWER - lowered perceptions of the product's quality and prestige
The process of firms expanding their operations by entering new businesses is called ______. -
CORRECT ANSWER - diversification
______ refers to firms' abilities to profit through restricting or controlling supply to a market or
coordinating with other firms to reduce investment. - CORRECT ANSWER - Market power
Companies that implement a related diversification strategy may benefit from which of the
following? (Check all that apply.) - CORRECT ANSWER - horizontal relationships across
different businesses in the diversified corporation
economies of scope
leveraging core competencies and sharing activities
, ______ is the improvement in bargaining position relative to suppliers and customers. -
CORRECT ANSWER - Pooled negotiating power
A firm's core competencies include which of the following? (Check all that apply.) - CORRECT
ANSWER - Integrating multiple streams of technologies
Marketing diverse products and services
Coordinating diverse production skills
______ is an expansion or extension of the firm by integrating preceding or successive
production processes. - CORRECT ANSWER - Vertical integration
Sharing activities can potentially provide which of the following two payoffs? (Check all that
apply.) - CORRECT ANSWER - revenue enhancements
cost savings
Which of the following are ways that synergy is created through the use of unrelated
diversification? (Check all that apply.) - CORRECT ANSWER - The corporate office
contributes through parenting.
The corporate office adds value by allocating resources throughout the entire corporation to
optimize corporate profitability goals.
The parent company restructures the acquired business.
Firms pursuing differentiation strategies might engage in ______, such as using a shared order-
processing system. - CORRECT ANSWER - sharing activities
Which of the following are ways that parent companies create value through their management
expertise? (Check all that apply.) - CORRECT ANSWER - providing consulting on business
units' acquisitions, divestitures, and new internal development decisions
improving plans and budgets
providing central functions such as human resource management and procurement
Questions and CORRECT Answers
What should senior management's primary motivation be for implementing a diversification
strategy? - CORRECT ANSWER - to create shareholder value
______ is when a firm enters a different business in which it can benefit from leveraging core
competencies, sharing activities, or building market power. - CORRECT ANSWER - Related
diversification
______ refers to a firm's strategic resources that reflect the collective learning in the
organization. - CORRECT ANSWER - Core competencies
______ is when value-chain activities of two or more businesses are performed by only one of
the businesses. - CORRECT ANSWER - Sharing activities
While sharing activities may decrease costs, increase revenues, and enhance product
differentiation, it sometimes can have an unintended negative effect, such as ______. -
CORRECT ANSWER - lowered perceptions of the product's quality and prestige
The process of firms expanding their operations by entering new businesses is called ______. -
CORRECT ANSWER - diversification
______ refers to firms' abilities to profit through restricting or controlling supply to a market or
coordinating with other firms to reduce investment. - CORRECT ANSWER - Market power
Companies that implement a related diversification strategy may benefit from which of the
following? (Check all that apply.) - CORRECT ANSWER - horizontal relationships across
different businesses in the diversified corporation
economies of scope
leveraging core competencies and sharing activities
, ______ is the improvement in bargaining position relative to suppliers and customers. -
CORRECT ANSWER - Pooled negotiating power
A firm's core competencies include which of the following? (Check all that apply.) - CORRECT
ANSWER - Integrating multiple streams of technologies
Marketing diverse products and services
Coordinating diverse production skills
______ is an expansion or extension of the firm by integrating preceding or successive
production processes. - CORRECT ANSWER - Vertical integration
Sharing activities can potentially provide which of the following two payoffs? (Check all that
apply.) - CORRECT ANSWER - revenue enhancements
cost savings
Which of the following are ways that synergy is created through the use of unrelated
diversification? (Check all that apply.) - CORRECT ANSWER - The corporate office
contributes through parenting.
The corporate office adds value by allocating resources throughout the entire corporation to
optimize corporate profitability goals.
The parent company restructures the acquired business.
Firms pursuing differentiation strategies might engage in ______, such as using a shared order-
processing system. - CORRECT ANSWER - sharing activities
Which of the following are ways that parent companies create value through their management
expertise? (Check all that apply.) - CORRECT ANSWER - providing consulting on business
units' acquisitions, divestitures, and new internal development decisions
improving plans and budgets
providing central functions such as human resource management and procurement
