Test Bank – Essentials of Strategic Management: The
Quest for Competitive Advantage | Chapter 8
Diversification into new industries deserves strong consideration when
a multibusiness company encounters enhanced market opportunities and increasing sales in its
principal business.
a single-business company needs to develop a multi-line strategy.
a single-business company needs to develop a corporate-wide strategy.
a single-business company can achieve profitable growth opportunities in its present industry.
a single-business company encounters diminishing market opportunities and stagnating sales in its
principal business.
So long as a single-business company can achieve profitable growth opportunities in its present industry,
there is no urgency to pursue diversification. However, a company’s opportunities for growth can become
limited if the industry becomes competitively unattractive. Thus, diversifying into new industries always
merits strong consideration whenever a single-business company encounters diminishing market
opportunities and stagnating sales in its principal business.
, Award: 1.00 point
2.
Diversification into a new industry can not be considered a success unless it results in
enhanced industry attractiveness.
enhanced shareholder value.
boosting performance of the existing business.
lowered cost of entry.
diminishing market opportunities and stagnating sales in a firm’s principal business.
Crafting a diversified company’s overall corporate strategy is aimed at creating enhanced shareholder
value, that is, value that shareholders could not capture on their own by spreading their investments
across the stocks of companies in different industries.
Imagine you are the CEO of a regional ridesharing company that is considering diversification into grocery
and meal delivery services. How would you determine whether or not your diversification strategy would
be successful?
Diversification would result in increased ease of entry into new market locations.
Diversification would result in enhanced shareholder value.
, Award: 1.00 point
Diversification would result in enhanced industry attractiveness.
Diversification would result in increased performance of the existing business.
Diversification would result in increased switching costs for customers.
Crafting a diversified company’s overall corporate strategy is aimed at creating enhanced shareholder
value, that is, value that shareholders could not capture on their own by spreading their investments
across the stocks of companies in different industries.
4.
Diversification merits strong consideration whenever a single-business company
has integrated backward and forward as far as it can.
faces diminishing market opportunities and stagnating sales in its principal business.
has achieved industry leadership in its main line of business.
encounters declining profits in its mainstay business.
faces strong competition and is struggling to earn a good profit.
Diversifying into new industries always merits strong consideration whenever a single-business company
encounters diminishing market opportunities and stagnating sales in its principal business.
Diversification ought to be considered when a
company’s profits are being squeezed, and it needs to increase its net profit margins and return on
investment.
, Award: 1.00 point
company lacks sustainable competitive advantage in its present business.
company begins to encounter diminishing growth prospects in its mainstay business.
company has run out of ways to achieve a distinctive competence in its present business.
company is under the gun to create a more attractive and cost-efficient value chain.
Diversifying into new industries always merits strong consideration whenever a single-business company
encounters diminishing market opportunities and stagnating sales in its principal business.
Quest for Competitive Advantage | Chapter 8
Diversification into new industries deserves strong consideration when
a multibusiness company encounters enhanced market opportunities and increasing sales in its
principal business.
a single-business company needs to develop a multi-line strategy.
a single-business company needs to develop a corporate-wide strategy.
a single-business company can achieve profitable growth opportunities in its present industry.
a single-business company encounters diminishing market opportunities and stagnating sales in its
principal business.
So long as a single-business company can achieve profitable growth opportunities in its present industry,
there is no urgency to pursue diversification. However, a company’s opportunities for growth can become
limited if the industry becomes competitively unattractive. Thus, diversifying into new industries always
merits strong consideration whenever a single-business company encounters diminishing market
opportunities and stagnating sales in its principal business.
, Award: 1.00 point
2.
Diversification into a new industry can not be considered a success unless it results in
enhanced industry attractiveness.
enhanced shareholder value.
boosting performance of the existing business.
lowered cost of entry.
diminishing market opportunities and stagnating sales in a firm’s principal business.
Crafting a diversified company’s overall corporate strategy is aimed at creating enhanced shareholder
value, that is, value that shareholders could not capture on their own by spreading their investments
across the stocks of companies in different industries.
Imagine you are the CEO of a regional ridesharing company that is considering diversification into grocery
and meal delivery services. How would you determine whether or not your diversification strategy would
be successful?
Diversification would result in increased ease of entry into new market locations.
Diversification would result in enhanced shareholder value.
, Award: 1.00 point
Diversification would result in enhanced industry attractiveness.
Diversification would result in increased performance of the existing business.
Diversification would result in increased switching costs for customers.
Crafting a diversified company’s overall corporate strategy is aimed at creating enhanced shareholder
value, that is, value that shareholders could not capture on their own by spreading their investments
across the stocks of companies in different industries.
4.
Diversification merits strong consideration whenever a single-business company
has integrated backward and forward as far as it can.
faces diminishing market opportunities and stagnating sales in its principal business.
has achieved industry leadership in its main line of business.
encounters declining profits in its mainstay business.
faces strong competition and is struggling to earn a good profit.
Diversifying into new industries always merits strong consideration whenever a single-business company
encounters diminishing market opportunities and stagnating sales in its principal business.
Diversification ought to be considered when a
company’s profits are being squeezed, and it needs to increase its net profit margins and return on
investment.
, Award: 1.00 point
company lacks sustainable competitive advantage in its present business.
company begins to encounter diminishing growth prospects in its mainstay business.
company has run out of ways to achieve a distinctive competence in its present business.
company is under the gun to create a more attractive and cost-efficient value chain.
Diversifying into new industries always merits strong consideration whenever a single-business company
encounters diminishing market opportunities and stagnating sales in its principal business.
