GEB 4890 EXAM 2 EXAM SCRIPT 2026 FULL
EVALUATION VERIFIED A+
◉ Internal Capital Market Answer: Allows a diversified company to
add value by shifting capital from business units generating free
cash flow to those needing additional capital to expand and realize
their growth potential.
◉ Portfolio Approach Answer: ensuring financial fit among a firm's
businesses is based on the fact that different businesses have
different cash flow and investment characteristics.
◉ Cash Hog Business Answer: Generates cash flows that are too
small to fully fund its growth; it thereby requires cash infusions to
provide additional working capital and finance new capital
investment.
◉ Cash Cow Business Answer: Generates cash flows over and above
its internal requirements, thus providing a corporate parent with
funds for investing in cash hog businesses, financing new
acquisitions, or paying dividends.
◉ Spin-Off Answer: Is an independent company that was created
when a corporate parent divests a business either by selling shares
,to the public via an initial public offering or by distributing shares in
the new company to shareholders of the corporate parent.
◉ Companywide Restructuring (corporate restructuring) Answer:
Involves making major changes in a diversified company by
divesting some businesses and/or acquiring others, so as to put a
whole new face on the company's business lineup.
◉ Describe the distinguishing characteristics of a multinational
diversification strategy. Answer:
◉ Define business ethics and explain what it involves. Answer:
Business ethics deals with the application of general ethical
principles to the actions and decisions of businesses and the conduct
of their personnel.
◉ Ethical Universalism Answer: The most important concepts of
what is right and wrong are universal and transcend culture, society,
and religion
Results in a set of Universal ethical standards that apply to members
of all societies, all companies, and all businesspeople
Sets limits and puts boundaries on ethical behavior
, ◉ Ethical Relativism Answer: Differing religious beliefs, customs and
behavioral norms across countries and cultures give rise to multiple
sets of standards concerning what is ethically right or wrong.
What is ethical or unethical can depend on the prevailing local
ethical standards and can vary from one nation to another
There can be multiple sets of ethical standards
There is no one-size-fits-all set of ethical norms
◉ Integrative Social Contracts Theory Answer: Provides a middle
position
The ethical standards of a company should try to uphold govern by
both:
A common universal set of ethical standards that apply everywhere
Ethical standards that vary according to local custom (I.e., cultures,
traditions, and shared values)
The more stringent standards should always take precedence
◉ Explain why the notions of right and wrong, ethical and unethical,
and moral and immoral are more complicated when competing in
global markets. Answer: Some notions of right and wrong are
universal while other are not (universalism vs. Relativism)
Cross-culture variability in ethical standards
Determining what is ethical when local standards vary
EVALUATION VERIFIED A+
◉ Internal Capital Market Answer: Allows a diversified company to
add value by shifting capital from business units generating free
cash flow to those needing additional capital to expand and realize
their growth potential.
◉ Portfolio Approach Answer: ensuring financial fit among a firm's
businesses is based on the fact that different businesses have
different cash flow and investment characteristics.
◉ Cash Hog Business Answer: Generates cash flows that are too
small to fully fund its growth; it thereby requires cash infusions to
provide additional working capital and finance new capital
investment.
◉ Cash Cow Business Answer: Generates cash flows over and above
its internal requirements, thus providing a corporate parent with
funds for investing in cash hog businesses, financing new
acquisitions, or paying dividends.
◉ Spin-Off Answer: Is an independent company that was created
when a corporate parent divests a business either by selling shares
,to the public via an initial public offering or by distributing shares in
the new company to shareholders of the corporate parent.
◉ Companywide Restructuring (corporate restructuring) Answer:
Involves making major changes in a diversified company by
divesting some businesses and/or acquiring others, so as to put a
whole new face on the company's business lineup.
◉ Describe the distinguishing characteristics of a multinational
diversification strategy. Answer:
◉ Define business ethics and explain what it involves. Answer:
Business ethics deals with the application of general ethical
principles to the actions and decisions of businesses and the conduct
of their personnel.
◉ Ethical Universalism Answer: The most important concepts of
what is right and wrong are universal and transcend culture, society,
and religion
Results in a set of Universal ethical standards that apply to members
of all societies, all companies, and all businesspeople
Sets limits and puts boundaries on ethical behavior
, ◉ Ethical Relativism Answer: Differing religious beliefs, customs and
behavioral norms across countries and cultures give rise to multiple
sets of standards concerning what is ethically right or wrong.
What is ethical or unethical can depend on the prevailing local
ethical standards and can vary from one nation to another
There can be multiple sets of ethical standards
There is no one-size-fits-all set of ethical norms
◉ Integrative Social Contracts Theory Answer: Provides a middle
position
The ethical standards of a company should try to uphold govern by
both:
A common universal set of ethical standards that apply everywhere
Ethical standards that vary according to local custom (I.e., cultures,
traditions, and shared values)
The more stringent standards should always take precedence
◉ Explain why the notions of right and wrong, ethical and unethical,
and moral and immoral are more complicated when competing in
global markets. Answer: Some notions of right and wrong are
universal while other are not (universalism vs. Relativism)
Cross-culture variability in ethical standards
Determining what is ethical when local standards vary
