WPC 480 CHAPTER 6 QUIZ WITH 100% CORRECT ANSWERS ALREADY GRADED A+.

a How does diversification and firm size impact top managers of a firm? a. As a firm diversifies, its size increases, as does executive compensation. b. As a firm diversifies, its size decreases, as does executive compensation. c. As a firm diversifies, its size increases, while executive compensation decreases. d. As a firm diversifies, its size decreases, while executive compensation increases. a External investors allocate capital by taking stakes in businesses with high growth and profitability potential. Which of the following is a disadvantage for external investors? a. Limited access to information b. Cannot estimate the performance of individual businesses c. Unlimited access to information d. Can understand the operational dynamics in large organizations a Sports Inc. has developed a shoe to compete with Air Jordans. In order to keep up with competitors and minimize competitor market power, the firm decides to sell branded sports equipment as well. By introducing another new business so soon outside of its shoe products, the firm stands to lose value. Sports Inc.'s reason for diversifying itself is to _____ by acquiring a _____. a. neutralize another firm's advantage; similar distribution outlet b. decrease another firm's advantage; similar distribution outlet c. increase its value; similar distribution outlet as a competitor d. decrease another firm's value; different distribution outlet a Typically, a diversification strategy is used to _____ the firm's value by _____ its overall performance. a. increase; improving b. maintain; improving c. decrease; improving d. increase; decreasing a Which of the following is a reason(s) that keeps managers from selfishly diversifying the firm for higher compensation? a. Concerns for their reputation and strong managerial talent market b. Concerns for their reputation and weak managerial talent market c. Fear that the firm would lose value d. To avoid the responsibility of a more highly complex firm d A popular TV network, QTV, wishes to gain a competitive advantage by managing several businesses from its corporate headquarters. Among its goals, QTV hopes to acquire its competitor, RTV, in the process. In this instance, QTV is using which type of strategy? a. Business-level strategy b. Network-level strategy c. Global-level strategy d. Corporate-level strategy b Turtlecreek owns a high-end grocery chain, a high-end outdoor gear chain, and a sporting goods chain. Its retail businesses are unrelated; however, the firm hopes to gain an advantage over its competitors by associating its perceived luxury brand with each business. By selecting and managing these various businesses, Turtlecreek is implementing a _____ strategy. a. business-level b. corporate-level c. firm-level d. small-business b What are the two ways an unrelated diversification strategy can create value through financial economies? a. Efficient external capital allocations and the restructuring of acquired allocations b. Efficient internal capital allocations and the restructuring of acquired assets c. Efficient external capital allocations and the restructuring of acquired assets d. Inefficient internal capital allocations and the restructuring of acquired assets d Which of the following would be a motive for top-level executives to diversify their firm beyond value-creating and value-neutral levels? a. Decreased compensation and reduction of managerial risk b. Pursuit of a managerial challenge c. Interest in a promotion to a board position d. Increased compensation and reduced managerial risk b A secondhand computer retailer is often mistaken for an IT-help business. As a result, tech-savvy employees of the retailer are often fixing the customers' computer issues when they come into the store. The firm that owns the secondhand computer retailer has decided to diversify and open computer repair shops selling IT services. The retailer is diversifying on the basis of employee knowledge, which is considered a(n) _____ resource. a. tangible b. intangible c. nonsubstitutable d. rare