MBA 621 Midterm Study | 2025 -2026 LATEST UPDATED | COMPREHENSIVE QUESTIONS
WITH 100% RATED ANSWERS | GUARANTEED TO PASS
The main difference between the related constrained level of diversification and the related
linked level of diversification is:
A) the percentage of total organizational profitability that comes from the dominant business
B) the level of resources and activities shared among the businesses
C) whether the diversification is vertical or horizontal
D) whether the diversification is value-creating or value-neutral B) the level of resources and
activities shared among the businesses
The term "conglomerates" refers to firms using the ____ diversification strategy.
A) unrelated
B) related constrained
C) related linked
D) global A) unrelated
Firms use corporate-level diversification strategies for all the following reasons EXCEPT
a. value-creating
b. value-neutral
c. value-reducing
d. value-diversifying d. value-diversifying
,Which of the following is a value-reducing reason for diversification?
A) enhancing the strategic competitiveness of the entire company
B) expanding the business portfolio in order to diversify managerial employment risk
C) gaining market power relative to competitors
D) conforming to antitrust regulation B) expanding the business portfolio in order to
diversify managerial employment risk
Acquisitions to increase market power require that the firm have a(n) ___ diversification
strategy.
A) unrelated
B) related
C) dominant-business
D) single-business B) related
Backward integration occurs when a company:
A) produces its own inputs
B) owns its own source of distribution of outputs
C) is concentrated in a single industry
D) is divesting unrelated business A) produces its own inputs
Which type of diversification is most likely to create value through financial economies?
,a. related constrained
b. operational and corporate relatedness
c. unrelated
d. related linked c. unrelated
Large diversified businesses often face what is known as the "conglomerate discount." This
discount means that investors
a. understand that the financial efficiencies of this strategy automatically make these stocks
worth more than their current market valuation.
b. believe that the value of conglomerates is less than the value of the sum of their parts.
c. increase the expected future earnings of conglomerates.
d. have found that over time, conglomerates earn more than the component companies would
have earned independently. b. believe that the value of conglomerates is less than the value
of the sum of their parts.
Successful unrelated diversification through restructuring is typically accomplished by
a. focusing on mature, low-technology businesses.
b. a "random walk" of good luck in picking firms to buy.
c. seeking out high technology firms in high growth industries.
d. a top management team that is not constrained by pre-established ideas of how the firm's
portfolio should be developed. a. focusing on mature, low-technology businesses.
, The risk for firms that follow the unrelated diversification strategy in developed economies is
that
a. external investors tend to dump the stocks of conglomerates during economic downturns.
b. conglomerates are typically owned by one powerful entrepreneur and do not survive his/her
retirement or death.
c. government regulations, especially in Europe, have periodically forced the dissolution of
conglomerates.
d. competitors can imitate financial economies more easily than they imitate economies of
scope. d. competitors can imitate financial economies more easily than they imitate
economies of scope.
Among the value-neutral incentives to diversify, some come from the firm's external
environment while others are internal to the firm. External incentives to diversify include
a. the fact that other firms in an industry are diversifying.
b. pressure from stockholders who are demanding that the firm diversify.
c. changes in antitrust regulations and tax laws.
d. a firm's low performance. c. changes in antitrust regulations and tax laws.
The curvilinear relationship of corporate performance and diversification indicates that:
A) dominant-business corporate strategies tend to be higher performing than related
constrained or unrelated business strategies
B) the highest performing business strategy is related constrained diversification
C) the less related the businesses acquired, the higher performing the organization
WITH 100% RATED ANSWERS | GUARANTEED TO PASS
The main difference between the related constrained level of diversification and the related
linked level of diversification is:
A) the percentage of total organizational profitability that comes from the dominant business
B) the level of resources and activities shared among the businesses
C) whether the diversification is vertical or horizontal
D) whether the diversification is value-creating or value-neutral B) the level of resources and
activities shared among the businesses
The term "conglomerates" refers to firms using the ____ diversification strategy.
A) unrelated
B) related constrained
C) related linked
D) global A) unrelated
Firms use corporate-level diversification strategies for all the following reasons EXCEPT
a. value-creating
b. value-neutral
c. value-reducing
d. value-diversifying d. value-diversifying
,Which of the following is a value-reducing reason for diversification?
A) enhancing the strategic competitiveness of the entire company
B) expanding the business portfolio in order to diversify managerial employment risk
C) gaining market power relative to competitors
D) conforming to antitrust regulation B) expanding the business portfolio in order to
diversify managerial employment risk
Acquisitions to increase market power require that the firm have a(n) ___ diversification
strategy.
A) unrelated
B) related
C) dominant-business
D) single-business B) related
Backward integration occurs when a company:
A) produces its own inputs
B) owns its own source of distribution of outputs
C) is concentrated in a single industry
D) is divesting unrelated business A) produces its own inputs
Which type of diversification is most likely to create value through financial economies?
,a. related constrained
b. operational and corporate relatedness
c. unrelated
d. related linked c. unrelated
Large diversified businesses often face what is known as the "conglomerate discount." This
discount means that investors
a. understand that the financial efficiencies of this strategy automatically make these stocks
worth more than their current market valuation.
b. believe that the value of conglomerates is less than the value of the sum of their parts.
c. increase the expected future earnings of conglomerates.
d. have found that over time, conglomerates earn more than the component companies would
have earned independently. b. believe that the value of conglomerates is less than the value
of the sum of their parts.
Successful unrelated diversification through restructuring is typically accomplished by
a. focusing on mature, low-technology businesses.
b. a "random walk" of good luck in picking firms to buy.
c. seeking out high technology firms in high growth industries.
d. a top management team that is not constrained by pre-established ideas of how the firm's
portfolio should be developed. a. focusing on mature, low-technology businesses.
, The risk for firms that follow the unrelated diversification strategy in developed economies is
that
a. external investors tend to dump the stocks of conglomerates during economic downturns.
b. conglomerates are typically owned by one powerful entrepreneur and do not survive his/her
retirement or death.
c. government regulations, especially in Europe, have periodically forced the dissolution of
conglomerates.
d. competitors can imitate financial economies more easily than they imitate economies of
scope. d. competitors can imitate financial economies more easily than they imitate
economies of scope.
Among the value-neutral incentives to diversify, some come from the firm's external
environment while others are internal to the firm. External incentives to diversify include
a. the fact that other firms in an industry are diversifying.
b. pressure from stockholders who are demanding that the firm diversify.
c. changes in antitrust regulations and tax laws.
d. a firm's low performance. c. changes in antitrust regulations and tax laws.
The curvilinear relationship of corporate performance and diversification indicates that:
A) dominant-business corporate strategies tend to be higher performing than related
constrained or unrelated business strategies
B) the highest performing business strategy is related constrained diversification
C) the less related the businesses acquired, the higher performing the organization
