Strategic Mgmt EXAM QUESTIONS AND CORRECT DETAILED ANSWERS (V
IFIED COMPLETE SOLUTION) ALREADY PASSED SCORE A+.
Study online at https://quizlet.com/_i5c3hz
1. Which of the following is NOT a governance mechanism that may limit man-
agerial tendencies to over-diversify?: surveillance technologies
2. In making a decision to diversify, managers should use value-creating rea-
sons or face the risk that their firms will be acquired and they could lose their
jobs. Which of the following is a value-creating reason to diversify?: economies of
scope
3. Free cash flows are: liquid financial assets for which investments in current businesses are no longer
economically viable.
4. Because of the tax laws of the 1960s and 1970s, when dividends were taxed
more heavily than capital gains, shareholders preferred that corporations: keep
free cash flows for investment in acquisitions.
5. The Cherrywood Fine Furniture Company finds itself with excess capacity in
its plant and equipment for furniture manufacturing. This excess capacity will
be useful in: related diversification projects
6. Which of the following is NOT a limitation directly relating to vertical integra-
tion?: imitation of core technology by potential competitors
7. Corporate-level strategy is concerned with ____ and how to manage these
businesses.: what product markets and businesses the firm should be in
8. Walt Disney Company has successfully used related diversification to create
value by: sharing activities and transferring core competencies
9. Revenues for United Parcel Service (UPS) come from the following business
segments: 60 percent from U.S. package delivery operations, 22 percent from
international package delivery, and 18 percent from non-packaging opera-
tions. Which best describes the corporate level strategy of UPS?: dominant business
10. Which of the following reasons for diversification is most likely to increase
the firm's value?: reducing costs through business restructuring
11. Which of the following is a value-reducing reason for diversification?: expanding
the business portfolio in order to diversify managerial employment risk
12. The _________________diversification strategy creates value in two ways. First,
since the core competence has already been developed in one business, the
1/9
, Strategic Mgmt EXAM QUESTIONS AND CORRECT DETAILED ANSWERS (V
IFIED COMPLETE SOLUTION) ALREADY PASSED SCORE A+.
Study online at https://quizlet.com/_i5c3hz
firm does not have to allocate resources to develop it. Second, since the re-
source is intangible, competitors cannot easily imitate it.: related linked
13. The main difference between the related constrained level of diversification
and the related linked level of diversification is: the level of resources and activities shared
among the businesses.
14. Firms that have selected a related diversification corporate-level strategy
seek to exploit: economies of scope between business units
15. The basic types of operational economies through which firms seek value
from economies of scope are: the sharing of value chain activities and support functions.
16. Which of the following is TRUE?: Related constrained firms share more tangible resources and
activities between businesses than do related linked firms.
17. When a firm simultaneously practices operational relatedness and corporate
relatedness,: it is difficult for investors to observe the value created by the firm.
18. A firm that earns less than 70 percent of revenue from its dominant business
and has direct connections between its businesses is engaging in ____ diversi-
fication.: related constrained
19. A firm practicing unrelated diversification can make better capital allocations
to its subsidiary businesses than the external capital market can for all the
following reasons EXCEPT: the firm can acquire other firms with innovative products instead of allocating
capital to research and development
20. The value of the assets of a firm using a diversification strategy to create
both operational and corporate relatedness tend to be: discounted by investors.
21. Capabilities: are often developed in specific functional areas.
22. To build social capital whereby resources such as knowledge are transferred
across organizations requires ______ between the parties.: trust
23. ______ is an example of a capability that is based in the functional area of
distribution.: Effective use of logistics management techniques
24. Compared to intangible resources, tangible resources are ______ constrained
because they are ______ to leverage: more; harder
25. Today, a substantially slimmed-down Polaroid is introducing a number of
new products, including GL20 Camera Glasses which have a built-in camera
2/9
IFIED COMPLETE SOLUTION) ALREADY PASSED SCORE A+.
Study online at https://quizlet.com/_i5c3hz
1. Which of the following is NOT a governance mechanism that may limit man-
agerial tendencies to over-diversify?: surveillance technologies
2. In making a decision to diversify, managers should use value-creating rea-
sons or face the risk that their firms will be acquired and they could lose their
jobs. Which of the following is a value-creating reason to diversify?: economies of
scope
3. Free cash flows are: liquid financial assets for which investments in current businesses are no longer
economically viable.
4. Because of the tax laws of the 1960s and 1970s, when dividends were taxed
more heavily than capital gains, shareholders preferred that corporations: keep
free cash flows for investment in acquisitions.
5. The Cherrywood Fine Furniture Company finds itself with excess capacity in
its plant and equipment for furniture manufacturing. This excess capacity will
be useful in: related diversification projects
6. Which of the following is NOT a limitation directly relating to vertical integra-
tion?: imitation of core technology by potential competitors
7. Corporate-level strategy is concerned with ____ and how to manage these
businesses.: what product markets and businesses the firm should be in
8. Walt Disney Company has successfully used related diversification to create
value by: sharing activities and transferring core competencies
9. Revenues for United Parcel Service (UPS) come from the following business
segments: 60 percent from U.S. package delivery operations, 22 percent from
international package delivery, and 18 percent from non-packaging opera-
tions. Which best describes the corporate level strategy of UPS?: dominant business
10. Which of the following reasons for diversification is most likely to increase
the firm's value?: reducing costs through business restructuring
11. Which of the following is a value-reducing reason for diversification?: expanding
the business portfolio in order to diversify managerial employment risk
12. The _________________diversification strategy creates value in two ways. First,
since the core competence has already been developed in one business, the
1/9
, Strategic Mgmt EXAM QUESTIONS AND CORRECT DETAILED ANSWERS (V
IFIED COMPLETE SOLUTION) ALREADY PASSED SCORE A+.
Study online at https://quizlet.com/_i5c3hz
firm does not have to allocate resources to develop it. Second, since the re-
source is intangible, competitors cannot easily imitate it.: related linked
13. The main difference between the related constrained level of diversification
and the related linked level of diversification is: the level of resources and activities shared
among the businesses.
14. Firms that have selected a related diversification corporate-level strategy
seek to exploit: economies of scope between business units
15. The basic types of operational economies through which firms seek value
from economies of scope are: the sharing of value chain activities and support functions.
16. Which of the following is TRUE?: Related constrained firms share more tangible resources and
activities between businesses than do related linked firms.
17. When a firm simultaneously practices operational relatedness and corporate
relatedness,: it is difficult for investors to observe the value created by the firm.
18. A firm that earns less than 70 percent of revenue from its dominant business
and has direct connections between its businesses is engaging in ____ diversi-
fication.: related constrained
19. A firm practicing unrelated diversification can make better capital allocations
to its subsidiary businesses than the external capital market can for all the
following reasons EXCEPT: the firm can acquire other firms with innovative products instead of allocating
capital to research and development
20. The value of the assets of a firm using a diversification strategy to create
both operational and corporate relatedness tend to be: discounted by investors.
21. Capabilities: are often developed in specific functional areas.
22. To build social capital whereby resources such as knowledge are transferred
across organizations requires ______ between the parties.: trust
23. ______ is an example of a capability that is based in the functional area of
distribution.: Effective use of logistics management techniques
24. Compared to intangible resources, tangible resources are ______ constrained
because they are ______ to leverage: more; harder
25. Today, a substantially slimmed-down Polaroid is introducing a number of
new products, including GL20 Camera Glasses which have a built-in camera
2/9
