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Exam 6: Corporate-Level Strategy: Creatingvalue Through Diversification

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Question 31

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Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input to its manufacturing process.This is an example of _______________.

A) using related diversification to achieve value by pooling negotiating power to achieve market power
B) using related diversification to achieve value by leveraging core competencies to achieve economies of scope
C) using related diversification to achieve value by integrating vertically in order to acquire market power
D) using related diversification to achieve value by integrating vertically in order to attain economies of scope

E) C) and D)
F) A) and B)

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Question 32

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If a corporation is to achieve synergy by sharing activities across its business units,it is not important to compromise on the design or performance of an activity that is to be shared.

A) True
B) False

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Question 33

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Casio,a giant electronic products producer,synthesizes it abilities in miniaturization,microprocessor design,material science,and ultrathin precision castings to produce digital watches.It uses the same skills to produce card calculators,digital cameras,and other small electronics.These collective skills are known as _________________.

All diversification moves,including those involving mergers and acquisitions,erode performance.

Explain how transaction cost analysis can provide insights into vertical integration decisions.

A firm should consider vertical integration when ___________.

Although acquiring related businesses can enhance the bargaining power of a corporation,there is a risk of retaliation by competitors that can result in a diminishing of the desired bargaining power.

In the BCG Growth Share Matrix,the suggested strategy for Stars is to ________.

With unrelated diversification,potential benefits can be gained from vertical or hierarchical relationships; that is,the creation of synergies from the interaction of the corporate office with outside stakeholders.

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures.

Shared activities among businesses in a corporation do not always have a positive effect on a differentiation strategy of a corporation.

McKesson,a large distribution company,sells many product lines such as pharmaceuticals and liquor through its super warehouses.This is an example of ____________.

In recent years,many high tech firms such as Priceline.com have suffered from the negative impact of uncontrolled growth.

According to the transaction cost perspective in analyzing vertical integration,every market transaction involves some transaction cost.

The antitakeover tactic,_______,is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.

The primary means by which a firm can diversify are __________,_________,and ________.

The risks of vertical integration include all of the following EXCEPT:

For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation it must at least create superior customer value and it must be difficult to imitate.

When firms diversify into unrelated businesses,the primary potential benefits are horizontal relationships,i.e.,businesses sharing tangible and intangible resources.

Through joint ventures,firms can directly acquire the assets and competencies of other firms.