Strat Quiz #4

Benefits derived from horizontal and hierarchical relationships are not mutually exclusive. True False

True

Most acquisitions destroy value rather than create value. True False

True

Corporate-level strategy is about a) gaining long-term revenue b) gaining short-term profits c) managing single businesses. d) finding optimal locations for corporate offices.

a) gaining long-term revenue

The BCG framework implies that a) question marks can represent future stars if their market share is increased. b) cash cows require substantial cash outlays to maintain market share. c) stars are in low growth markets and can provide excess cash to fund other opportunities. d) dogs should be invested in to increase market share and become cash cows.

a) question marks can represent future stars if their market share is increased.

When eBay owned PayPal, which diversification was it? a) Unrelated businesses with parenting advantage b) Related businesses with vertical integration c) Unrelated businesses with portfolio management d) Related businesses with core competences.

b) Related businesses with vertical integration

If a company acquires a business that has little horizontal relationship with other businesses of the company, this is an example of ___________ diversification. a) Related b) Unrelated c) Synergistic d) Horizontal

b) Unrelated

At what level are portfolio management matrices used? a) international level b) corporate level c) business level d) departmental level

b) corporate level

When it comes to internal development, which statement is false? a) Many companies use internal development to extend their product or service offers. b) The firm can capture wealth created without having to share the wealth with alliance partners. c) An advantage of internal development is that it is generally faster than other means of diversification. d) Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.

c) An advantage of internal development is that it is generally faster than other means of diversification.

When it comes to eBay's decision to spin off PayPal, which statement is true? a) Activist investors were against it. b) eBay management supported the idea wholeheartedly. c) PayPal was the most valuable asset in eBay's portfolio. d) eBay mainstream business grew faster than PayPal.

c) PayPal was the most valuable asset in eBay's portfolio.

Leveraging common production facilities is an illustreation of a) achieving process gains. b) using portfolio analysis c) sharing activities d) building on core competencies.

c) sharing activities