SM quiz ch 8
Diversification marriage strong consideration whenever a single business company: option A: encounters worsening industry conditioned that are expected to be long-lasting and adversity impair it's prospects for continued the performance. Option B: needs to increase its net profit margin and return on investment. Option C: has competitively week or resources and capabilities than the industries marketshare leader. Option D: has become the low-cost provider in its current line of business and needs to move on to other challenges. Option E: Has tried unsuccessfully to achieve a sustainable competitive advantage in its present business.
A
Creating added long-term value for shareholders the diversification required: option A: sizable increases in the companies annual rate of growth in revenue and total profit. Option B: building a multi business company where the hole is greater than the sum of its parts search 1+1 = 3 ethics are called synergy. Option C: lowering the company's overall operating cost, and enhance company image, and increase prospects for market share leader ship in two or more of the companies businesses. Option D: Entering businesses which employed the same basic type of competitive strategy. Option E: boosting the companies long-term prospects for above average increases in total revenue, stock price, and earnings per share.
B
Retrenching to a narrower diversification base: option A: is usually the most attractive longer and strategy for a broadly diversified company confronted with a recession or a slowly growing economy, high or rising interest rates, mountain competitive pressures in several other businesses, and onerous and cost to government regulations. Option B: has the advantage of enabling a company to strive for better long-term performance by concentrating on building strong positions in a small number of core businesses and industries and avoiding the Mistakes of diversifying so broadly that resources in management attention or stretch Stanley across many businesses Option C: is a particularly appealing strategy for broadly diversified companies that have too few cash cow businesses to cover the losses and negative cash flow is being incurred and it's cash all the businesses option D: is a highly recommended strategic option for broadly diversified companies that have you competitively valuable resources and capabilities and are struggling to capture both economies of scale and economies of scope in the present businesses. Option E: usually the best strategy option for a broadly diversified company that is plagued with two little cross business financial fit.
B
Which of the following is not one of the appeals of related diversification? Option A: it may present opportunities for cross business collaboration to create competitively valuable resource strength and capabilities. Option B: it has the advantage of opening up more market opportunities in achieving faster revenue growth as compared to unrelated diversification. Option C: he can offer opportunities for transferring competitively valuable resources and capabilities from one business to enhance the competitiveness and performance of a sister business. Option D: it may present opportunities for a supporting use of a well-known and potent brand-name. Option E: It can offer opportunities for combining the related value chain activities of separate businesses into a single operation to achieve over cost.
B
Which one of the following is not among the outcome that incorporate executive should pursue in order for a strategy of unrelated diversification to produce companywide financial results above and beyond what the businesses could generate operating as standalone entities: option A: develop and nurture outstanding corporate parenting capabilities. Option B: focus on acquiring businesses that offer the best opportunities for achieving rapid market growth and that have a big competitive advantage over rivals thereby satisfying the industry attractiveness and competitive strength test. Option C: provide individual business with administrative expertise and other corporate resources that lower companywide administrative and overhead cost and enhance the operating effectiveness in individual business. Option D:Build a portfolio of businesses in on related industries by number one acquiring company in any industry with growth in earnings prospects that can satisfy the industry attractiveness test and number to acquiring undervalued or under performing businesses that present appealing opportunities for being overhauled and streamlined in ways that will produce dramatic gains and profitability. Option E: become skilled in discerning when a particular company business should be sold because of deteriorating industry and competitive concerns or other factors that make it long term profit outlook on attractive and also in finding buyers who will pay a price higher than the companies net investment in the business so the sale of divested Businesses will result in capital gains for shareholders rather than capital losses
B
What is calculated by dividing a business;s Presented share of total industry sales volume by the percentage share held by its largest rival - it is a better indicator of a business is competitive strength then is a simple percentage measure of market share: this is because a company with a 15% market share is in a much stronger competitive position if it's orange is rival have a market share of 10% which means it's relative market share is 1.5, then it is if it's largest rival has a 30% market share in which case the companies relative market share is only .50.
Business units relative market share
A diversified company's business units exhibit good resource for fit when option A: when the number of cash cow businesses equals the number of cash hog businesses. Option B: the total amount of capital the company has available to deploy to its various business is equal to or greater than the sum of the capital requirement of each business. Option C each company business has adequate access to the resources and capabilities needed to be competitively successful and when the corporate parent has the financial means and parenting capabilities to support its entire group of business without spreading itself to thin. Option D: when the companies profitable business units have sufficient earnings and cash flow's to cover the loss and negative cash flow's of it on profitable business, with enough cash left over to cover the companies dividend payments, capital expediters, and debit repayment. Option E: the sum of the resource requirements of each business equal or exceed the total amount of resources the company has available
C
The chief purpose of calculating quantitative industry attracted in the scores for each industry a company has diversified into is to: option A: be able to accurately rank the industries from best to worst in terms of both investment risk and having problems issues that are hard to or costly to overcome. Option B: be able to accurately rank the attractiveness of eat industries competitive advantage potential from highest to lowest. Option C: Help determine number one whether each industry the company has diversified into represents a good business for the company to be in, number two which of the companies industries are most attractive and which are least attractive, and number three the overall appeal of the whole group of industries in which the company has invested. Option D: be able to accurately rank the industries from the most competitive to lease competitive. Option E: ascertain those industries in which it is easiest/hardest to be competitively successful and very profitable.
C
The top level executive task of crafting a diversified company overall or corporate strategy include which one of the following? Option A: determining whether it makes more sense to combine and merge all of the companies businesses into a single unified operation or two operate them as separate stand-alone divisions. Option B: choosing the specific resources and competitive capabilities that each different one of the companies business must develop and strengthen in order to successfully pursue competitive advantage. Option C: pursuing opportunities to leverage cross businesses value chain relationships in strategic fit into competitive advantage. Option D: crafting a competitive strategy for each of the companies different businesses to employ the same strategy is usually not optimal for each and every business the company is in. Option E: identifying the most cost efficient value chain for each of the companies businesses to implement.
C
Which of the following are negative or disadvantages of pursuing unrelated diversification strategy? Option A: reduce competitive strength in each of the unrelated business is the company has diversified into and last market opportunities because of having to a few cash cow businesses. Option B: conflict incompatibility among the competitive strategies of the companies different businesses and increased likelihood that the company's financial resources will be spread thin layer over to many different lines of businesses. Option C: No potential for competitive advantage beyond any benefits of corporate parenting and what each individual business can generate on its own. Option D: ending up with too many cash cow business is an increased risk associated with operating in too many unrelated businesses and industries. Option E: greater value levity in earnings and return on capital investment and reduced competitive strength because corporate parenting capabilities are spread thin Lee over any distinctly different lines of business
C
Which of the following best illustrates and economies of scope? Option A: being able to illuminate or reduce cost by expanding the size of a companies manufacturing plants or distributtion centers. Option B: being able to illuminate or reduce the cost by offering customers a bigger section of models, styles, and product versions to choose from. Option C: being able to illuminate or reduce cost by combining certain closely related value change activities of separate businesses into a single operation. Option D: being able to illuminate or reduce costs by operating over a wider geographic area. Option E: being able to illuminate or reduce cost by performing all of the value chain activities related sister businesses at the same location.
C
What type of business generate positive cash flow's over and above its internal requirement, that's providing a corporate parent with funds that can be used for financing new acquisitions, investing in cash hog businesses, and or paying dividends
Cash cow
According to figure 8.1, some of the things to look for in identifying a diversified company strategy include: option A: each businesses competitive approach provider, broad differentiation, best cost, focused it for integration, or focused low-cost, whether it's products are sold under the same brand or different brands, and whether each businesses are mostly cash cow or mostly cash out. Option B: the technological proficiencies and labor skill requirements of each of the firms businesses and the competitive strategy each business is important. Option C: the actions top management is taking to capture economies Of scale and economies of scope in the companies recent move to Davis it's Cash hog. Option D: the recent moved it has made to divest week businesses, their positions in new industries, and strengthen the positions of its existing businesses and whether the companies diversification is based nearly in a few industry or Bradley in many industries. Option E: whether the company is focused on milking is cash cows or feeding it cash dogs and whether it is pursuing the same or different competitive strategies in each other's business units
D
According to figure 8.6, which one of the following is a strategic option for allocating a diversified company's financial resources? Option A: paying of existing long term or short term debt. Option B: repurchasing shares of the companies common stock. Option C: increasing dividend payments to shareholders. Option D: funding long range R & D ventures and at opening market opportunities in new or existing businesses. Option E: building cash revenues and or investing in short-term securities.
D
Using quantitative measures of industry attractiveness and competitive strength to plot each businesses location of the nine cell industry attractiveness competitive strength matrix: Option A: is useful for ranking of companies different business units from best to worst based on how much your T-shirt that each unit has with his sister business. Option B: is useful for ranking of companies different businesses unit from best to worst based on how much resource but each unit has with his sister business. Option C: pinpoint which of a diversified company's business unit or cash cows, those in the three diagonal sales, and which ones are cash hogs, I was in the three sales in the lower right corner of the matrix. Option D: provide valuable guidance in the poem corporate resources to the various business units in a general, and diversified Companies prospects for good overall performance or enhanced by concentrating corporate resources in strategic attention on those business units position in the three cells in the upper left portion of the attractiveness strength matrix. Option E: useful for identifying which business units have biggest/smallest economies of scale in which have the biggest/smallest economies of scope
D
Which of the following is not part of the procedure for evaluating the pulses pluses and minuses of a diversified company's strategy and deciding what actions to improve the company's performance? Option A: ranking the performance prospects of the various businesses from best to worst in determining what the corporate parent priority should be in allocating resources to its various businesses option B: crafting new strategic moves to improve overall corporate performance. Option C: checking the company's present business lineup for both resource fit and cross business strategic fit. Option D: conducting a SWOT analysis of each business the company has diversified into. Option E: assessing the attractiveness in the industry the company has delivered into, both individually and as a group
D
Which one of the following is not one of the appeals of unrelated diversification?: Option A: business risk at it over a set of truly diverse industries. Option B: the company's financial resources can be employed to maximum advantage. Option C: to the extent that corporate managers are exceptionally astute at spotting bargain price companies with big upside profit potential, shareholder wealth can be enhanced by by distress business is at a low price, turning their operations around fairly quickly with an infusion of cash and managerial know how supplied by parent company, and then riding the crest of the profit increases generated by the newly acquired businesses or else selling the business for an amount for above the purchase price. Option D: it is quicker and easier to build a competitive advantage over undiversified or less diversified companies. Option E: company possibility may prove someone more stable over the course of economic upswings and downswings because market conditions in all industries don't move upward or downward simultaneously
D
A big advantage of related diversification is that: option A: it passes the industry fit test in those offers the best route to 1+1 = 2 benefits. Option B: it is less capital intensive and usually more profitable than unrelated diversification. Option C: involves diversifying into industries having the same kind of industry attractive and inspectors. Option D: it opens up more opportunities for earning bigger Profit margin standers unrelated diversification. Option E: it offers Waze for firm to realize 1+1 = 3 benefits because the value chains of the different businesses present competitively value cross business relationships with competitive advantage potential
E
The basic premise of unrelated diversification is that: option A: the best way to build shareholder value is to acquire businesses with strong cross business financial Field. Option B: the best companies to acquire or those that offer the greatest economies of scope rather than the greatest economies of scale. Option C: the least risky way to diversify is to seek out businesses that are leaders in their respective industry and have very appealing market opportunities. Option D: the task of building shareholder value is best served by diversifying into businesses with the greatest competitive advantage potential. Option E: any company or business that can be acquired On good financial terms and that has satisfactory growth in earning potential represents a good acquisition and a good business opportunity.
E
What makes related diversification and attractive strategy is: option A: the potential for achieving bigger economies of scale. Option B: the ability to broaden a company's overall product line and offer customers a big selection of models, styles and product versions to choose from. Option C: the added capability provides in competing into multiple markets segments and reducing the barriers to entering foreign markets. Option D: the ability to gain sustainable competitive advantage by serving a broader and more diverse customer base. Option E: the opportunity to convert cross business strategic fit into a competitive advantage over business rivals Who is operations do not offer a comparable strategic fit benefits.
E
