Business Strategy: Chapter 6
_______ is when one firm buys another through a stock purchase, cash or the issuance of debt
an acquisition
Firms that choose to diversify through internal development must develop ________ that allow them to move ________ from initial opportunity recognition to market introduction.
capabilities; quickly
According to the text, corporate restructuring includes
capital restructuring, asset restructuring, and management restructuring.
One of the reasons it is said that only the investment banker wins when a company is acquired is that they
collect huge up-front fees regardless of the outcome afterwards.
If a multinational firm paid too high a premium for the common stock of the company, this can lead to
divestiture
AOL purchased Time Warner for 114 billion USD in 2001. By 2003, AOL Time Warner had lost 150 billion USD in market valuation. This is an example of a
failed acquisition
Corporate-level strategy focuses on
gaining long-term revenue
According to Michael Porter, there is a tremendous allure to ________. It is the big play, the dramatic gesture. With one stroke of the pen, you can add billions to size, get a front-page story, and create excitement in markets.
mergers and acquisitions
Which of the following is not a downside of portfolio models used to assist a firm in balancing its portfolio of businesses?
Portfolio models rely on loose rules regarding resource allocation across the SBUs
________ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change, thereby creating value within business units.
Restructuring
For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?
The new business must have an established large market share
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
core competencies
Chinese automaker, Geely, acquired Volvo from Ford, because it mostly needed the Volvo ________ to compete on the global stage.
core competencies
Capital restructuring involves changing the ________ mix.
debt-equity
Which of the following potential advantages of strategic alliances best describes the current Honda solution, according to Strategy Spotlight 6.5?
developing and diffusing new technologies
Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using
parenting expertise
In the BCG Matrix, a ________ is a business that has a low market share in an industry characterized by high market growth.
question mark
ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all its food divisions. This is an example of using
related diversification to acquire market power by leveraging pooled negotiating power.
Which of the following is not part of a good guideline list for managing strategic alliances?
relying primarily on a contract to make the joint venture work
Many leading high-tech firms such as Google, Apple, and Intel have dramatically enhanced their revenues, profits, and market values through a wide variety of diversification initiatives. Which of the following is not such an initiative?
stockholder enhancement
A firm should consider vertical integration when
the suppliers of raw materials to the firm are unable to maintain quality standards.
The corporate office of Novartis, formerly Ciba-Geigy, acts to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of creating value by using
unrelated diversification to acquire financial synergies through portfolio management.
