Ch 6 * MGT 491

When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a

star

_________ is when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures.

A) Parenting

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

A) achieving economies of scope through related diversification

The downsides or limitations of mergers and acquisitions include all of the following :

A) expensive premiums that are frequently paid to acquire a business. B) difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going operations. D) there can be many cultural issues that can doom an otherwise promising acquisition.

Antitakeover tactics include all of the following

A) greenmail. B) golden parachutes. D) poison pills.

Cooperative relationships such as _______ have the potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies.

A) joint ventures C) strategic alliances

A "cash cow," referred to in the Boston Consulting Group Portfolio management technique, refers to a business that has

A) low market growth and relatively high market share.

It may be advantageous to vertically integrate when

A) lower transaction costs and improved coordination are vital and achievable through vertical integration.

The three primary means by which a firm can diversify are:

A) mergers and acquisitions; joint ventures and strategic alliances; internal development

Transaction costs include all of the following costs

A) search costs. B) negotiating costs. C) monitoring costs.

Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that

A) the similarity required for sharing core competencies must be in the value chain, not in the product

Vertical integration is attractive when

A) transaction costs are higher than internal administrative costs.

Which of the following statements regarding internal development as a means of diversification is FALSE:

B) An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.

___________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through _________ and __________ can provide

B) Internal Development; Mergers; Acquisitions

_______ 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.

B) Restructuring

Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as

B) capitalizing on core competencies.

In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized by high market growth is termed a

B) question mark.

When management uses common production facilities or purchasing procedures to distribute different but related products, they are

B) sharing activities.

A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of

B) strategic alliance.

In managing a firm's portfolio, the BCG matrix would suggest that

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

__________ reflect the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services.

C) Core competencies

Antitakeover tactics include all of the following except

C) golden handcuffs.

The downsides or limitations of mergers and acquisitions include all of the following except:

C) it is a slow means to enter new markets and acquire skills and competences.

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

C) vertical integration.

Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with

C) vertical integration.

Transaction costs include all of the following costs except

D) agency costs

The term "golden parachutes" refers to

D) pay given to executives fired because of a takeover.

A firm should consider vertical integration when

D) the firm's suppliers of raw materials are often unable to maintain quality standards.

The most visible and often costly means to diversify is through

acquisitions.