Business Strategy Chapter 8 Connect Questions

In order to be a good market for a company to be in, an industry should Multiple choice question. - have been around for at least a decade. - be recovering from a period of steep decline. - pass the industry attractiveness test. - have broad internal diversification.

pass the industry attractiveness test.

Businesses are said to be related when Multiple choice question. - one business cannot function without resources or supplies provided by the other. - they use similar marketing strategies. - their value chains exhibit competitively important cross-business commonalities. - customers make a brand association linking them.

their value chains exhibit competitively important cross-business commonalities.

The decision to diversify should begin with Multiple choice question. - a moral justification. - a desire to expand creativity and expression. - an economic justification. - a demand from dissatisfied shareholders.

an economic justification.

A good resource fit would include solid parenting capabilities in companies that pursue which of the following? Multiple choice question. - high industry attractiveness - a related diversification strategy - an unrelated diversification strategy - low employee turnover rate

an unrelated diversification strategy

Strategic analysis of diversified companies _____. Multiple choice question. - requires three steps - requires mastery of fewer analytic tools than single-business companies - serves as a basis to build on when analyzing single-business companies - builds on the same ideas and techniques used for analyzing single-business companies

builds on the same ideas and techniques used for analyzing single-business companies

Diversifying into new industries Multiple choice question. - is generally regarded as a last-ditch strategy to save a failing company. - should be explored when a single-business company encounters dwindling opportunities in its principal business. - is a poor idea when a single-business company sees stagnating sales in its principal business. - becomes urgent when a company has plentiful opportunities for growth in its present industry.

should be explored when a single-business company encounters dwindling opportunities in its principal business.

Which of the following are circumstances that indicate a poor fit of nonfinancial resources in a diversified company? Multiple select question. - A company's resources are stretched thin in order to assimilate and oversee many new businesses in a short time. - A mismatch exists between a diversifying company's competitive assets and the key success factors of an industry into which it is expanding. - A core business lacks accumulated resources to deal with the competitive environment of the businesses into which it has diversified. - A company has the depth of resources to transfer skills and competencies from its business to the other businesses it is parenting.

- A company's resources are stretched thin in order to assimilate and oversee many new businesses in a short time. - A mismatch exists between a diversifying company's competitive assets and the key success factors of an industry into which it is expanding. - A core business lacks accumulated resources to deal with the competitive environment of the businesses into which it has diversified.

Which of the following are true concerning the interpretation of industry-attractiveness scores? Multiple select question. - A strongly performing diversified company's primary businesses should be in industries with high growth potential. - If a company's scores are all above 5, it probably operates in an attractive group of industries - The group of industries takes on a decidedly higher level of attractiveness as the number of industries with scores below 5 increases. - Industries that score much less than five are unlikely to be attractive.

- A strongly performing diversified company's primary businesses should be in industries with high growth potential. - If a company's scores are all above 5, it probably operates in an attractive group of industries - Industries that score much less than five are unlikely to be attractive.

Which of the following are true concerning the interpretation of industry-attractiveness scores? Multiple select question. - A strongly performing diversified company's primary businesses should be in industries with high growth potential. - The group of industries takes on a decidedly higher level of attractiveness as the number of industries with scores below 5 increases. - Industries that score much less than five are unlikely to be attractive. - If a company's scores are all above 5, it probably operates in an attractive group of industries

- A strongly performing diversified company's primary businesses should be in industries with high growth potential. - Industries that score much less than five are unlikely to be attractive. - If a company's scores are all above 5, it probably operates in an attractive group of industries

Which of the following ratings concerning interpretation of competitive-strength scores are correct? Multiple select question. - Businesses with ratings in the 3.3 to 6.7 range have moderate competitive strength. - Business units with ratings above 6.7 are strong market contenders in their industries. - Businesses with ratings below 3.3 are in competitively weak market positions. - Business with ratings below 5 are in competitively strong market positions.

- Businesses with ratings in the 3.3 to 6.7 range have moderate competitive strength. - Business units with ratings above 6.7 are strong market contenders in their industries. - Businesses with ratings below 3.3 are in competitively weak market positions.

Steps involved in assessing the positive and negative aspects of a diversified company's strategy and determining how to improve performance include which of the following? Multiple select question. -Eliminating the previous management team and selecting leaders with strengths in specialized areas. - Determining the competitive strength of the company's business units. - Evaluating the individual and group attractiveness of the industries the company has diversified into. - Determining if the firm's resources fit the requirements of its current business lineup.

- Determining the competitive strength of the company's business units. - Evaluating the individual and group attractiveness of the industries the company has diversified into. - Determining if the firm's resources fit the requirements of its current business lineup.

What questions can be answered by determining the competitive value of strategic fit in diversified companies? Multiple select question. - How much competitive value will come from the cross-business transfer of skills, technology, or intellectual capital? - Will leveraging a potent umbrella brand or corporate image strengthen the businesses and increase sales? - Are there other unrelated businesses that can be added to the company's holdings for the purposes of gaining a strategic fit? - Are the cost savings associated with economies of scope likely to give one or more businesses a cost-based advantage?

- How much competitive value will come from the cross-business transfer of skills, technology, or intellectual capital? - Will leveraging a potent umbrella brand or corporate image strengthen the businesses and increase sales? - Are the cost savings associated with economies of scope likely to give one or more businesses a cost-based advantage?

Which of the following statements are true concerning whether a company has sufficient nonfinancial resources? Multiple select question. - If a company's strategy is closely tied to moving technologies from existing businesses to new ones, it must develop more resources to supply them. - The broader the diversification, the greater the concern that corporate executives are overburdened trying to parent too many companies. - The broader the diversification, the lower the concern that corporate executives are overburdened trying to parent too many companies. - A company's resources can be overtaxed by making many acquisitions and calling on management to oversee many businesses quickly.

- If a company's strategy is closely tied to moving technologies from existing businesses to new ones, it must develop more resources to supply them. - The broader the diversification, the greater the concern that corporate executives are overburdened trying to parent too many companies. - A company's resources can be overtaxed by making many acquisitions and calling on management to oversee many businesses quickly.

Which of the following are true of the nine-cell attractiveness-strength matrix? (Check all that apply.) Multiple select question. - It identifies the business strength of businesses. - It identifies the industry attractiveness of businesses. - It helps craft new strategic moves to improve overall corporate performance. - It helps diversified companies allocate resources among their businesses. - It accurately calculates the probability of a business failing within the next five years.

- It identifies the business strength of businesses. - It identifies the industry attractiveness of businesses. - It helps diversified companies allocate resources among their businesses.

Which of the following statements are true of a nine-cell matrix? Multiple select question. - Low numbers represent high industry attractiveness, and high numbers represent low competitive strength. - Overall attractiveness and strength scores are used to plot business units, which are displayed as bubbles. - The horizontal axis is divided into regions for strong, average, and weak competitive strength. - The vertical axis is divided into regions for high, medium, and low attractiveness.

- Overall attractiveness and strength scores are used to plot business units, which are displayed as bubbles. - The horizontal axis is divided into regions for strong, average, and weak competitive strength. - The vertical axis is divided into regions for high, medium, and low attractiveness.

Which of the following statements are true concerning the portfolio approach to ensuring financial fit? Multiple select question. - The portfolio approach relies on the premise that cash flow and investment traits vary among different businesses. - Business units in quickly expanding industries are often cash hogs. - Cash cows have limited growth but are a valuable financial resource. - Cash hogs are usually able to generate surplus cash flow to help cash cows continue to grow.

- The portfolio approach relies on the premise that cash flow and investment traits vary among different businesses. - Business units in quickly expanding industries are often cash hogs. - Cash cows have limited growth but are a valuable financial resource.

Which of the following are true of related businesses? Multiple select question. - They have different resource requirements. - They can be combined to perform better than the sum of the individual businesses. - They have similar resources and capabilities. - They have compatible value chain activities.

- They can be combined to perform better than the sum of the individual businesses. - They have similar resources and capabilities. - They have compatible value chain activities.

Which of the following actions should a company consider according to the nine-cell attractiveness-strength matrix? (Check all that apply.) Multiple select question. - To concentrate resources in businesses that possess higher degrees of attractiveness and competitive strength - To withdraw capital resources from companies that are not evenly matched in industry attractiveness and business strength - To remove resources from ventures that are low in attractiveness and strength unless they offer superior profit or cash flow opportunity - To be cautious about investing in companies located intermediately on the grid

- To concentrate resources in businesses that possess higher degrees of attractiveness and competitive strength - To remove resources from ventures that are low in attractiveness and strength unless they offer superior profit or cash flow opportunity - To be cautious about investing in companies located intermediately on the grid

Which of the following actions should a company consider according to the nine-cell attractiveness-strength matrix? (Check all that apply.) Multiple select question. - To remove resources from ventures that are low in attractiveness and strength unless they offer superior profit or cash flow opportunity - To concentrate resources in businesses that possess higher degrees of attractiveness and competitive strength - To be cautious about investing in companies located intermediately on the grid - To withdraw capital resources from companies that are not evenly matched in industry attractiveness and business strength

- To remove resources from ventures that are low in attractiveness and strength unless they offer superior profit or cash flow opportunity - To concentrate resources in businesses that possess higher degrees of attractiveness and competitive strength - To be cautious about investing in companies located intermediately on the grid

Which of the following are questions to ask when evaluating industry attractiveness? Multiple select question. - Which of the company's industries are most attractive? - How many years has the company been involved in each industry? - How appealing is the whole group of industries in which the company has invested? - Does each industry the company has diversified into represent a good market for the company to be in?

- Which of the company's industries are most attractive? - How appealing is the whole group of industries in which the company has invested? - Does each industry the company has diversified into represent a good market for the company to be in?

Factors that can be used to quantify the competitive strengths of a diversified company's business subsidiaries include Multiple select question. - ability to match or beat rivals on key product attributes. - absolute industry market share. - relative market share. - costs relative to competitors' costs.

- ability to match or beat rivals on key product attributes. - relative market share. - costs relative to competitors' costs.

Which of the following are strategic options for increasing a corporation's overall success? Multiple select question. - broadening the scope of diversification by entering additional industries - retrenching to a narrower scope of diversification by divesting poorly performing businesses - sticking closely with the existing business lineup and pursuing opportunities presented by these businesses - avoiding any restructuring that might put a new face on the company's business lineup

- broadening the scope of diversification by entering additional industries - retrenching to a narrower scope of diversification by divesting poorly performing businesses - sticking closely with the existing business lineup and pursuing opportunities presented by these businesses

In a nine-cell matrix, Multiple select question. - competitive strength is plotted on the horizontal axis. - each axis is divided into three regions. - industry attractiveness is plotted on the vertical axis. - as the curve for strength increases, the curve for attractiveness decreases.

- competitive strength is plotted on the horizontal axis. - each axis is divided into three regions. - industry attractiveness is plotted on the vertical axis.

Factors that can be used to quantify the competitive strengths of a diversified company's business subsidiaries include Multiple select question. - costs relative to competitors' costs. - absolute industry market share. - ability to match or beat rivals on key product attributes. - relative market share.

- costs relative to competitors' costs. - ability to match or beat rivals on key product attributes. - relative market share.

A company has good financial resource fit if Multiple select question. - the excess cash flow of its cash hog businesses is sufficient to fund its cash cow businesses. - the company can create enough internal cash flow to provide the capital required by its businesses. - the company can adequately fund all its businesses while keeping a good credit rating. - each individual business sufficiently contributes to meeting companywide performance targets.

- the company can create enough internal cash flow to provide the capital required by its businesses. - the company can adequately fund all its businesses while keeping a good credit rating. - each individual business sufficiently contributes to meeting companywide performance targets.

Quantitative industry-attractiveness scores can be calculated based on Multiple select question. - the presence of cross-industry strategic fit. - emerging threats and opportunities. - current long-term interest rates. - market size and projected growth rate.

- the presence of cross-industry strategic fit. - emerging threats and opportunities. - market size and projected growth rate.

The steps involved in creating a diversified company's corporate strategy include Multiple select question. - establishing investment priorities. - requiring corporate executives to become involved in all details of business-level strategies. -leveraging cross-business value chain relationships into competitive advantage. - picking new industries to enter and the means for entering them.

-establishing investment priorities. - leveraging cross-business value chain relationships into competitive advantage. - picking new industries to enter and the means for entering them.

Which of the following is true concerning relative market share? Multiple choice question. - It is a ratio of a business unit's market share to the market share held by the rest of the industry. - Business units cannot have a relative market share greater than 1. - The further below 1 a business unit's relative market share is, the stronger its competitive strength and market position with its rivals. - The further below 1 a business unit's relative market share is, the weaker its competitive strength and market position with its rivals.

The further below 1 a business unit's relative market share is, the weaker its competitive strength and market position with its rivals.

Which of the following is true concerning relative market share? Multiple choice question. - The further below 1 a business unit's relative market share is, the weaker its competitive strength and market position with its rivals. - It is a ratio of a business unit's market share to the market share held by the rest of the industry. - Business units cannot have a relative market share greater than 1. - The further below 1 a business unit's relative market share is, the stronger its competitive strength and market position with its rivals.

The further below 1 a business unit's relative market share is, the weaker its competitive strength and market position with its rivals.

Business units with competitive-strength ratings Multiple choice question. - from 3.3. to 5.0 are relatively well diversified. - above 6.7 are strong market contenders in their industries. - below 3.3 are in competitively strong market positions. - from 5.0 to 6.7 are fairly weak market contenders in their industries.

above 6.7 are strong market contenders in their industries.

The portfolio approach to financial fit revolves around the fact that Multiple choice question. - different businesses have different management cultures. - cash flow and investment characteristics vary among businesses. - successful businesses share a common management culture. - different businesses share universal cash flow and investment characteristics.

cash flow and investment characteristics vary among businesses.

In calculating industry attractiveness scores, Multiple choice question. - strategic-fit considerations should be assigned a low weight in companies with unrelated diversification strategy. - strategic fit with other industries may be dropped entirely for companies with a related diversification strategy. - competition intensity should be heavily weighted. - each attractiveness measure is weighted equally.

competition intensity should be heavily weighted.

A diversified company can add value by shifting capital from business units generating free cash flow to those needing capital to grow by having a strong Multiple choice question. - external capital market. - internal capital market. - competitive strength score. - industry attractiveness score.

internal capital market.

determining the competitive value of strategic fit in diversified companies Multiple choice question. - is based on the skills and other assets that cannot be shared between related businesses. - is important in evaluating their related diversification strategies. - can be bypassed for companies with related businesses. - is most useful for companies with unrelated businesses.

is important in evaluating their related diversification strategies.

In order for a diversified company to perform well, Multiple choice question. - most of its business units must have an attractiveness score between 3 and 5. - the sum of the attractiveness scores of all its industries should not exceed 7. - industries with low attractiveness scores must account for a sizable fraction of the company's revenues. - much of its revenues and profits should be derived from business units with comparatively high attractiveness scores.

much of its revenues and profits should be derived from business units with comparatively high attractiveness scores.

In order for a diversified company to perform well, Multiple choice question. - much of its revenues and profits should be derived from business units with comparatively high attractiveness scores. - industries with low attractiveness scores must account for a sizable fraction of the company's revenues. - the sum of the attractiveness scores of all its industries should not exceed 7. - most of its business units must have an attractiveness score between 3 and 5.

much of its revenues and profits should be derived from business units with comparatively high attractiveness scores.

When a firm with a related diversification strategy has businesses that match specialized resource requirements at points along their value chains that are critical for the business's market success, they are said to have Multiple choice question. - corporate parenting. - moderate growth potential. - competitive value. - resource fit.

resource fit.