MGMT 4842 Chapter 8 Connect

If the question of speed determines that fast movers can grab long-term advantages, the preferred mode of diversification is likely to be (a) acquisition (b) internal development (c) stock repurchases (d) joint venture

(a) acquisition

Diversification isn't really viewed as a success unless it (a) yields added long-term economic value for shareholders (b) more than doubles the annual cash flow of the company (c) results in short-term gains for the shareholders (d) lowers the overall tax burden on the company

(a) yields added long-term economic value for shareholders

The decision to diversify should begin with: (a) a desire to expand creativity and expression (b) an economic justification (c) a demand from dissatisfied shareholders (d) a moral justification

(b) an economic justification

Determining if there are obstacles that block a new company from gaining a foothold and thriving in an industry is an example of answering the strategy-based question of: (a) speed (b) comparative costs (c) entry barriers (d) critical resources and capabilities

(c) entry barriers

If the question of critical resources and capabilities demonstrates that a company has or can easily lease all of the materials necessary to start a new business, it will probably do so by (a) joint venture (b) liquidation (c) internal development (d) acquisition

(c) internal development

Determining whether the premium required to make an acquisition will be worth the extra value gained is an example of answering the question of (a) critical resources and capabilities (b) speed (c) entry barriers (d) comparative cost

(d) comparative costs

Which of the following is true about joint ventures? (a) they tend to decrease conflict and disagreement within management (b) they are the most durable of the diversification options (c) they are successful only if the companies involved are both domestic companies (d) they are usually short-lived, ending as soon as the partners decide to part ways

(d) they are usually short-lived, ending as soon as the partners decide to part ways

Which of the following are drawbacks of acquisition? - there can be high integration costs - integration of the company into the existing firm can be time-consuming - there are often excessive premiums - it can quickly establish supplier relations

- there can be high integration costs - integration of the company into the existing firm can be time-consuming - there are often excessive premiums

Which of the following are among the four questions that need to be asked when determining how best to enter a new business? - will the choice be popular with most employees? - are there entry barriers to overcome? - is speed an important factor in the firm's chances of survival? - which is the last costly mode of entry, given the company's objectives?

- are there entry barriers to overcome? - is speed an important factor in the firm's chances of survival? - which is the last costly mode of entry, given the company's objectives?

Which of the following are the ways a company can enter a new business - internal startup - margin buying - joint ventures - acquisition

- internal startup - joint ventures - acquisition

Internal development of a new business is a good idea when which of the following conditions are met? - it is cheaper to enter internally than through an acquisition - the parent company has the in-house resources needed to launch the company - incumbent firms are likely to respond quickly to a new entrant into the market - there is plenty of time to start the business

- it is cheaper to enter internally than through an acquisition - the parent company has the in-house resources needed to launch the company - there is plenty of time to start the business

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

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

Entering a new business via a joint venture can be useful in which of the following situations? - when an opportunity is too complicated or risky for one company to attempt alone - when an opportunity in a new industry requires more know-how than one company has alone - when diversification entails operations in a foreign country - when both companies have different visions for product development

- when an opportunity is too complicated or risky for one company to attempt alone - when an opportunity in a new industry requires more know-how than one company has alone - when diversification entails operations in a foreign country