Corporate Strategy & Diversification –
Exam 2 Study Guide – FSU Dever – 2026 |
Strategic Management, Restructuring &
Competitive Dynamics|Questions
Provided with A+ Graded Rationales
Latest Updated
A firm practicing unrelated diversification can make better capital allocations to its subsidiary
businesses than the external capital market can for all the following reasons EXCEPT:
the firm can acquire other firms with innovative products instead of allocating capital to
research and development.
What are the challenges associated with using an unrelated diversification strategy?
Replicating the value gained from operational relatedness
Virgin Group Ltd. successfully transfers its marketing core competence across airlines,
cosmetics, music, drinks, mobile phones, health clubs, and a number of other businesses.
Virgin follows which diversification corporate strategy?
Related linked
Which of the following makes high-technology firms and service-based firms risky as
restructuring candidates?
they are dependent on human resources
Corporate-level strategy is concerned with how to manage these businesses and
what product markets and businesses the firm should be in
There are two types of competitive actions, which of the following is correct?
strategic, tactical
When substantial debt is used to finance acquisitions, firms with successful acquisitions
Reduce the debt quickly
The term "stuck in the middle"
, means that the firm's cost structure is not low enough to allow it to attractively price its
products and that its products are not sufficiently differentiated to create value for its target
customer.
An investor is analyzing two firms in the same industry which are basically identical. She is
looking for long-term performance from her investment. Both firms are undergoing
restructuring. One firm is involved in substantial downsizing, and the other firm is
undertaking aggressive downscoping. The investor should invest in the
downscoping firm because this will cause the firm to refocus on its core business.
Isidore Crocker, CEO of Gotham Engines, is strongly in favor of acquiring Carolina Textiles, a
firm in an unrelated industry. Some members of the board of directors are questioning
Crocker's motives for the acquisition. They argue that it is not uncommon for CEOs to push for
acquisitions because
higher CEO pay is related to larger organization size
How is the value of a corporate-level strategy ultimately determined?
Value is ultimately determined by the degree to which the businesses in the portfolio are
worth more under the management of the company than under any other ownership.
What is one potential negative outcome of leveraged buyouts?
Short-term and risk-averse managerial focus
GE operates in various industries such as aviation, healthcare, power, renewable energy, and
more. While these industries may seem unrelated at first glance, they are interconnected
through GE's core competencies in areas such as technology, engineering, and innovation.
They use related constrained diversification. What is the primary purpose of related
constrained diversification?
Sharing resources among businesses with a common feature
Sales of watches among teenagers and twenty-somethings are declining rapidly as this age
group uses cellphones, iPads, and other devices to tell time. A company that specializes in
selling inexpensive watches to this age group may wish to consider which strategy in order to
develop new products other than watches?
unrelated diversification
The risk for firms that follow the unrelated diversification strategy in developed economies is
that
Exam 2 Study Guide – FSU Dever – 2026 |
Strategic Management, Restructuring &
Competitive Dynamics|Questions
Provided with A+ Graded Rationales
Latest Updated
A firm practicing unrelated diversification can make better capital allocations to its subsidiary
businesses than the external capital market can for all the following reasons EXCEPT:
the firm can acquire other firms with innovative products instead of allocating capital to
research and development.
What are the challenges associated with using an unrelated diversification strategy?
Replicating the value gained from operational relatedness
Virgin Group Ltd. successfully transfers its marketing core competence across airlines,
cosmetics, music, drinks, mobile phones, health clubs, and a number of other businesses.
Virgin follows which diversification corporate strategy?
Related linked
Which of the following makes high-technology firms and service-based firms risky as
restructuring candidates?
they are dependent on human resources
Corporate-level strategy is concerned with how to manage these businesses and
what product markets and businesses the firm should be in
There are two types of competitive actions, which of the following is correct?
strategic, tactical
When substantial debt is used to finance acquisitions, firms with successful acquisitions
Reduce the debt quickly
The term "stuck in the middle"
, means that the firm's cost structure is not low enough to allow it to attractively price its
products and that its products are not sufficiently differentiated to create value for its target
customer.
An investor is analyzing two firms in the same industry which are basically identical. She is
looking for long-term performance from her investment. Both firms are undergoing
restructuring. One firm is involved in substantial downsizing, and the other firm is
undertaking aggressive downscoping. The investor should invest in the
downscoping firm because this will cause the firm to refocus on its core business.
Isidore Crocker, CEO of Gotham Engines, is strongly in favor of acquiring Carolina Textiles, a
firm in an unrelated industry. Some members of the board of directors are questioning
Crocker's motives for the acquisition. They argue that it is not uncommon for CEOs to push for
acquisitions because
higher CEO pay is related to larger organization size
How is the value of a corporate-level strategy ultimately determined?
Value is ultimately determined by the degree to which the businesses in the portfolio are
worth more under the management of the company than under any other ownership.
What is one potential negative outcome of leveraged buyouts?
Short-term and risk-averse managerial focus
GE operates in various industries such as aviation, healthcare, power, renewable energy, and
more. While these industries may seem unrelated at first glance, they are interconnected
through GE's core competencies in areas such as technology, engineering, and innovation.
They use related constrained diversification. What is the primary purpose of related
constrained diversification?
Sharing resources among businesses with a common feature
Sales of watches among teenagers and twenty-somethings are declining rapidly as this age
group uses cellphones, iPads, and other devices to tell time. A company that specializes in
selling inexpensive watches to this age group may wish to consider which strategy in order to
develop new products other than watches?
unrelated diversification
The risk for firms that follow the unrelated diversification strategy in developed economies is
that
