MGT 4335 CHAPTER 6 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026

MGT 4335 CHAPTER 6 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026 ________ involves the search for competitive advantage within a single industry, market, or line of business. - Answers Business unit strategy The search for value and competitive advantages through participation in several different industries and markets is called _________. - Answers corporate strategy Which of the following describes movement into adjacent markets by a firm along its own value chain? - Answers Vertical integration ___________ depicts the movement into an adjacent, or unrelated, market that is not along a firm's own value chain. - Answers Horizontal diversification A firm that earns more than 70 percent of its revenue from its main line of business and the rest from businesses located along the value chain is known as a(n) _________. - Answers dominant vertical business Which of the following occurs when a firm that operates in related markets, but fewer linkages exists between the new and existing markets than the elements create separately? - Answers Related-linked diversification Which of the following describes a conceptualization of a business, or a set of rules for competition, that applies to seemingly unrelated product markets or industries? - Answers Dominant logic ________ is the belief of managers that investment in a failed acquisition must continue because significant amounts have already been invested) - Answers Sunk cost fallacy Which of the following terms describes entry into an adjacent market by a firm that opens its own operation? - Answers Greenfield entry A(n) ________ involves the purchase of another company, or its assets. - Answers acquisition In an acquisition, few channels are available and getting access to those channels is difficult and expensive. T/F? - Answers True _________ is the process whereby managers closely examine the target firm to understand its core processes, strengths, and weaknesses. - Answers Due diligence A(n) _________ is an acquisition where the acquiring firm absorbs the target firm and the target firm ceases to exist. - Answers takeover An acquisition with the goal of creating a new firm from the components of the two pre-acquisition firms is known as a(n) ________. - Answers merger CVS in 2015 - Answers From Neighborhood Pharmacy Provider to Health Care Company Diversification creates value when - Answers firms exploit or enhance their resource base by entering a new line of business, market, or industry. Managers should ask two questions when considering entering a new line of business: - Answers (1) Why will the existing businesses be more valuable because we've entered an adjacent business? (2) Why will the new business activity be more valuable inside our corporation than operating alone? When managers choose to diversify, they face a choice about - Answers whether to enter a new line of business through greenfield entry or through acquisition. Greenfield entry proves - Answers a preferred strategy when the firm can readily exploit its existing resources and capabilities, is not pressed for speed, and can enter a new line of business at a small or moderate scale. Diversification through acquisition becomes the preferred strategy when - Answers firms must expand their resources and capabilities to compete effectively, enter a market quickly, or operate at large scale. Successful diversification relies on one of the Eight Ss to create value: - Answers 1. managerial slack gy 3. shared knowledge ess models ding capital ing stone into new markets 7. stopping or slowing competitors 8. staying ahead of tech managerial slack - Answers the ability of managers to handle more work effectively over time synergy - Answers the combination of two businesses creates more value than either could separately shared knowledge - Answers diversification allows valuable knowledge and skill to be shared between business units business models - Answers when business unit success depends on common characteristics, such as knowledge management, or scale economies spreading capital - Answers the headquarters of the corporation quickly allocates capital and other resources to their best use among business units stepping stone to new markets - Answers where a firm moves to a new industry through a set of small jumps and each jump allows the acquisition of key resources and skills stopping (or slowing competitors) - Answers pre-emptively moving into a new market space, or acquiring another firm, to deny a competitor access to that space staying ahead of technology - Answers expanding into a new technology arena, or buying a company in that arena, in order to learn about new technologies When done poorly, diversification destroys value through - Answers 1. excessive pride or hubris cost fallacy tive diversification governance and incentives 5. the lack of resource commonality between the lines of business excessive pride or hubris - Answers making diversification decisions based on biased thinking or emotional reasoning rather than facts and data sunk cost fallacy - Answers focusing on past resources expended, which cannot be recovered, as a criteria for decision making imitative diversification - Answers choosing to copy a competitor's moves rather than having a compelling strategic logic poor governance and incentives - Answers simply running the new business poorly or failing to incentivize managers to attend to the business the lack of resource commonality between the lines of business - Answers moving into lines of business that fail to create value based on any of the eight Successful integration ensures that - Answers acquisitions add value to the organization. The four Bs provide a template for thinking about how a firm should integrate an acquisition: - Answers Bury—completely absorb the acquired company into the acquirer Blend—retaining and combining the best elements of both companies to compete more effectively Build—craft an entirely new organization Bolt-on—run the acquired company independently of the acquiring company adjacent market - Answers A market or industry that is closely related to markets or industries a firm currently competes in. core competencies (or shared knowledge) - Answers Collective knowledge that can be distributed throughout the organization to create value. corporate venture capital - Answers A venture capital fund owned and managed by a corporation instead of independent investors. dominant business - Answers A firm that earns more than 70 percent of revenue from its main line of business and the remainder from other lines across different value chains. dominant logic - Answers A conceptualization of a business, or a set of rules for competition, that applies to seemingly unrelated product markets or industries. economy of scope - Answers Activities where the average cost of producing two different products is less when delivered together than separately. horizontal diversification - Answers The movement into an adjacent, or unrelated, market that is not along a firm's own value chain.