BUSA Chapter 6 with correct answers 100%

BUSA Chapter 6 with correct answers 100% Define corporate strategy - Correct Answer Strategies firm use to diversify their operations from a business operating in a single market into several product markets and industries. What is the primary form of corporate level strategy? - Correct Answer Product diversification What are the incentive-related reasons for diversification? - Correct Answer Diminishing market opportunities and stagnating sales, spread risk across varying industries, exploit valuable tangible or intangible resources, changes in antitrust regulations or tax What are the value creation-related reasons for diversification? - Correct Answer Obtain economies of scope, gain market power, achieve financial economies How do you test the merit of diversification? - Correct Answer Industry attractiveness that will yield consistently good returns, an industry with a low cost of entry that won't erode returns, businesses perform better together than independently What are the standard vehicles of diversification? - Correct Answer Acquisition of an existing business, internal development, joint ventures What is the most popular means of diversifying into an existing industry? - Correct Answer Acquisition What is internal development? - Correct Answer Building a new business subsidiary from scratch What is a joint venture? - Correct Answer Forming a new corporate entity owned by the partners, used with complex industries and foreign markets, least durable due to potential of conflicting objectives What are the characteristics of related diversification? - Correct Answer Enhance shareholder value by capturing economies of scope and market power, transfer skills and capabilities, share activities to reduce cost, vertical integration, block competitors through multipoint competition What are economies of scope? - Correct Answer savings a firm creates by successfully sharing resources and capabilities or transferring core competencies What is market power? - Correct Answer When a firm is able to sell its products above the existing competitive level or to reduce the costs of its primary or support activities below the competitive level What are the characteristics of diversifying into an unrelated business? - Correct Answer Build shareholder value by managing a collection of businesses more efficiently, spread risk across completely different businesses, focus on attractive growth business, allocate capital more efficiently, business restructuring What are financial economies? - Correct Answer Cost savings improved through improved allocation of financial resources based on investments inside or outside the firm What is efficient internal capital allocation? - Correct Answer Cost savings realized through improved allocations of financial resources based on capital allocated inside the diversified firm What is asset restructuring? - Correct Answer Financial economies accrue to firms expert at purchasing undervalued assets, restructuring operations, and selling at a premium Which type of diversification creates more value? - Correct Answer Related