MGT 405 CHAPTER 10 EXAM
QUESTIONS AND ANSWERS ALL
CORRECT
Which of the following is a justification that a business adopts to justify diversification? -
Answer- Entry into new industries will rescue the core business and lead to long term
growth and profitability.
Microsoft's relationships and experiences in the computer industry and expertise in
managing industries surrounding external networks led them to create new business
units in the video game, online portal, and search engine industries. This is an example
of which of the following? - Answer- Leveraging competencies to create a new business
The three main types of diversification strategies are: - Answer- acquisitions, internal
new ventures, and joint ventures.
Bob's Running Shoes has acquired Fleet Feet about six months ago. Due to the
differences in processes and cultures of the two companies, it has taken a long time to
adopt a common management and financial control system. They share information and
personnel but have had difficulty in creating a common culture. Management is
threatening to leave because the employees do not like the acquiring company's way of
operating. Which of the following acquisition pitfalls does this scenario describe? -
Answer- Integrating the acquired company
Which of the following describes when diversification to obtain economies of scope is
possible? - Answer- When there are significant commonalities between one or more
value-chain functions in a company's different business units or divisions that result in
synergies which increase profitability.
Which of the following is NOT a reason that explains the relatively high failure rate of
internal new ventures? - Answer- Companies are focused on and excel at R&D in which
they help to advance basic science and discover important commercial applications for
it.
Product bundling refers to: - Answer- a complete package of related products.
, How is the acquisition of new business related to existing business activities in
situations where company leaders base their diversification strategy on transferring
competencies? - Answer- Related
A company should pursue unrelated diversification instead of related diversification
when: - Answer- its core skills are highly specialized are have few applications outside
of its core business.
Tom Smith is a top manager at a diversified company that has been tasked to identify
inefficient, poorly managed companies in other industries and then acquire and
restructure them to improve their performance and increase the profitability of the total
corporation. Which of the following would be a strategy Tom might take to increase the
performance of one of these newly acquired companies? - Answer- The new top-
management team consolidates assets and terminates staff to reduce the cost
structure.
Which diversification strategy is based on the idea that the company creates value by
applying the distinctive competencies it developed in one line of business to another
business activity? - Answer- Related diversification
Stanley's services firm wants to enter an embryonic market, but it doesn't have enough
cash to purchase the required assets. Which of the following strategies would you
recommend to Stanley? - Answer- Diversify with a joint venture.
Which of the following is NOT a general organizational competency? - Answer- Product
bundling
Which of the following is the probable consequences of a company's inability to
integrate 2 divergent corporate cultures after an acquisition? - Answer- An inability to
realize potential gains from synergies
A company should pursue related diversification instead of unrelated diversification
when the company's: - Answer- core skills are applicable to a wide variety of industrial
and commercial situations.
Which of the following is NOT a reason for the failure of an acquisition to generate the
gains originally expected of it? - Answer- Overestimation of the potential costs of
realizing synergies
In order to make a successful acquisition, which of the following would occur after a
detailed assessment of the potential acquisition's strengths and weaknesses? - Answer-
Developing and initiating a bidding strategy
Which of the following statements concerning research and development is correct? -
Answer- Exploratory research and development research are needed for internal new
venturing.
QUESTIONS AND ANSWERS ALL
CORRECT
Which of the following is a justification that a business adopts to justify diversification? -
Answer- Entry into new industries will rescue the core business and lead to long term
growth and profitability.
Microsoft's relationships and experiences in the computer industry and expertise in
managing industries surrounding external networks led them to create new business
units in the video game, online portal, and search engine industries. This is an example
of which of the following? - Answer- Leveraging competencies to create a new business
The three main types of diversification strategies are: - Answer- acquisitions, internal
new ventures, and joint ventures.
Bob's Running Shoes has acquired Fleet Feet about six months ago. Due to the
differences in processes and cultures of the two companies, it has taken a long time to
adopt a common management and financial control system. They share information and
personnel but have had difficulty in creating a common culture. Management is
threatening to leave because the employees do not like the acquiring company's way of
operating. Which of the following acquisition pitfalls does this scenario describe? -
Answer- Integrating the acquired company
Which of the following describes when diversification to obtain economies of scope is
possible? - Answer- When there are significant commonalities between one or more
value-chain functions in a company's different business units or divisions that result in
synergies which increase profitability.
Which of the following is NOT a reason that explains the relatively high failure rate of
internal new ventures? - Answer- Companies are focused on and excel at R&D in which
they help to advance basic science and discover important commercial applications for
it.
Product bundling refers to: - Answer- a complete package of related products.
, How is the acquisition of new business related to existing business activities in
situations where company leaders base their diversification strategy on transferring
competencies? - Answer- Related
A company should pursue unrelated diversification instead of related diversification
when: - Answer- its core skills are highly specialized are have few applications outside
of its core business.
Tom Smith is a top manager at a diversified company that has been tasked to identify
inefficient, poorly managed companies in other industries and then acquire and
restructure them to improve their performance and increase the profitability of the total
corporation. Which of the following would be a strategy Tom might take to increase the
performance of one of these newly acquired companies? - Answer- The new top-
management team consolidates assets and terminates staff to reduce the cost
structure.
Which diversification strategy is based on the idea that the company creates value by
applying the distinctive competencies it developed in one line of business to another
business activity? - Answer- Related diversification
Stanley's services firm wants to enter an embryonic market, but it doesn't have enough
cash to purchase the required assets. Which of the following strategies would you
recommend to Stanley? - Answer- Diversify with a joint venture.
Which of the following is NOT a general organizational competency? - Answer- Product
bundling
Which of the following is the probable consequences of a company's inability to
integrate 2 divergent corporate cultures after an acquisition? - Answer- An inability to
realize potential gains from synergies
A company should pursue related diversification instead of unrelated diversification
when the company's: - Answer- core skills are applicable to a wide variety of industrial
and commercial situations.
Which of the following is NOT a reason for the failure of an acquisition to generate the
gains originally expected of it? - Answer- Overestimation of the potential costs of
realizing synergies
In order to make a successful acquisition, which of the following would occur after a
detailed assessment of the potential acquisition's strengths and weaknesses? - Answer-
Developing and initiating a bidding strategy
Which of the following statements concerning research and development is correct? -
Answer- Exploratory research and development research are needed for internal new
venturing.
