Strategic Management Chapter 6
Testbank Questions and Answers Grade
A+ 2023
Whenever an organization diversifies, it represents investing a stockholder's funds in a way in
which the individual investor is unable. True or false? - -false
-Diversification that results in strengthening the value chain and increasing competitive
advantages is the best possible example of investing stockholders' funds in a way that individual
investors cannot. true or false? - -true
-When firms diversify into unrelated businesses, the primary potential benefits are horizontal
relationships, i.e. businesses sharing tangible and intangible resources. true or false? - -false
-a newly acquired business must always have products that are similar to the existing businesses'
products to benefit from the corporation's core competence. true or false? - -false
-sharing activities across business units can provide two primary benefits cost savings and
revenue enhancements. true or false? - -true
-sharing activities among business units can have a negative effect on a given business's
differentiation. true or false? - -true
-market power refers to cost savings from leveraging core competencies or sharing activities
among the businesses in a corporation. true or false? - -false
-The two principle means by which firms achieve synergy through market power are pooled
negotiating power and corporate parenting. true or false? - -false
-similar businesses working together or the affiliation of a business with a strong parent can
strengthen a firm's bargaining position relative to suppliers and customers. true or false? - -true
-a firm that incorporates more processes toward the original source of raw materials is an
example of forward integration. true or false? - -false
-a publishing company that purchases a chain of bookstores to sell its books is an example of
unrelated diversification. true or false? - -false
, -one of the risks of vertical integration is that they may be problems associated with unbalanced
capacities or unfilled demands along a firm's value chain. true or false? - -true
-vertical integration should be undertaken when demand for the organization's products is very
unstable. true or false? - -false
-market transactions do not involve transaction costs. true or false? - -false
-vertical integration is attractive when market transaction costs are higher than internal admin
costs. true or false? - -true
-according to the text, the 2 main sources of synergy is unrelated diversification are parenting
and financial synergies via portfolio management. true or false? - -true
-restructuring requires the corporate office to find either poorly performing firms with unrealized
potential or firms in industries on the threshold of significant, positive change. true or false? - -
true
-portfolio management should be considered as the primary basis for formulating corporate level
strategies. true or false? - -false
-portfolio management matrices generally costs of 2 axes that reflect industry or market growth
and the market share of a business. true or false? - -true
-the acquisition of 2 or more counter cyclical businesses is an example of using diversification to
reduce risk. true or false? - -true
-an advantage of mergers and acquisitions is that the can enable a firm to rapidly enter new
product markets. true or false? - -true
-among the disadvantages of acquisitions are the expensive premiums that are frequently paid to
acquire a business. true or false? - -true
-through joint ventures, firms can directly acquire the assets and competencies of other firms.
true or false? - -false
-the potential advantages of strategic alliances and joint ventures include entering new markets
as will as developing and diffusing new technologies. true or false? - -true
-for strategic alliances to be effective, reliance on written contracts to delimit responsibilities and
enforce compliance is vital. true or false? - -false
-an advantage of a firm entering into a strategic alliance is that it does not have to share the
wealth with is partners. true or false? - -false
Testbank Questions and Answers Grade
A+ 2023
Whenever an organization diversifies, it represents investing a stockholder's funds in a way in
which the individual investor is unable. True or false? - -false
-Diversification that results in strengthening the value chain and increasing competitive
advantages is the best possible example of investing stockholders' funds in a way that individual
investors cannot. true or false? - -true
-When firms diversify into unrelated businesses, the primary potential benefits are horizontal
relationships, i.e. businesses sharing tangible and intangible resources. true or false? - -false
-a newly acquired business must always have products that are similar to the existing businesses'
products to benefit from the corporation's core competence. true or false? - -false
-sharing activities across business units can provide two primary benefits cost savings and
revenue enhancements. true or false? - -true
-sharing activities among business units can have a negative effect on a given business's
differentiation. true or false? - -true
-market power refers to cost savings from leveraging core competencies or sharing activities
among the businesses in a corporation. true or false? - -false
-The two principle means by which firms achieve synergy through market power are pooled
negotiating power and corporate parenting. true or false? - -false
-similar businesses working together or the affiliation of a business with a strong parent can
strengthen a firm's bargaining position relative to suppliers and customers. true or false? - -true
-a firm that incorporates more processes toward the original source of raw materials is an
example of forward integration. true or false? - -false
-a publishing company that purchases a chain of bookstores to sell its books is an example of
unrelated diversification. true or false? - -false
, -one of the risks of vertical integration is that they may be problems associated with unbalanced
capacities or unfilled demands along a firm's value chain. true or false? - -true
-vertical integration should be undertaken when demand for the organization's products is very
unstable. true or false? - -false
-market transactions do not involve transaction costs. true or false? - -false
-vertical integration is attractive when market transaction costs are higher than internal admin
costs. true or false? - -true
-according to the text, the 2 main sources of synergy is unrelated diversification are parenting
and financial synergies via portfolio management. true or false? - -true
-restructuring requires the corporate office to find either poorly performing firms with unrealized
potential or firms in industries on the threshold of significant, positive change. true or false? - -
true
-portfolio management should be considered as the primary basis for formulating corporate level
strategies. true or false? - -false
-portfolio management matrices generally costs of 2 axes that reflect industry or market growth
and the market share of a business. true or false? - -true
-the acquisition of 2 or more counter cyclical businesses is an example of using diversification to
reduce risk. true or false? - -true
-an advantage of mergers and acquisitions is that the can enable a firm to rapidly enter new
product markets. true or false? - -true
-among the disadvantages of acquisitions are the expensive premiums that are frequently paid to
acquire a business. true or false? - -true
-through joint ventures, firms can directly acquire the assets and competencies of other firms.
true or false? - -false
-the potential advantages of strategic alliances and joint ventures include entering new markets
as will as developing and diffusing new technologies. true or false? - -true
-for strategic alliances to be effective, reliance on written contracts to delimit responsibilities and
enforce compliance is vital. true or false? - -false
-an advantage of a firm entering into a strategic alliance is that it does not have to share the
wealth with is partners. true or false? - -false
