MGMT425 8 EXAM QUESTIONS WITH 100%
CORRECT ANSWERS 2024/2025
E) All of these.
The task of crafting corporate strategy for a diversified company encompasses
A) picking the new industries to enter and deciding on the means of entry.
B) initiating actions to boost the combined performance of the businesses the firm has entered.
C) pursuing opportunities to leverage cross-business value chain relationships and strategic fits into
competitive advantage.
D) establishing investment priorities and steering corporate resources into the most attractive
business
units.
E) All of these.
B) Choosing the appropriate value chain for each business the company has entered
Which one of the following is not one of the elements of crafting corporate strategy for a diversified
company?
A) Picking new industries to enter and deciding on the means of entry
B) Choosing the appropriate value chain for each business the company has entered
C) Pursuing opportunities to leverage cross-business value chain relationships and strategic fits into
competitive advantage
D) Establishing investment priorities and steering corporate resources into the most attractive
business
units
E) Initiating actions to boost the combined performance of the businesses the firm has entered
B) is faced with diminishing market opportunities and stagnating sales in its principal business.
Diversification merits strong consideration whenever a single-business company
A) has integrated backward and forward as far as it can.
B) is faced with diminishing market opportunities and stagnating sales in its principal business.
C) has achieved industry leadership in its main line of business.
D) encounters declining profits in its mainstay business.
E) faces strong competition and is struggling to earn a good profit.
E) All of these.
Diversification becomes a relevant strategic option when a company
A) spots opportunities to expand into industries whose technologies and products complement its
present
business.
B) can leverage existing competencies and capabilities by expanding into industries where these same
resource strengths are key success factors and valuable competitive assets.
C) has a powerful and well-known brand name that can be transferred to the products of other
businesses
and thereby used as a lever for driving up the sales and profits of such businesses.
D) can open up new avenues for reducing costs by diversifying into closely related businesses.
E) All of these.
C) a company begins to encounter diminishing growth prospects in its mainstay business.
Diversification ought to be considered when
A) a company's profits are being squeezed and it needs to increase its net profit margins and return
on
investment.
B) a company lacks sustainable competitive advantage in its present business.
, C) a company begins to encounter diminishing growth prospects in its mainstay business.
D) a company has run out of ways to achieve a distinctive competence in its present business.
E) a company is under the gun to create a more attractive and cost-efficient value chain.
B) When a company is only earning a low profit margin in its principal business
Diversification becomes a relevant strategic option in all but which one of the following situations?
A) When a company spots opportunities to expand into industries whose technologies and products
complement its present business.
B) When a company is only earning a low profit margin in its principal business
C) When a company has a powerful and well-known brand name that can be transferred to the
products
of other businesses and thereby used as a lever for driving up the sales and profits of such businesses.
D) When a company can open up new avenues for reducing costs by diversifying into closely related
businesses.
E) When a company can leverage existing competencies and capabilities by expanding into industries
where these same resource strengths are key success factors and valuable competitive assets.
B) builds shareholder value.
Diversifying into new businesses is justifiable only if it
A) results in increased profit margins and bigger total profits.
B) builds shareholder value.
C) helps a company escape the rigors of competition in its present business.
D) leads to the development of a greater variety of distinctive competencies and competitive
capabilities.
E) helps the company overcome the barriers to entering additional foreign markets.
A) their value chains possess competitively valuable cross-business relationships.
The essential requirement for different businesses to be "related" is that
A) their value chains possess competitively valuable cross-business relationships.
B) the products of the different businesses are bought by much the same types of buyers.
C) the products of the different businesses are sold in the same types of retail stores.
D) the businesses have several key suppliers in common.
E) the productions methods that they employ both entail economies of scale.
B) Related diversification offers more competitive advantage potential than does unrelated
Which of the following is an important appeal of a related diversification strategy?
A) Related diversification is an effective way of capturing valuable financial fit benefits.
B) Related diversification offers more competitive advantage potential than does unrelated
diversification.
C) Related diversification offers significant opportunities to strongly differentiate a company's product
offerings from those of rivals.
D) Related diversification is more likely to pass the cost-of-entry test and the capital gains test than
unrelated diversification.
E) Related diversification is typically more profitable than unrelated diversification, which is a major
factor in helping related diversification pass the attractiveness test.
D) their value chains possess competitively valuable cross-business relationships that present
opportunities
Businesses are said to be "related" when
A) they have several key suppliers and several key customers in common.
B) their value chains have the same number of primary activities.
C) their products are both sold through retailers.
CORRECT ANSWERS 2024/2025
E) All of these.
The task of crafting corporate strategy for a diversified company encompasses
A) picking the new industries to enter and deciding on the means of entry.
B) initiating actions to boost the combined performance of the businesses the firm has entered.
C) pursuing opportunities to leverage cross-business value chain relationships and strategic fits into
competitive advantage.
D) establishing investment priorities and steering corporate resources into the most attractive
business
units.
E) All of these.
B) Choosing the appropriate value chain for each business the company has entered
Which one of the following is not one of the elements of crafting corporate strategy for a diversified
company?
A) Picking new industries to enter and deciding on the means of entry
B) Choosing the appropriate value chain for each business the company has entered
C) Pursuing opportunities to leverage cross-business value chain relationships and strategic fits into
competitive advantage
D) Establishing investment priorities and steering corporate resources into the most attractive
business
units
E) Initiating actions to boost the combined performance of the businesses the firm has entered
B) is faced with diminishing market opportunities and stagnating sales in its principal business.
Diversification merits strong consideration whenever a single-business company
A) has integrated backward and forward as far as it can.
B) is faced with diminishing market opportunities and stagnating sales in its principal business.
C) has achieved industry leadership in its main line of business.
D) encounters declining profits in its mainstay business.
E) faces strong competition and is struggling to earn a good profit.
E) All of these.
Diversification becomes a relevant strategic option when a company
A) spots opportunities to expand into industries whose technologies and products complement its
present
business.
B) can leverage existing competencies and capabilities by expanding into industries where these same
resource strengths are key success factors and valuable competitive assets.
C) has a powerful and well-known brand name that can be transferred to the products of other
businesses
and thereby used as a lever for driving up the sales and profits of such businesses.
D) can open up new avenues for reducing costs by diversifying into closely related businesses.
E) All of these.
C) a company begins to encounter diminishing growth prospects in its mainstay business.
Diversification ought to be considered when
A) a company's profits are being squeezed and it needs to increase its net profit margins and return
on
investment.
B) a company lacks sustainable competitive advantage in its present business.
, C) a company begins to encounter diminishing growth prospects in its mainstay business.
D) a company has run out of ways to achieve a distinctive competence in its present business.
E) a company is under the gun to create a more attractive and cost-efficient value chain.
B) When a company is only earning a low profit margin in its principal business
Diversification becomes a relevant strategic option in all but which one of the following situations?
A) When a company spots opportunities to expand into industries whose technologies and products
complement its present business.
B) When a company is only earning a low profit margin in its principal business
C) When a company has a powerful and well-known brand name that can be transferred to the
products
of other businesses and thereby used as a lever for driving up the sales and profits of such businesses.
D) When a company can open up new avenues for reducing costs by diversifying into closely related
businesses.
E) When a company can leverage existing competencies and capabilities by expanding into industries
where these same resource strengths are key success factors and valuable competitive assets.
B) builds shareholder value.
Diversifying into new businesses is justifiable only if it
A) results in increased profit margins and bigger total profits.
B) builds shareholder value.
C) helps a company escape the rigors of competition in its present business.
D) leads to the development of a greater variety of distinctive competencies and competitive
capabilities.
E) helps the company overcome the barriers to entering additional foreign markets.
A) their value chains possess competitively valuable cross-business relationships.
The essential requirement for different businesses to be "related" is that
A) their value chains possess competitively valuable cross-business relationships.
B) the products of the different businesses are bought by much the same types of buyers.
C) the products of the different businesses are sold in the same types of retail stores.
D) the businesses have several key suppliers in common.
E) the productions methods that they employ both entail economies of scale.
B) Related diversification offers more competitive advantage potential than does unrelated
Which of the following is an important appeal of a related diversification strategy?
A) Related diversification is an effective way of capturing valuable financial fit benefits.
B) Related diversification offers more competitive advantage potential than does unrelated
diversification.
C) Related diversification offers significant opportunities to strongly differentiate a company's product
offerings from those of rivals.
D) Related diversification is more likely to pass the cost-of-entry test and the capital gains test than
unrelated diversification.
E) Related diversification is typically more profitable than unrelated diversification, which is a major
factor in helping related diversification pass the attractiveness test.
D) their value chains possess competitively valuable cross-business relationships that present
opportunities
Businesses are said to be "related" when
A) they have several key suppliers and several key customers in common.
B) their value chains have the same number of primary activities.
C) their products are both sold through retailers.
