Chapter 6 Review Questions

Topics: Strategic management, Marketing, Mergers and acquisitions Pages: 7 (1459 words) Published: September 9, 2013
Keiser University
MAN4631 Global Strategy and Policy
Chapter 6 Review questions.

Name _________________Points ___________Grade_____

1. Whenever an organization diversifies, it represents investing a stockholder's funds in a way in which the individual investor is unable.  True     (p. 198) 
2. When firms diversify into unrelated businesses, the primary potential benefits are horizontal relationships, i.e., businesses sharing tangible and intangible resources.    False (p. 198) 
3. 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     (p. 203 – 204)

4. A publishing company that purchases a chain of bookstores to sell its books is an example of unrelated diversification.  True     (p. 206)
5. One of the risks of vertical integration is that there may be problems associated with unbalanced capacities or unfilled demands along a firm's value chain.  True      (p. 206 - 207) 
6. Vertical integration is attractive when market transaction costs are higher than internal administrative costs.  True     (p. 208) 
7. According to the text, the two main sources of synergy in unrelated diversification are parenting and financial synergies via portfolio management.     False (p. 209 - 211) 
8. Portfolio management should be considered as the primary basis for formulating corporate-level strategies.  True      (p. 211) 
9. An advantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.  True    False (p. 215 - 216) 
10. A golden parachute is a prearranged contract with managers specifying that in the event of a hostile takeover, the target firm's managers will be paid a significant severance package.  True      (p. 225) 

11. The potential advantages of strategic alliances and joint ventures include entering new markets as well as developing and diffusing new technologies.  True    (p. 220 - 222) 
12. Corporate-level strategy addresses two related issues:  (p. 195) 

C. How to integrate primary activities; increase shareholder wealth..

13. __________ reflect(s) the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services. (p. 200) 

C. Core competencies

14. The risks of vertical integration include all of the following except  (p. 207) 

B. Lack of control over valuable assets.

15. A firm should consider vertical integration when  (p. 207 - 208) 

D. The firm's suppliers of raw materials are often unable to maintain quality standards.  
16. __________ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. (p. 207 - 208) 

B. Restructuring

17. According to the text, corporate restructuring includes  . (p. 210) 

D. Capital restructuring, asset restructuring, and management restructuring.  
18. Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics?  A. Grid dimensions are based on external environments and internal capabilities/market positions.

19. The three primary means by which a firm can diversify are: (p. 214 - 215)  A. Mergers and acquisitions; joint ventures and strategic alliances; internal development..  
20. The downsides or limitations of mergers and acquisitions include all of the following except: . (p. 217 - 218) 

C. It is a slow means to enter new markets and acquire skills and competences.

21. __________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide.  (p. 222) 

C. Strategic alliances; mergers; joint ventures
22. McKesson, a large distribution company, sells many product...
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