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Win Goods Inc.is a large multinational conglomerate.As a single business unit, the company's stock price is estimated to be $200.However, by adding the actual market stock prices of each of its individual business units, the stock price of the company as one unit would be $300.What is Win Goods experiencing in this scenario?


A) Diversification discount
B) Learning-curve effects
C) Experience-curve effects
D) Economies of scale

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Real Goods Inc.is a large conglomerate.The company's beverages strategic business unit (SBU) has been recognized as a cash cow, and its tobacco SBU has been categorized as a dog.Which of the following can be inferred from this scenario?


A) While the tobacco SBU operates in a low-growth market, the beverages SBU operates in a high-growth market.
B) The management of the company should use the cash inflow from the beverages SBU and invest it in the tobacco SBU.
C) While the market share of the company in the beverages industry will be high, the market share in the tobacco industry will be low.
D) The tobacco SBU should follow a backward integration strategy, and the beverages SBU should pursue a forward integration strategy.

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A firm follows a(n) _____ when less than 70 percent of its revenues come from a single business and there are few, if any, linkages among its businesses.


A) related-constrained strategy
B) unrelated diversification strategy
C) differentiation strategy
D) dominant-business strategy

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How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies?


A) By using internal capital markets as a source of value creation
B) By adding more unrelated businesses into its corporate portfolio
C) By increasing its coordination and influence costs
D) By investing in businesses under the question mark quadrant of the BCG matrix

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What kind of businesses is categorized under stars in the Boston Consulting Group (BCG)growth-share matrix?

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A corporation's star strategic business ...

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ElectraSync Inc., a large consumer electronics company, has divided each product in its portfolio into a separate strategic business unit (SBU) .The desktop SBU has been experiencing drastic decline in its cash flow, and its market share has also reduced to an insignificant 10 percent.This has been attributed to the low-growth in the desktop market after the arrival of tablet computers and laptops.In the context of the Boston Consulting Group (BCG) growth-share matrix, the desktop SBU will be categorized under:


A) stars.
B) question marks.
C) dogs.
D) cash cows.

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How does a conglomerate benefit from following an unrelated diversification strategy?


A) The conglomerate can solely depend on its primary business activity for a major portion of its revenues.
B) The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses.
C) The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies.
D) The conglomerate can limit the learning- and experience-curve effects it faces.

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Which of the following companies will be considered as a conglomerate?


A) ExxonMobil, after it acquired XTO Energy-a natural gas company
B) The Tata Group, active in industries such as tea, steel, IT, power, and automobiles
C) Harley-Davidson, with its Harley-Davidson branded motorcycle clothing and attire
D) Coca-Cola, which solely focuses on soft drinks but operates in many countries

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What options do managers have to formulate corporate strategy once they have a clear understanding of their firm's core competencies?

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Once managers have a clear understanding...

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GFR Group is the parent company of many related businesses under its banner.Each share of the parent company is quoted at $220.However, if this had to be assessed by adding the stock prices of each of its strategic business units, the value would only be $200 per share.In this scenario, what has GFR Group created?


A) Capital liquidity
B) Diversification premium
C) Diversification discount
D) Demand-pull inflation

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Explain the two types of related diversification strategy with the help of examples.

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Students' answers may vary.
There are tw...

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_____ is best described as a firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs.


A) Venture capitalism
B) Bootlegging
C) Vertical integration
D) Crowdsourcing

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_____ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property.


A) Lean manufacturing
B) Licensing
C) Crowdsourcing
D) Bootlegging

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Discuss the application of the core competence-market matrix. C. K. Prahalad advanced the core competence-market matrix, as a way to guide managerial decisions in regard to diversification strategies. The first task for managers is to identify their existing core competencies and understand the firm's current market situation. When applying an existing or new dimension to core competencies and markets, four quadrants emerge, each with distinct strategic implications.

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To survive and prosper, companies need t...

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Which of the following is true of the parent-subsidiary relationship?


A) The ability to create a community of knowledge is low.
B) The parent firm has no control and command over the subsidiary.
C) The transaction costs that arise are frequently due to transfer prices.
D) The parent firm will lack specialization and division of labor.

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Diversification premium is a situation in which:


A) customers have to pay premium prices on products manufactured by firms pursuing unrelated diversification due to the lack of economies of scope.
B) the overall value creation of highly diversified firms is more than the sum of the value created by individual business units.
C) the stock price of related-diversification firms is valued at greater than the sum of their individual business units.
D) shareholders are benefitted from the market capitalization of a highly diversified firm because of its economies of scale.

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When do companies experience diversification discount and diversification premium?

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Firms that pursue unrelated diversificat...

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A _____ is best defined as a company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy.


A) conglomerate
B) single-business firm
C) parent company
D) subsidiary

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The most efficient way to overcome the principal-agent problem in a firm is to:


A) increase the level of vertical integration within the firm.
B) provide stock options to managers.
C) downsize the existing workforce.
D) organize economic activities within the firm.

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Which of the following corporate strategies did ExxonMobil pursue by acquiring XTO Energy, a natural gas company?


A) Taper integration strategy
B) Differentiation strategy
C) Related diversification strategy
D) Cost-leadership strategy

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Showing 21 - 40 of 126

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