Firms use corporate-level diversification strategies for all the following reasons EXCEPT
True/False Show
Indicate whether the sentence or statement is true or false. 1. Increasingly, people are an important source of competitive advantage for firms competing in the global economy. 2. Firms can earn above-average returns even if they do not develop or sustain a competitive advantage. 3. A low-cost position in the industry is not a valuable defense against rivals when competing on the basis of price. 4. A differentiator's product price is typically less than that of a cost leader. 5. Firms operating in the same market, offering similar products and targeting similar customers are competitors. 6. The description of firms' strategic actions as dynamic in nature suggests that actions taken by one firm cause responses from competitors. 7. Firms are more likely to imitate the actions of a competitor that is noted for risky, complex, and unpredictable behavior because this is a way to imitate intangible resources. 8. Market power exists when a firm is able to sell its products above the existing competitive level or decrease the costs of its primary and support activities below the competitive level, or both. 9. Many manufacturing firms are de-integrating and moving to independent supplier networks. 10. Related diversification by a firm tends to reduce a manager's executive compensation, whereas unrelated diversification tends to increase it. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 11. Even for companies capable of succeeding in global markets, it is critical that they:
12. Organizational stakeholders include which of the following?
13. In a diversified firm, corporate-level strategy is concerned with:
14. According to the five factors model, an attractive industry would have all of the following characteristics EXCEPT:
15. Firms within strategic groups:
16. The firm's reputation for quality is:
17. Causally ambiguous means that:
18. A company using a narrow scope in its business strategy is:
19. A cost leadership strategy can be summarized as:
20. A differentiation strategy can be effective in controlling the power of substitutes in an industry because:
21. The integrated cost leadership/differentiation strategy:
22. __________ relates to the gains or losses are firm will experience if it attacks a rival or responds to an attack by a rival.
23. First movers are:
24. Late movers are those firms that:
25. Which of the following would be an example of a strategic action?
26. Ninety percent of Wm. Wrigley Company's total revenue comes from chewing gum. This is a good example of:
27. In order to compete effectively, standard-cycle firms need:
28. If Wm. Wrigley Jr. Company had succeeded in buying Hershey's chocolate:
29. A company pursuing vertical integration can gain market power over its competitors through all of the following EXCEPT:
30. In the diversified firm, internal capital allocation may provide greater gains relative to external capital market allocation because:
Which reason for diversification does not create value?Diversified companies cannot create value for their stockholders merely by diversifying away unsystematic risk. Inasmuch as investors can diversify away unsystematic risk themselves, in efficient capital markets unsystematic risk is irrelevant in the equity valuation process.
What are the five categories of businesses based on level of diversification?The five categories of businesses determined by level of diversification are as follows: (1) single business (more than 95 per cent of revenues from a single business); (2) dominant business (between 70 and 95 per cent of revenue from a single business); (3) related constrained (less than 70 per cent of revenue from ...
Which types of diversification is more likely to be successful related or unrelated diversification?Generally, related diversification (entering a new industry that has important similarities with a firm's existing industries) is wiser than unrelated diversification (entering a new industry that lacks such similarities). Geographic diversification is another strategy to drive synergy.
Which type of diversification is most likely to create value through financial economics?Unrelated diversified firms seek to create value through economies of scope. c. The sharing of intangible resources, such as know-how, between firms is a type of operational sharing in related diversifications.
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