A) business units that lack strategic fit with the businesses to be retained
B) weak performers
C) businesses in unattractive industries
D) businesses that are cash hogs or that lack other types of resource fit
E) businesses compatible with the company's revised diversification strategy
G) A) and D)
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Opting to broaden a diversified company'...View Answer
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A) internal capital market
B) cash cow benefits
C) economic value added
D) shareholder value added
E) transaction cost valuation
G) C) and E)
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A) make the company better off because it will produce a greater number of core competencies.
B) make the company better off by improving its balance sheet strength and credit rating.
C) make the company better off by spreading shareholder risks across a greater number of businesses and industries.
D) produce a synergistic outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.
E) help each business earn exactly what they were earning before coming under the same corporate umbrella.
G) B) and C)
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A) Businesses with high industry attractiveness ratings should be given top priority and those with low industry attractiveness ratings should be given low priority.
B) Business subsidiaries with the brightest profit and growth prospects, attractive positions on the nine-cell matrix, and solid strategic and resource fits generally should head the list for corporate resource support.
C) The positions of each business in the nine-cell attractiveness-strength matrix should govern resource allocation.
D) Businesses with the most strategic and resource fits should be given top priority and those with the fewest strategic and resource fits should be given low priority.
E) Businesses with high competitive strength ratings should be given top priority and those with low competitive strength ratings should be given low priority.
G) A) and C)
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A) outsourcing most of the value chain activities that have to be performed in the target business/industry.
B) acquiring a company already operating in the target industry, creating a new business from scratch, or forming a joint venture with one or more companies to enter the target industry.
C) integrating forward or backward into the target industry.
D) shifting from a strategic group comprised mostly of single-business companies to a strategic group comprised of diversified companies.
E) employing an offensive strategy with new product innovation as its centerpiece.
G) A) and C)
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A) "Have we missed the opportunity to milk these cash cows?"
B) "If we were not in this business today, would we want to get into it now?"
C) "Can't we derive a parenting advantage with these businesses?"
D) "Do we need to do the math to achieve 1 + 1 = 3 outcomes from these diversified businesses?"
E) "Will these three businesses pass the 'cost-of-exit' test?"
G) B) and E)
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A) broadening the company's business scope by making new acquisitions in new industries.
B) divesting weak-performing businesses and retrenching to a narrower base of business operations.
C) restructuring the company's business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company's business makeup.
D) pursuing growth opportunities within the existing business lineup.
E) pursuing certain acquisitions even if they have done badly or haven't quite lived up to expectations.
G) B) and E)
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A) combining related value-chain activities of different businesses into a single operation.
B) performing all of the value chain activities of related sister businesses at the same location.
C) extending the firm's scope of operations over a wider geographic area.
D) expanding the size of a company's manufacturing plants.
E) having more value chain activities performed in-house rather than outsourcing them.
G) All of the above
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A) Scale refers to the magnitude or size of the operation, while scope refers to the reach of defined savings within the value chain.
B) Scale refers to the extent of change, while scope refers to the possibilities of change.
C) Scale is about dimensions, while scope is about the capacity available for production capabilities.
D) Scale refers to cost savings that accrue directly from larger-sized operations, while scope stems directly from strategic fit along the value chains of related businesses.
E) Scale and scope mean the same thing and the only difference is the extent of cost savings accrued from unrelated businesses in each.
G) A) and B)
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A) focus on building brand awareness or establishing supplier relationships.
B) pay a premium price for a successful company or buy a struggling company at a bargain price.
C) strive for scale economies or to acquire technical know-how to customize production.
D) focus on building brand awareness or striving for scale economies.
E) focus on acquiring technical know-how or outsourcing production.
G) A) and B)
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A) vulnerability to seasonal and cyclical downturns, vulnerability to driving forces, and vulnerability to fluctuating interest rates and exchange rates.
B) relative market share, the ability to match or beat rivals on key product attributes, brand image and reputation, costs relative to competitors, and the ability to benefit from strategic fits with sister businesses.
C) the appeal of its strategy, the relative number of competitive capabilities, the number of products in each business's product line, which businesses have the highest/lowest market shares, and which businesses earn the highest/lowest profits before taxes.
D) the ability to hurdle barriers to entry, value chain attractiveness, and business risk.
E) cost reduction potential, customer satisfaction potential, and comparisons of annual cash flows from operations.
G) B) and C)
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A) that PepsiCo's business units are all fairly strong market contenders in their respective industries
B) that PepsiCo's units are all fairly weak market contenders in their respective industries
C) that PepsiCo will not likely perform well over the next five years
D) that PepsiCo's competitive strength score is meaningless unless it is comparable to Coca-Cola's competitive strength score
E) that PepsiCo's rivals will likely prevail in the race to achieve sustainable competitive advantage
G) B) and C)
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A) company is under pressure to create a more attractive and cost-efficient value chain.
B) company begins to encounter diminishing growth prospects in its mainstay business.
C) company's profits are being squeezed and it needs to increase its net profit margins and return on investment.
D) company lacks sustainable competitive advantage in its present business.
E) company has run out of ways to achieve a distinctive competence in its present business.
G) B) and C)
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A) to prevent the transfer of expertise or technology or capabilities from one business to another.
B) to independently preserve common brand names from cross-business usage.
C) to increase costs by combining the performance of the related value chain activities of different businesses.
D) for cross-business collaboration to build valuable new resource strengths and competitive capabilities.
E) to maintain business value chain activities separate and apart from one business to another to protect company independence.
G) C) and D)
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A) get into new businesses that are profitable.
B) diversify into industries that are growing rapidly.
C) spread its business risk across various industries by only acquiring firms that are strong competitors in their respective industries.
D) diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses.
E) diversify into businesses that have either key success factors or value chains that are similar to its present businesses.
G) A) and D)
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A) the transferring of valuable resources and capabilities from one business to another.
B) combining related value chain activities of different businesses to achieve lower costs.
C) forcing cultural independence, operating diversity, and sophisticated analytical responsibility on the businesses to ensure compatibility with the corporate overhead identity.
D) sharing the use of powerful and well-respected brand names across multiple businesses.
E) encouraging knowledge-sharing and collaborative activity among the businesses.
G) A) and B)
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A) are cost reductions that flow from operating in multiple related businesses.
B) arise only from strategic fit relationships in the production portions of the value chains of sister businesses.
C) are more associated with unrelated diversification than related diversification.
D) are present whenever diversification satisfies the attractiveness test and the cost of entry test.
E) arise mainly from strategic fit relationships in the distribution portions of the value chains of unrelated businesses.
G) B) and D)
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A) a broadly diversified enterprise
B) a narrowly diversified enterprise
C) a multibusiness enterprise
D) a high-compensation/low-risk enterprise
E) a dominant business enterprise
G) B) and C)
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A) broadly diversified
B) narrowly diversified
C) multibusiness
D) high-compensation/low-risk
E) dominant business
G) A) and D)
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