A) have a quantitative basis for identifying which businesses have large/small competitive advantages or competitive disadvantages vis-à-vis the rivals in their respective industries.
B) have a quantitative basis for rating them from strongest to weakest in terms of contributing to the corporate parent's revenue growth.
C) compare resource strengths and weaknesses,business by business.
D) have a quantitative basis for rating them from strongest to weakest in contending for market leadership in their respective industries.
E) have a quantitative basis for rating them from strongest to weakest in terms of contributing to the corporate parent's profitability.
G) C) and E)
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A) is making money,whereas a cash hog business is losing money.
B) generates enough profits to pay off long-term debt,whereas a cash hog business does not.
C) generates positive retained earnings,whereas a cash hog business produces negative retained earnings.
D) produces large internal cash flows over and above what is needed to build and maintain the business,whereas the internal cash flows of a cash hog business are too small to fully fund its operating needs and capital requirements.
E) generates very large increases in sales revenues,whereas a cash hog business has declining sales revenues and chronic deficiencies of working capital.
G) A) and E)
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A) enhanced industry attractiveness.
B) enhanced shareholder value.
C) boosting performance of the existing business.
D) lowered cost of entry.
E) diminishing market opportunities and stagnating sales in a firm's principal business.
G) None of the above
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A) which businesses in the portfolio have the most potential for strategic fit and resource fit.
B) why cash cow businesses are more valuable than cash hog businesses.
C) that corporate resources should be concentrated on those businesses enjoying both a higher degree of industry attractiveness and competitive strength and that businesses having low competitive strength in relatively unattractive industries should be looked at for possible divestiture.
D) which businesses have the biggest competitive advantages and which ones confront serious competitive disadvantages.
E) which businesses are in industries with profitable value chains and which are in industries with money-losing value chains.
G) D) 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 and putting a whole new face on the company's business makeup.
D) sticking closely to the existing business lineup and pursuing the growth opportunities presented by these businesses.
E) selling businesses too late and at too low a price.
G) A) and D)
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A) Stick closely with the existing business lineup.
B) Restructure the company's business lineup.
C) Craft new initiatives to build or enhance the company's reputation.
D) Divest some businesses and retrench to a narrower diversification base.
E) Broaden the diversification base.
G) A) and B)
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Strategic fit occurs when value chains o...View Answer
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A) utilize activity-based costing and benchmarking to determine the funding needs of each business unit.
B) first consider the strength of funding proposals presented by managers of each division or business unit.
C) give priority for funding to cash-hog businesses.
D) put business units with the brightest profit and growth prospects and solid strategic and resource fits at the top of the investment priority list.
E) always make the company's business units with strong resource strengths and competitive capabilities the central focus of funding initiatives.
G) All of the above
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A) is an effective way to hurdle entry barriers,is usually quicker than trying to launch a new start-up operation,and allows the acquirer to move directly to the task of building a strong position in the target industry.
B) is less expensive than launching a new start-up operation,thus passing the cost-of-entry test.
C) is a less risky way of passing the attractiveness test.
D) is more likely to result in passing the shareholder value test,the profitability test,and the better-off test.
E) offers the prospect of gaining an immediate competitive advantage in the new industry and thus helps ensure that the diversification move will pass the competitive advantage test for building shareholder value.
G) C) and D)
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Diversifying into new industries always ...View Answer
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A) internal capital market.
B) debt policy management.
C) liquidity management.
D) economic value added.
E) managerial cost control.
G) A) and C)
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The three tests for judging whether a pa...View Answer
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The industry to be entered through diver...View Answer
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A) if it is aimed at achieving good financial fit (whereas related diversification aims at good strategic fit) .
B) if it can achieve at least existing profit margins into the near future.
C) if it passes the competitive fit,financial fit,strategic relatedness,and value chain maximization tests
D) if it has the opportunity to generate positive buzz in the industry,even if it may not be able to contribute to the parent firm's bottom line.
E) if it can pass the industry attractiveness and cost-of-entry test,and if it has good prospects for profit growth.
G) B) and C)
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A) Acquisition is generally the most profitable way to enter a new industry,tends to be more suitable for an unrelated diversification strategy than a related diversification strategy,and usually requires less capital than entering an industry via internal start-up.
B) Acquisition is the most popular means of diversifying into another industry,has the advantage of being quicker than trying to launch a brand-new operation,and offers an effective way to hurdle entry barriers.
C) The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price.
D) The big drawbacks to entering a new industry via internal development include the costs of overcoming entry barriers,building an organization from the ground up,and the extra time it takes to build a strong and profitable competitive position.
E) Joint ventures are an attractive way to enter new businesses when the opportunity is too complex,uneconomical,or risky for one company to pursue alone,when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own,and/or when it aids entry into a foreign market.
G) A) and E)
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A) business units that are all fairly weak market contenders in their respective industries.
B) business units that are all fairly strong market contenders in their respective industries.
C) a competitive strength score that does not relate to the market position of the business.
D) signals that the company will not likely perform well against its rivals.
E) signals that the company will likely fail.
G) B) and C)
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A) rank the business unit from best to worst in terms of potential for cost reduction and profit margin improvement.
B) provide a quantitative measure of the overall market strength and competitive standing for each business unit.
C) determine which business unit has the greatest number of resource strengths,competencies,and competitive capabilities,and which one has the least.
D) determine which one has the biggest market share and is growing the fastest.
E) rank each business unit's strategy from best to worst.
G) A) and B)
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A) industry attractiveness test,the profitability test,and the shareholder value test.
B) strategic fit test,the competitive advantage test,and the return on investment test.
C) resource fit test,the profitability test,and the shareholder value test.
D) attractiveness test,the cost-of-entry test,and the better-off test.
E) shareholder value test,the cost-of-entry test,and the profitability test.
G) A) and C)
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A) scope stems directly from strategic fit along the value chains of related businesses,while scale refers to cost savings that accrue directly from larger-sized operations.
B) scope refers to strategic fits to be gained outside the value chain,while scale refers to the impact of the value chain on operations.
C) scope refers to the reach of defined savings within the value chain,while scale refers to the magnitude or size of the operation itself.
D) scope refers to the possibilities of change,while scale refers to the extent and direction of change.
E) they mean the same thing and the only difference is the extent of cost savings accrued from unrelated businesses in each.
G) B) and C)
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A) concentrating resources to bolster unattractive and competitively weak performers in the corporate portfolio.
B) measuring only business strength in allocating resources and investment capital to the different businesses.
C) concentrating resources in only those business units that are destined for squeezing out the maximum cash flows.
D) using both industry attractiveness and business strength measurements in allocating resources and investment capital to a corporation's different businesses.
E) using both resource fit and product strength measurements in allocating resources and investment capital to its different businesses.
G) A) and E)
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