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Chapter Quiz
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1
The vast majority of acquisitions do not result in value destruction rather than value creation.
A)True
B)False
2
Firms that diversify into related businesses realize primary benefits from________ relationships in which businesses share intangible and tangible resources.
A)hierarchical
B)horizontal
C)vertical
D)reciprocal
3
When a sporting goods store with several locations acquires another retail store that carries different product lines, it is able to reuse many of its resources such as staff, managerial skills and favorable reputation in order to realize overall cost savings. In this case, the firm benefits from which of the following?
A)unrelated diversification
B)economies of scale
C)unrelated competencies
D)economies of scope
4
Sharp Corporation specializes in optoelectronics technologies that are difficult to replicate, thus giving it competitive advantage over its rivals. These strategic resources are known as which of the following?
A)economies of scope
B)core competencies
C)unrelated advantages
D)parenting advantages
5
When a firm becomes its own supplier or distributor, this is known as vertical integration. What are two types of vertical integration?
A)upward and downward
B)related and unrelated
C)inward and outward
D)forward and backward
6
A parenting advantage for a business new to the firm's portfolio can result from unrelated diversification due to which of the following?
A)substantial changes in the capital structure for the new business
B)management expertise and support from the corporate office
C)synergies across business units
D)putting in a new management team for the new business
7
The key purpose of portfolio models is to assist a firm in achieving a balanced mix of businesses that are complementary to one another.
A)True
B)False
8
Based on the BCG Portfolio Matrix, managers of cash cows would have higher threshold levels of _______ on proposed projects than the managers of star businesses.
A)profit targets
B)revenues
C)market share growth
D)innovation
9
Which of the following is NOT an advantage of mergers and acquisitions?
A)obtaining valuable resources to help expand product offerings
B)building market power
C)entering new market segments
D)deconsolidation within the industry
10
Time-Warner built a home cable system in New York City and asked three African American-owned cable companies to operate it. Time-Warner supplied the product, and the cable companies supplied the knowledge of the community and the know-how to market the cable system. This is an example of what kind of strategic alliance?
A)a merger
B)a joint venture
C)differentiation
D)internal development





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