21.One strategic fit-based approach to related diversification would be to A.diversify

Question : 21.One strategic fit-based approach to related diversification would be to A.diversify : 1278899



21.One strategic fit-based approach to related diversification would be to 



A.diversify into new industries that present opportunities to combine value chain activities of two or more businesses to lower costs.


B.diversify into those industries where the same kinds of driving forces and competitive forces prevail, thus allowing use of much the same competitive strategy in all of the businesses a company is in.


C.acquire rival firms that have broader product lines so as to give the company access to a wider range of buyer groups.


D.acquire companies in forward distribution channels (wholesalers and/or retailers).


E.expand into foreign markets where the firm currently does no business.





22.The best place to look for cross-business strategic fits is 



A.in R&D and technology activities.


B.in supply chain activities.


C.in sales and marketing activities.


D.in production and distribution activities.


E.anywhere along the respective value chains of related businesses—no one place is best.





23.Cross-business strategic fits can be found 



A.in unrelated as well as related businesses and in the markets of foreign countries as well as in domestic markets.


B.only in businesses whose products/services satisfy the same general types of buyer needs and preferences.


C.mainly in either technology-related activities or sales and marketing activities.


D.chiefly in the R&D portions of the value chains of unrelated businesses.


E.anywhere along the respective value chains of related businesses.





24.Economies of scope 



A.are cost reductions that flow from cost-saving strategic fits along the value chains of related businesses in the business lineup of a multibusiness corporation.


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.





25.What makes related diversification an attractive strategy is 



A.theability to broaden the company's product line.


B.the opportunity to convert the competitive advantage potential into 1 + 1 = 3 gains in shareholder value.


C.the potential for improving the stability of the company's financial performance.


D.the ability to serve a broader spectrum of buyer needs.


E.the added capability it provides in overcoming the barriers to entering foreign markets.





26.A diversified company that leverages the strategic fits of its related businesses into competitive advantage 



A.has a distinctive competence in its related businesses.


B.has a clear path to achieving 1 + 1 = 3 synergy gains in shareholder value.


C.has a clear path to global market leadership in the industries where it has related businesses.


D.passes the value chain test and the profit expectations test for building shareholder value.


E.achieves economies of scope and passes the reduced-costs test for crafting a diversification strategy capable of creating added shareholder value.





27.When evaluating strategic fit benefits that related diversification can deliver one must keep in consideration a number of factors. Which one is not relevant? 



A.Shareholder value stemming from a diversified business cannot be replicated by simply owning a diversified portfolio of stocks.


B.The capture of cross-business strategic fits benefits is possible only through related diversification.


C.Cross-business strategic fit benefits is not automatically realized; the benefits materialize only after management has successfully pursued internal actions to capture them.


D.Shareholder value is created when the diversified company's profitability exceeds expectations.


E.Related diversification is the process of holding the stock of many businesses in a portfolio.





28.The essential requirement for different businesses to be "related" is that 



A.their value chains possess competitively valuable cross-business fit relationships.


B.the products of the different businesses are bought by much the same types of buyers.


C.the products of the different businesses are sold in the same types of retail stores.


D.the businesses have several key suppliers in common.


E.the production methods that they employ both entail economies of scale.





29.A strategy of diversifying into unrelated businesses 



A.is aimed at achieving good financial fit (whereas related diversification aims at good strategic fit).


B.is the best way for a company to pass the attractiveness test in choosing which types of businesses/industries to enter.


C.discounts the importance of strategic fit and instead focuses on building and managing a group of businesses in attractive industries that can acquired on financial terms that allow for acceptable returns on investment.


D.concentrates on diversifying into businesses where a company can leverage use of a well-known brand name in ways that create added value for shareholders.


E.generally offers more competitive advantage potential than related diversification.





30.Different businesses are said to be "unrelated" when 



A.they are in different industries.


B.the products of the different businesses are not bought by the same types of buyers or sold in the same types of retail stores.


C.the products of the different businesses satisfy different buyer needs.


D.the businesses have different supply chains and different types of suppliers.


E.there is an absence of competitively valuable strategic fits between their respective value chains.






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