BUSA 4980 - Test 2 Practice Questions and Answers, Exams of Business Administration

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The term "conglomerates" refers to firms using which of the following forms of corporate-level strategy. a) unrelated b) related constrained c) related linked d) mix of related linked and unrelated ANSWER a Corporate-level strategy is concerned with and how to manage these businesses. a) whether the firm should invest in global or domestic businesses b) what product markets and businesses the firm should be in c) whether the portfolio of businesses should generate immediate above-average returns or should be troubled businesses which will create above-average returns only after restructuring d) whether to integrate backward or forward ANSWER b (T/F) Economies of scope are cost savings resulting from a firm successfully leveraging, either through sharing or transferring, some of its capabilities and competencies developed in one business to another business. ANSWER True The more "constrained" the relatedness of diversification: a) the fewer the linkages between the businesses within the portfolio owned by the firm b) the wider the variation in the portfolio of businesses owned by the firm c) the more links there are among the businesses owned by an organization d) the lower the proportion of total organizational revenue derived from the dominant business ANSWER c (T/F) Companies creating financial economies through restructuring typically focus on high-technology businesses primarily because these firms are human-resource dependent. ANSWER False The problems for firms that follow an unrelated diversification strategy is that: a) external investors tend to dump the stocks of conglomerates during economic downturns b) conglomerates are typically owned by one powerful entrepreneur and do not survive his/her retirement or death c) government regulations have periodically forced the dissolution of conglomerates d) it poses demanding managerial time requirements, without providing cross- business strategic fits and hence economies of scope ANSWER d