Certain regulatory changes (such as antitrust regulation and tax laws) create incentives or disincentives for diversification that ________.
are managerial motives to diversify
are value-neutral
create value
reduce value
The term "conglomerates" refers to firms using the ________ diversification strategy.
global
related linked
related constrained
unrelated
Which of the following is NOT a drawback to transferring competencies by moving key people into new management positions?
the managers who have these skills are expensive.
top-level managers may resist having key people transferred.
the people involved may not want to move.
managerial competencies are not easily transferable to different organizational cultures.
Which of the following represents the lowest level of diversification?
dominant business
single business
related constrained
unrelated
One method of facilitating the transfer of corporate-level core competencies between firms is to:
virtually integrate the two firms.
transfer key people into new management positions.
restructure the weaker firm to mirror the more successful firm.
share support activities, such as purchasing practices.
The more "constrained" the relatedness of diversification:
the fewer the linkages between the businesses owned by an organization.
the more links there are among the businesses owned by an organization.
the lower the proportion of total revenue from the dominant-business.
the wider the variation in the portfolio of businesses owned by the firm.
When a firm simultaneously practices operational relatedness and corporate relatedness:
the firm is likely to be overvalued by investors.
they will suffer from diseconomies of scope which outweigh cost savings
it is difficult for investors to observe the value created by the firm.
the firm is seeking to create value through financial economies.
Among the value-neutral incentives to diversify, some come from the firm's external environment while others are internal to the firm. External incentives to diversify include:
other firms in an industry are diversifying.
pressure from stockholders who demand that the firm diversify.
the low performance of a firm.
changes in antitrust regulations and tax laws.
The purchasing of firms in the same industry is called:
horizontal acquisition.
networking the organization.
vertical integration.
unrelated diversification.
Which of the following reasons for diversification is most likely to increase the firm's value?