Business Diversification and Vertical Integration

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Questions and Answers

What does vertical integration involve for a company?

Refusing to work with any external partners
Expanding its operations towards the customer (correct)
Reducing its product offerings
Expanding its operations into unrelated industries

Which company in the text has engaged in vertical integration in the power sector?

Cebu Pacific
Davao Light & Power Company
San Miguel Corporation
Aboitiz Power Corporation (correct)

What is the primary benefit of strategic alliances between companies as mentioned in the text?

Allowing companies to merge into a single entity
Reducing competition between companies
Restricting customers' destination options
Enhancing market position while remaining independent (correct)

How does diversification benefit a company as described in the text?

Stabilizes revenue streams and reduces risk vulnerability (D) Signup and view all the answers

What does forward integration involve for a company's supply chain?

Expanding towards the customer (D) Signup and view all the answers

Which company mentioned in the text has diversified into food, beverages, infrastructure, and telecommunications?

'San Miguel Corporation' (A) Signup and view all the answers

Which of the following is NOT a support activity in the value chain?

Marketing (B) Signup and view all the answers

What is the primary goal of Value Chain Analysis?

To identify activities where the firm can create more value for customers or reduce costs (A) Signup and view all the answers

Which of the following is an example of a technology development activity?

Research and Development (R&D) (C) Signup and view all the answers

How can a company achieve a cost advantage, according to the text?

By controlling costs and expenses throughout the value chain (B) Signup and view all the answers

What is the role of firm infrastructure in the value chain?

To support the entire value chain through activities like finance and planning (B) Signup and view all the answers

What is a source of competitive advantage for a firm?

The way a firm organizes and performs its value chain activities relative to its competitors (A) Signup and view all the answers

What is the primary difference between a merger and an acquisition?

In a merger, two companies combine to form a new company, while in an acquisition, one company purchases another company. (C) Signup and view all the answers

Which of the following is NOT a common goal of corporate restructuring?

Reducing the number of employees (C) Signup and view all the answers

What strategic shift did Ayala Corporation undergo to remain competitive?

Ayala Corporation focused on high-growth sectors such as real estate, banking, telecommunications, and water utilities. (B) Signup and view all the answers