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Questions and Answers
A conglomerate firm is one that generates its revenue from related businesses.
A conglomerate firm is one that generates its revenue from related businesses.
False
The expansion of a firm's operational efficiency is a result of its horizontal expansion.
The expansion of a firm's operational efficiency is a result of its horizontal expansion.
False
A firm pursuing a moderate level of diversification uses an unrelated diversification strategy.
A firm pursuing a moderate level of diversification uses an unrelated diversification strategy.
False
The primary objective of diversification is to increase the variability in the firm's profitability index.
The primary objective of diversification is to increase the variability in the firm's profitability index.
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The development of core competencies is a key driver of a firm's vertical integration.
The development of core competencies is a key driver of a firm's vertical integration.
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A firm's core competencies are not utilized in diversification.
A firm's core competencies are not utilized in diversification.
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Market diversification is a strategy that focuses on a single business activity.
Market diversification is a strategy that focuses on a single business activity.
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The transfer of knowledge and capabilities between businesses is a result of economies of scale.
The transfer of knowledge and capabilities between businesses is a result of economies of scale.
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Geographic market diversification involves operating in multiple industries simultaneously.
Geographic market diversification involves operating in multiple industries simultaneously.
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The experience gained in a mother firm cannot be used effectively in new ventures.
The experience gained in a mother firm cannot be used effectively in new ventures.
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Diversification is pursued to reduce cost-effectiveness through lower sales volume.
Diversification is pursued to reduce cost-effectiveness through lower sales volume.
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A firm with a single product generating 95% of its entire sales revenue is an example of a moderate level of diversification.
A firm with a single product generating 95% of its entire sales revenue is an example of a moderate level of diversification.
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Vertical diversification involves acquiring or establishing a new firm that will handle the production of a new product that is different from that of the competing firm.
Vertical diversification involves acquiring or establishing a new firm that will handle the production of a new product that is different from that of the competing firm.
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Market related diversification is a strategy that involves selling products or services below the competing firm's price.
Market related diversification is a strategy that involves selling products or services below the competing firm's price.
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Conglomerate firms create value by buying, restructuring, and selling the restructured firms' assets in the internal market.
Conglomerate firms create value by buying, restructuring, and selling the restructured firms' assets in the internal market.
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Horizontal diversification involves producing the inputs of production or creating a new venture that will handle its distribution.
Horizontal diversification involves producing the inputs of production or creating a new venture that will handle its distribution.
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Operational efficiency is achieved through the development of greater managerial motivation and empowerment.
Operational efficiency is achieved through the development of greater managerial motivation and empowerment.
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Corporate responsibility is a strategy that involves acquiring or establishing a new firm that will handle the production of a new product.
Corporate responsibility is a strategy that involves acquiring or establishing a new firm that will handle the production of a new product.
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