Corporate Strategies Quiz

<p>Divestiture announcements typically lead to a small but positive increase in stock prices. (A)</p> Signup and view all the answers

<p>A company announcing a layoff. (D)</p> Signup and view all the answers

<p>Microsoft has a strong reputation in the software market, allowing them to leverage that into other markets. (B)</p> Signup and view all the answers

<p>Apple acquiring the Beat headphones company to create AirPods. (D)</p> Signup and view all the answers

<p>It forces other companies to use Microsoft software in their hardware, ensuring a stable market for Microsoft's products. (C)</p> Signup and view all the answers

<p>Thomas Cook wanted to focus on its own travel packages and avoid competition with Club Med. (C)</p> Signup and view all the answers

<p>Reputation built in one market can be leveraged to gain advantage in other markets, particularly through forward vertical integration. (C)</p> Signup and view all the answers

<p>To obtain radically new capabilities. (A)</p> Signup and view all the answers

<p>The impact on the acquiring company's core competencies. (D)</p> Signup and view all the answers

<p>Product Diversification (B)</p> Signup and view all the answers

<p>To streamline internal processes and reduce operational costs. (C)</p> Signup and view all the answers

<p>Increased market share through the elimination of competitors. (C)</p> Signup and view all the answers

<p>A retail chain acquires a logistics company to improve its supply chain efficiency. (D)</p> Signup and view all the answers

<p>Guaranteed long-term profitability through effective divestiture strategies. (A)</p> Signup and view all the answers

<p>Acquisitions are a means to achieve faster and more efficient internal growth. (D)</p> Signup and view all the answers

<p>PM's success in Tobacco &amp; Beer was not due to their marketing skills and was thus misunderstood. (A), The market characteristics of soft drinks were vastly different from Tobacco &amp; Beer. (C), PM overestimated the extent to which their marketing skills would be valuable in the soft drinks market. (D)</p> Signup and view all the answers

<p>The soft drinks market boasts a higher potential for fixed cost offsetting due to the prevalence of variable costs. (A)</p> Signup and view all the answers

<p>Companies should prioritize understanding market differences over focusing on surface similarities. (A)</p> Signup and view all the answers

<p>PM's marketing investments in the soft drinks market turned out to be ineffective and wasteful. (A)</p> Signup and view all the answers

<p>Firms should ensure that the expansion strategy aligns with their core competencies and competitive advantages. (C)</p> Signup and view all the answers

<p>Firms often focus on surface similarities between markets and fail to recognize key differences in market characteristics. (D)</p> Signup and view all the answers

<p>Firms may become overly confident in their capabilities and overlook the challenges of entering new markets. (D)</p> Signup and view all the answers

<p>PM's marketing efforts were not aligned with the specific needs and preferences of consumers in the soft drinks market. (A)</p> Signup and view all the answers

<p>Horizontal Expansion (A)</p> Signup and view all the answers

<p>Forward Vertical Expansion (B)</p> Signup and view all the answers

<p>Horizontal Expansion (A)</p> Signup and view all the answers

<p>Horizontal expansion involves acquiring or merging with companies in the same industry, while vertical expansion involves acquiring or merging with companies within a different industry, but with a related product or service. (B)</p> Signup and view all the answers

<p>Forward vertical expansion involves moving closer to the customer, while backward vertical expansion involves moving closer to the raw materials. (A)</p> Signup and view all the answers

<p>Total moving from oil distribution to oil exploration (A)</p> Signup and view all the answers

<p>Consumer electronics (B)</p> Signup and view all the answers

<p>Focus on differentiation through innovation. (D)</p> Signup and view all the answers

<p>Increased regulatory oversight (B)</p> Signup and view all the answers

<p>Preservation (C)</p> Signup and view all the answers

<p>Improving operational efficiency through managerial skills transfer (D)</p> Signup and view all the answers

<p>Absorption (D)</p> Signup and view all the answers

<p>Seeking to unlock synergies and create new capabilities through collaboration (C)</p> Signup and view all the answers

<p>Improving the target's efficiency through managerial skills transfer (A)</p> Signup and view all the answers

<p>Holding and Absorption (D)</p> Signup and view all the answers

<p>The presence of unique and valuable capabilities within the target company (B)</p> Signup and view all the answers

<p>Symbiosis (C)</p> Signup and view all the answers

<p>To improve the target's business-level efficiency and eventually sell at a higher price (C)</p> Signup and view all the answers

Combining existing activities with new activities in the same industry.

Internal production of activities that were previously outsourced.

Moving from raw materials to distribution and sales.

Extending operations to include earlier stages of production.

The percentage of an industry or market's total sales that is earned by a particular company.

Luxottica and Essilor's €46 billion merger to lead the eyewear industry.

British American Tobacco's $50 billion acquisition of Reynolds American.

VW and Audi showing horizontal expansion; Zara using vertical strategies.

A strategy where a company expands its operations to the next stage of the value chain, targeting end consumers directly.

A strong reputation allows companies to charge higher prices for their products.

A strategy where a company acquires a supplier or enters an earlier stage of the value chain.

A market condition where a company has substantial market power, influencing others within the industry.

Microsoft leveraged its strong software reputation to enter and charge premiums in consumer electronics.

The total unexpected returns a stock earns due to specific announcements over time.

Announcing a divestiture typically leads to a +3% stock price increase.

Eliminating activities with few synergies to focus on core operations.

Selling divisions when it's cheaper to buy inputs than produce them internally.

Acquisition announcements can lead to a +16.5% increase in stock prices.

Costs that change with the level of production, such as raw materials.

Industries requiring large investments in fixed assets relative to variable costs.

Benefits gained from the integration of operations that enhance overall performance.

Inability to clearly understand the cause of an event or outcome, leading to overconfidence.

Similarity between markets based on characteristics rather than just products.

Expenditures aimed at promoting and selling products to enhance brand recognition.

Belief that familiarity or past success guarantees future performance, leading to misjudgment.

The ability to balance variable costs with fixed costs to achieve economies of scale.

A strategic approach to corporate development involving acquisitions and redeployment.

A secondary acquisition that leverages existing capabilities for growth.

The process of selling off parts of a business to improve efficiency.

Expanding a company's capabilities through existing resources and innovation.

Reassigning acquired capabilities to enhance other operations.

Gaining new skills or resources through purchasing another company.

Improvements or additions to products that increase customer value.

The process of combining two organizations after a merger to achieve synergies.

The reliance between the target and acquirer for operational functions post-merger.

The ability to achieve greater efficiencies and effectiveness together than separately.

The independence of the acquired unit to make its own decisions post-merger.

Maintaining the autonomy and capabilities of the acquired entity.

A mutually beneficial relationship between the acquirer and target post-merger.

The complete integration of the acquired organization into the acquirer.

Acquiring a company mainly for investment, with limited operational involvement.

The opportunity to share skills and knowledge between organizations post-merger.

Investment in companies that are not publicly traded, often involving management involvement.