Question1. Once a firm has diversified and established itself in several different businesses, then its main strategic alternatives include all but which one of the following?divesting some businesses and retrenching to a narrower base of business operationsrestructuring the company’s business lineup with a combination of divestitures and new acquisitions to put a whole new face on the company’s business makeupsticking closely with the existing business lineup and pursuing the opportunities these businesses presentshifting from a multiple-country to a global strategybroadening the firm’s business scope by diversifying into additional businesses2. The thesis that because different societies and cultures have divergent values and standards of what is “ethically right” and “ethically wrong,” it is appropriate to judge behavior as ethical/unethical in the light of local customs and social moresaccounts for why there is no such thing as ethical standards for business enterprises.defines what is meant by “integrated social contracts theory.”is the reason codes of ethical and social morality have been established country by country.characterizes the school of ethical relativism.is the basis for the theory of ethical variation.3. Unethical managerial behavior tends to be driven by such factors asa lack of training in what is ethical and what is not.the lack of a company code of ethics.confusing differences between what is ethical behavior in one’s personal life and what is ethically permissible in business.All of these choices are correct.overzealous or obsessive pursuit of personal gain, wealth, and other self-interests; a company culture that puts the profitability and good business performance ahead of ethical behavior; and heavy pressures on company managers to meet or beat performance targets.4. Environmental sustainability involvesstriking a balance between (1) the economic responsibility to reward shareholders with profits, (2) the legal responsibility by the company to laws in countries where it operates, (3) the ethical responsibility to abide by society’s moral norms, and (4) the discretionary philanthropic responsibility to contribute to the noneconomic needs of society.developing the resource strengths necessary to develop a sustainable competitive advantage.deliberate actions to protect the environment, provide for the longevity of natural resources, maintain ecological support systems for future generations, and guard against the ultimate endangerment of the planet.a corporate commitment to address the unmet noneconomic needs of society.All of these choices are correct.5. Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnelhave no fair way to judge the ethical correctness of the conduct of company personnel.quickly find themselves on a slippery slope with no ethical standards or principles of their own.have a uniform code of ethical standards that is applied globally.are able to comply with the varying ethical standards of the world’s different cultures.end up allowing each company employee to determine what set of ethical standards to observe.6. According to integrated social contracts theory,the ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations, and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not; however, universal ethical norms take precedence over local ethical norms.the standards of what is ethically permissible and what is not should be based on a code of ethical and moral conduct that each society/country/culture adopts and then enacts into law.the views and principles of the school of ethical universalism are definitely wrong; the correct view is that ethics is a matter of personal responsibility, not a matter of management concern.the standards of what is ethically permissible should be determined by the terms of an “ethics contract” that each company employee signs as a condition of employment.the only valid ethical standards are those that are universal—and then only if the standards are not absolute and provide some wiggle room according to the circumstances of the each situation.7. According to the school of ethical universalismethical guidelines exist only when there is universal agreement as to what behaviors are “ethically right” and “ethically wrong”; anything not universally viewed as unethical is thus within the bounds of what is ethically permissible.all societies and countries have some definition of what is ethically permissible (in this sense, ethics are universal); however, the definitions of what is ethically permissible vary according to the prevailing religious doctrines in each country.concepts of right and wrong universally apply to all business situations within a given country but can vary across countries or cultures.whatbehaviors are “ethically right” and “ethically wrong” vary across religions, but the boundaries of what is ethical or not are universal within religions.many of the same standards of what’s ethical and what’s unethical resonate with peoples of most societies regardless of local traditions and cultural norms; hence, to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.8. Business ethics encompassesa business commitment to safe products, high worker compensation, and protection of the environment.picking and choosing among various ethical standards of society to arrive at a set of ethical standards that apply directly to operating a business.conducting oneself appropriately in a business setting.developing a special set of ethical standards for businesses to observe in conducting their affairs.the application of ethical principles and standards to business activities, behavior, and decisions.9. The strategic appeal of related diversification is that itinvolves diversifying into industries having the same kinds of key success factors.is less risky than unrelated diversification because it avoids the acquisition of cash hog businesses.facilitates the achievement of greater economies of scale since the company only enters those businesses that serve the same types of buyer groups and/or buyer needs.allows a firm to reap the competitive advantage benefits of skills transfer, lower costs (due to economies of scope), cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities.is less capital intensive than unrelated diversification because related diversification emphasizes getting into cash cow businesses (as opposed to cash hog businesses).10. Which of the following does not accurately describe entering a new business via acquisition, internal development, or a joint venture?Acquisition is generally the most profitable way to enter a new industry, tends to be more suitable for an unrelated diversification strategy than a related diversification strategy, and usually requires less capital than entering an industry via internal start-up.Acquisition is the most popular means of diversifying into another industry, has the advantage of being quicker than trying to launch a brand-new operation, and offers an effective way to hurdle entry barriers.Joint ventures are an attractive way to enter new businesses when the opportunity is too complex, uneconomical, or risky for one company to pursue alone, when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own, and/or when it aids entry into a foreign market.The big drawbacks to entering a new industry via internal development include the costs of overcoming entry barriers, building an organization from the ground up, and the extra time it takes to build a strong and profitable competitive position.The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price.11. Cross-business strategic fits can existin the supply chain portion of the value chains of related businesses.in the R&D and technology portion of the value chains of related businesses.in the manufacturing or production portions of the value chains of related businesses.All of these choices are correct; cross-business strategic fits can exist anywhere along the values chains of related businesses.in the sales and marketing portion of the value chains of related businesses.12. Which one of the following is not a part of the business case for why companies should act in a socially responsible manner?The aggressive pursuit of market share, revenues, and profits always puts the company in jeopardy of violating society’s social responsibility expectations.Socially responsible actions yield internal benefits (particularly for employee recruiting, workforce retention, and training costs) and can improve operational efficiency.A strong commitment to socially responsible behavior reduces the risk of reputation-damaging incidents.Social responsibility strategies work to the advantage of shareholders.Socially responsible actions can lead to increased buyer patronage.13. Economies of scopehave to do with the cost-saving efficiencies of operating across a bigger portion of an industry’s total value chain.refer to the cost savings that flow from being able to combine the value chains of different businesses into a single value chain.are derived from the cost-saving efficiencies of scattering a company’s manufacturing/assembly plants over a wider geographic area.are like economies of scale and arise from being able to lower costs via a larger volume operation.stem from cost-saving strategic fits along the value chains of related businesses.14. The defining characteristic of unrelated diversification (as opposed to related diversification) isthe presence of cross-business resource fit (whereas the defining characteristic of related diversification is the presence of cross-business strategic fit).that the company’s businesses are in different industries.the presence of cross-business financial fit.the presence of cross-business strategic fit (whereas the defining characteristic of related diversification is the presence of cross-business resource fit).that the value chains of different businesses are so dissimilar that no competitively valuable cross-business relationships are present (in other words, the value chains of a company’s businesses offer no opportunities to benefit from skills or technology transfer across businesses, economies of scope, cross-business use of a powerful brand name, and/or cross-business collaboration in creating stronger competitive capabilities).15. Checking a diversified company’s business lineup for resource fit does not involve which one of the following “tests”?determining whether recently acquired businesses are acting to strengthen the company’s resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thindetermining whether a company has or can develop the specific resources and competitive capabilities needed to be successful in each of its businessesdetermining whether the company has enough cash hog businesses to supply capital to its cash cow businessesdetermining whether the company has adequate financial strength to fund the needs of its various businesses and maintain a healthy credit ratingdetermining whether each business adequately contributes to achieving companywide performance targets16. Which of the following are consequences of pursuing a strategy that has unethical or shady components?adverse effects on employee productivitygovernment fines and penaltiescustomer defectionslegal and investigative costs incurred by the companyAll of these choices are correct.
17. Calculating quantitative attractiveness ratings for the industries a company has diversified into involvesdetermining each industry’s average profit margins, calculating how far the firm’s profit margins are above or below the industry averages, and then using these values to draw conclusions about industry attractiveness.selecting a set of industry attractiveness measures, weighting the importance of each measure (with the sum of the weights adding to 1.0), rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to evaluate the attractiveness of all the industries, both individually and as a group.determining the strength of the five competitive forces in each industry, calculating the ability of the company to overcome or contend successfully with each force, and obtaining overall measures of the firm’s ability to compete successfully in each of its industries.identifying each industry’s average price, rating the difficulty of charging an above-average price in each industry, and deciding whether the company’s prospects for being able to charge above-average prices make the industry attractive or unattractive.rating the attractiveness of each industry’s strategic and resource fit, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not.18. Integrated social contracts theory maintains thatfew nations or cultures have common moral agreement on what is ethically right and wrong.all ethical standards are determined by societal norms and individuals have an implied social contract to live up to these standards.”first order” universal ethical norms always take precedence over “second order” local ethical norms.there should be no absolute limits put on what is ethically or morally right.each country/culture/society has commonly held views about what constitutes ethically appropriate actions/behaviors that all individuals in that country/culture/society are obligated to observe.19. The Nine-Cell Industry Attractiveness–Competitive Strength Matrixshows which of a diversified company’s businesses have a good or poor resource fit.pinpoints which of a diversified company’s businesses are resource-rich cash cows and which are resource-poor cash hogs.indicates which businesses have the highest or lowest economies of scale and which have the highest or lowest economies of scope.involves assigning quantitative measures of industry attractiveness and competitive strength to plot each business’s location on the matrix; the thesis underlying the matrix is that there are good reasons to concentrate the company’s resources on those businesses having relatively strong competitive positions in industries with relatively high attractiveness and to invest minimally or even divest those businesses with relatively weak competitive positions in industries with relatively low attractiveness.is a valuable tool for ranking a company’s different businesses from best to worst based on strategic fit.20. Which one of the following is not one of the elements of crafting corporate strategy for a diversified company?initiating actions to boost the combined performance of the businesses the firm has enteredpursuing opportunities to leverage cross-business value chain relationships and strategic fits into competitive advantagepicking the new industries to enter and deciding on the means of entryestablishing investment priorities and steering corporate resources into the most attractive business unitsstandardizing the resource fit across the group of businesses the company has diversified into