For which of the following conditions is restructuring a diversified company's business lineup an attractive course of action?

1. When the interest owed on large debts is greatly reducing profitability

2. When the company has too many businesses in slowly growing or declining industries

3. When the market shares of one of more major business units are decreasing because of superior competition.

Retrenching to a narrower diversification base can include which of the following?

1. getting out of businesses that are competitively weak

2. focusing corporate resources on businesses in a few, carefully selected industries

3. eliminating businesses that have poor strategic fit

True or false: One method of broadening a company's diversification base is to add businesses that will complement and strengthen the market position of businesses in industries where the company already has a stake.

Answer: True

If a company has poorly chosen acquisitions that are underperforming expectations, it is a good idea to _____.

Answer: restructure the business lineup

When a company's management decides that it needs to concentrate on a smaller number of businesses, it is a good strategy to ____.

Answer: retrench to a narrower diversification base

It makes sense to stick closely with a diversified company's present business lineup when ____.

1. The existing business lineup provides ample opportunity for growth

2. The current lineup reliably creates economic value for shareholders

3. The company's existing businesses match the company's diversification strategy

A diversified company's base can be broadened by ____.

Answer: acquiring more businesses and building positions in new industries

When a firm with a related diversification strategy has businesses that match specialized resource requirements at points along their value chains that are critical for the business's market success, they are said to have ____.

Answer: resource fit

The broad categories of action for crafting strategic moves to improve a diversified company's overall performance include ____.

1. Divesting certain businesses and retrenching to a narrower base of business operations

2. Sticking closely with the existing business lineup and pursuing opportunities that those businesses present

3. Widening the company's business scope by making new acquisitions in new industries

True or false: Strategic uses of corporate resources should usually take precedes over financial options.

Answer: true

When a company's existing businesses provide opportunities for growth and produce economic value for shareholders, it makes sense to _____.

Answer: adhere to the existing business lineup

Which of the following statements are true concerning the ranking of a diversified company's business units from best to worst?

1. Future revenue and earnings for fast growing industries usually look superior to those for slow growing industries

2. The rankings help high level executives prioritize businesses for resource support and capital investment

3. The position of different businesses in the nine-cell matrix is a good criteria for identifying high opportunity and low opportunity businesses

The crafting of strategic moves to improve a diversified company's overall performance _____.

Answer: can be placed into four broad categories of action

Strategic options for allocating company financial resources include which of the following?

1. investing in ways to strengthen or grow existing businesses

2. making acquisitions to establish positions in new industries or to complement existing businesses

3. funding long range R&D ventures aimed at opening market opportunities in new or existing businesses

Which of the following statements are true concerning whether a company has sufficient non financial resources?

1. The broader the diversification, the greater the concern that corporate executives are overburdened trying to parent too many companies

2. A company's resources can be overtaxed by making many acquisitions and calling on management to oversee many businesses quickly

3. If a company's strategy is closely tied to moving technologies from existing businesses to new ones, it must develop more resources to supply them

Which of the following statements are true concerning the portfolio approach to ensuring financial fit?

1. The portfolio approach relies on the premise that cash flow and investment traits vary among different businesses

2. Cash cows have limited growth but are a valuable financial resource

3. Business units in quickly expanding industries are often cash hogs

After a evaluating the strength, attractiveness, and fit of a diversified company's strategy, the next move is to ____.

Answer: rank the performance potential of the business

A diversified company can add value by shifting capital from business units generating free cash flow to those needing capital to grow by having a strong ___.

Answer: internal capital market

When a firm with a related diversification strategy has businesses that match specialized resource requirements at points along their value chains that are critical for the business's market success, they are said to have ___.

Answer: resource fit

Which of the following are circumstances that indicate a poor fit of non financial resources in a diversified company?

1. A company's resources are stretched thin in order to assimilate and oversee many new businesses in a short time

2. A mismatch exists between a diversifying company's competitive assets and the key success factors of an industry into which it is expanding

3. A core business lacks accumulated resources to deal with the competitive environment of the businesses into which it has diversified