If managers diversify a firm in a way that does not produce value, the firm risks capital market _____.
Answer: intervention
Learn More :
Strategic Management Chapter 6
- Research suggests that _____ has decreased while _____ has increased possibly due to the
- In making a decision to diversify, managers should use value-creating reasons or face the risk that their firms will be acquired and they could lose their jobs. Which of the following is a value-creating reason to diversify?
- Which of the following is NOT a governance mechanism that may limit managerial tendencies to over-diversify?
- During the 1990s top executives of Titanic, Inc., followed a pattern of aggressive acquisitions and diversification. Now, Titanic is performing poorly and earning below average returns. Lusitania, a large conglomerate firm, is in the final stages of purchasing Titanic. Lusitania has announced that it will fire Titanic's current top executives. The Titanic executives may not be worried about their impending job loss if they
- Isidore Crocker, CEO of Gotham Engines, is strongly in favor of acquiring Carolina Textiles, a firm in an unrelated industry. Some members of the board of directors are questioning Crocker's motives for the acquisition. They argue that it is not uncommon for CEOs to push for acquisitions because
- Managerial motives to seek diversification include a desire to
- Compared with diversification based on intangible resources, diversification based on financial resources is
- Which of the following resources are more likely to create value in the diversification process?
- The Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing. This excess capacity will be useful in
- The downside of synergy in a diversified firm is
- Synergy exists when
- As the threat of corporate failure increases due to relatedness between a firm's business units, firms may decide to
- The curvilinear relationship of corporate performance and diversification indicates that
- Certain regulatory changes (such as antitrust regulation and tax laws) create incentives or disincentives for diversification that
- Free cash flows are
- Because of the tax laws of the 1960s and 1970s, when dividends were taxed more heavily than capital gains, shareholders preferred that corporations
- Of the value-neutral incentives to diversify, all of the following are internal firm incentives EXCEPT
- Among the value-neutral incentives to diversify, some come from the firm's external environment while others are internal to the firm. External incentives to diversify include
- Which of the following firms would be the most likely to be a successful candidate for acquisition and restructuring?
- What is the similarity between high-technology firms and service-based firms that makes them risky as restructuring candidates?
- The risk for firms that follow the unrelated diversification strategy in developed economies is that
- Successful unrelated diversification through restructuring is typically accomplished by
- Large diversified firms often face a _____.
- Large diversified businesses often face what is known as the "conglomerate discount." This discount means that investors
- A _____ firm, GE (discussed in the Chapter 6 Opening Case) has done an exceptional job _____ its four major strategic business units.