Question

7. A company that manufactures brakes for cars has just released a line of all-terrain vehicles. Using the same research and findings from the development of the ATV brakes, the manufacturer is redesigning its car brakes. By sharing the research across the business units for both vehicles, the company is increasing company profitability through:

a.economies of scope.

b. commonalities.

c. product bundling.

d. restructuring.

8. To pursue a diversification strategy, managers must have the ability to:

a.outsell all of the competition.

b. discover technological advancements to create new products.

c. recognize profitable opportunities to enter new industries.

d. introduce innovative and disruptive products to the market.

9. A computer retailer recently established a new computer repair shop separate from its retail stores after recognizing that it had hired many team members capable of diagnosing and repairing computer and IT problems. The computer retailer and its managers have developed this new business through:

a.leveraging its competencies.

b. transferring its competencies.

c. commonalities.

d. economies of scope.

10. A makeup retailer is interested in opening a spray tanning salon. Both businesses are related to cosmetics, but their operations are dramatically different. The makeup retailer is very successful in its customer loyalty program, which has served as a great marketing technique. The company hopes to implement this same program within the tanning salon business. This is an example of:

a.economies of scope.

b. transferring competencies.

c. organizational design skills.

d. leveraging competencies.

11. A movie theater business starts a video game arcade using a similar business model. The goal is to diversify its product offerings and transfer its distinctive competencies from operating the movie theater to establishing the video game arcade. Both businesses focus on the consumption of media. This helps the company increase the profitability of the businesses through its:

a. economies of scope.

b. leveraging of competencies.

c. commonalities.

d. product bundling.

12. A chemical company that produces fertilizer for farms is partnering with an eco-friendly products group to brand an animal-friendly line of fertilizer that doesn't harm livestock, wild animals, or pets if they ingest it by accident. Both companies will share the costs and risks associated with creating the business. What method are they using to enter the new industry?

a.Acquisition

b. External new venture

c. Internal new venture

d. Joint venture

Answer 1

Answer-7. A. Economies of scope as the use of this concept is the unit cost to produce that product will be minimised and increasing the varities of the product can be maximised.

Answer-8. C. Recognize profitable opportunities to enter new industries as the strategy to recognise new profitable business opportunities for entering into new businesses defines diversification strategy that managers must have.

Answer-9. B. Transferring its competencies as retailer tend to acquire business related to his existing business because of commonalities in between.

Answer-10. D. Leveraging competencies as their competencies is to create sustainable competitive advantage which cannot be easily replicated.

Answer-11. C. Commonalities as they both are in possession of common attributes.

Answer-12. D. Joint venture as in this arrangement of business both companies agreed to pool their resources to accomplish the specific task.

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