Use your understanding of corporate-level strategy to answer the questions that follow this short scenario.

Imagine that you own a small coffee shop and you are considering expanding your business through one or more options. One option is to merge with the gift shop next door. Another option is to purchase the bakery from which you buy pastries to sell to your customers along with their coffee and tea. Yet another option is to open another coffee shop in a different neighborhood.

If you decide to focus on your __________(corporate advantge, portfolio of businesses,core business) , you will choose to open another coffee shop in a different neighborhood.

What type of decision are you making when you decide to merge with the gift shop next door instead of entering into a joint venture to sell coffee-related merchandise?

Ownership

Organizational design

Scope of business

Businesses should diversify, or acquire other businesses, only under which of the following circumstances?

When the business environment is undergoing rapid transformation

When the company being acquired is significantly undervalued

When the combined business will be more valuable than the two separate businesses alone

When the acquiring business has excess funds available for use