1. Describe each of the different levels of diversification. Provide examples of organizations that showcase each of the levels.

2. Some acquisitions are made to build capabilities. Others are made to gain market power, reduce costs, or increase growth. Briefly describe these four reasons and clarify the main difference between the motivation for building capabilities and the other three motivations for acquisitions.

3. Why would a company choose to use foreign direct investment as a way to enter a foreign market, instead of other, less risky options? What are the disadvantages of foreign direct investment? What are the types of foreign direct investment? Provide examples of two corporations that chose foreign direct investment for two different reasons; these reasons should differ from the examples in your book.

4. Discuss the similarities and differences of vertical and horizontal alliances. Which is most vulnerable to problems, what are these problems, and what are their causes?

5. When would it be to an organizations advantage to use internal innovation rather than external innovation? When would it be best for an organization to use external innovation rather than internal innovation?