question

Corporate-level strategy addresses two related issues:

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what businesses to compete in; how these businesses can achieve strategy

question

Individual investors are dependent upon the corporation's managers to

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add value to their investments in a way that the stockholders could not accomplish on their own

question

McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses. This is an example of

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achieving economies of scope through related diversification

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Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as

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capitalizing on core competencies

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The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities and centralizing union negotiations. This is an example

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attaining the benefits of parenting through unrelated diversification

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Core competencies

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reflect the collective learning in organizations, how to coordinate diverse production skills, integrate multiple streams of technologies, and market diverse products and services

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For competencies to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which of the following is not one of these requirements?

answer

the new business must have an established large market share

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Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful it is important that

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the similarity required for sharing core competencies must be in the value chain not in the product

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When management uses common production facilities or purchasing procedures to distribute different but related products, they are

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sharing activities

question

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of

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vertical integration

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The risks of vertical integration include all of the following EXCEPT

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lack of control over valuable assets

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Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with

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vertical integration

question

A firm should consider vertical integration when

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the firm's suppliers of raw materials are often unable to maintain quality standards

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It may advantageous to vertically integrate when

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lower transaction costs and improved coordination are vital and achievable through vertical integration

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Transaction costs include all of the following costs EXCEPT

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agency costs

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Vertical integration is attractive when

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transaction costs are higher than internal administrative costs

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Parenting

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when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestitures, and new ventures

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Reconstructing

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when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change

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According to the text, corporate restructuring includes

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capital restructuring, asset restructuring and management restructuring

question

Portfolio management matrices are applied to what level of strategy?

answer

corporate level

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When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be know as a

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star

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In the BCG Matrix, a business that has a low market share in an industry characterized by high market growth is termed

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question mark

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Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics?

answer

Grid dimensions are based on external environments and internal capabilities/market positions

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A "cash cow" referred to in the Boston Consulting Group Portfolio management technique, refers to a business that has

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low market growth and relatively high market share

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In managing a firm's portfolio, the BCG matrix would suggest that

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"question marks" can represent future "stars" if their market share is increased

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In the Boston Consulting Group's (BCG) Growth Share Matrix, the suggested strategy for "stars" is to

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maintain position and after the market growth slows use the business to provide cash flow

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All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix EXCEPT

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it takes dynamic view of competition which can lead to overly complex analyses

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The three primary means by which a firm can diversify are:

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mergers and acquisitions; joint ventures ans strategic alliances; internal development

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The downside or limitations of mergers and acquisitions include all of the following EXCEPT:

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it is slow means to enter new markets and acquire skills and competences

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Divesting businesses can accomplish many different objectives, including

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(all of these) enabling managers to focus their efforts more directly on the firm's core business. providing the firm with more resources to spend on more attractive alternatives. raising cash to help fund existing businesses.

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A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of

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strategic alliance

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Cooperative relationships such as _______________ have the potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies

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both joint ventures and strategic alliances

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All of the following are guidelines for managing strategic alliances EXCEPT

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relying primarily on a contract to make the joint venture work

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Which of the following statements regarding internal development as a means of diversification if FALSE?

answer

an advantage on internal development is that it is generally faster than other means of diversification

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_________________may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through _________________ and __________________ can provide

answer

Internal development; mergers; acquisitions

question

According to Michael Porter: "There's a tremendous allure to _______________. It's the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get front page story, and create excitement in markets.

answer

mergers and acquisitions

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(anti-takeover tactic) greenmail

answer

when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it

question

An anti-takeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called

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a poison pill

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golden parachutes

answer

pay given to executives fired because of a takeover

question

anti-takeover tactics include all of the following EXCEPT

answer

golden handcuffs

Mana 4322 (Chapter 6) – Flashcards

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