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Exam 7: Developing Corporate Strategy

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Question 1

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Business strategy and corporate strategy have very similar objectives.

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Question 2

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Whenever a common resource can be used across more than one business unit, the company will always generate enhanced shareholder value.

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The profit pool incorporates key complementary businesses near the point at which a firm is directly involved in customer transactions.

When there are many businesses and they are largely unrelated, the firm is referred to as a conglomerate.

The corporate strategy involves operating in a singular arena.

As a result of the Sherman Antitrust Act of 1890, many large firms began expanding into areas unrelated to their core businesses.

Diversification into upstream or downstream industries is called ________.

When strategists think about a proposed diversification move, they must assess the extent to which their firm's resources and capabilities match the ________.

Some of the more important levers to achieve successful diversification include knowledge-transfer mechanisms, coordination mechanisms, rewards, and corporate oversight. Discuss the benefits of knowledge transfer.

Portfolio planning was not initially intended to help managers achieve a balanced portfolio of large stable businesses.

The success with which diversified firms are managed in harmony with key organizational features has a significant effect on the level of value that can be created through their portfolios.

The profit pool reminds us that profit and revenue concentration usually occur at the same place in an industry.

Economies of scope and synergy are collectively referred to as revenue-enhancement opportunities.

Expanding a firm's scope does not necessarily create value for shareholders.

The economic logic of diversification incorporates levers to achieve synergy and transfer knowledge between business units.

Businesses can be related along several different dimensions including all of the following except ________.

The maximum opportunities to exploit potential economies of scope and revenue enhancement synergies lie at the intersection of the two dimensions of fit among parent-subsidiary ________ and ________.

Managers can squander value through diversification.

At the ________ level, competitive advantage reflects management's success in creating more value from the firm's business units than those units could create as stand-alone enterprises.

Increased horizontal scope is attractive to firms because it offers opportunities by reducing costs through exploiting possible economies of scope and by ________.