Exam 13: Implementing Corporate Strategy: Managing the Multibusiness Firm

The axes of the BCG and GE/McKinsey portfolio planning matrices act as proxies for two key strategic variables:

Although sharing resources among the different businesses within the multibusiness corporation can offer substantial cost economies, these savings are often offset by:

The main purpose of a portfolio planning matrix is to:

The failure of companies such as Enron, WorldCom, Royal Bank of Scotland, and Kaupthing Bank of Iceland illustrate:

The axes of the BCG and GE/McKinsey business portfolio matrixes represent the two fundamental sources of profitability for a business: the attractiveness of its industry and its competitive advantage.

The Ashridge portfolio display is distinguished by the fact that it takes account of fit between each business and the corporate owner.

Multibusiness corporations with close linkages between their businesses tend to have smaller corporate headquarters than multibusiness corporations with more independent businesses.

The mechanisms through which the corporate headquarters exercises control over individual businesses can be classified into "input control" and "output control." Performance management systems represent a form of "input control."

Corporate management systems based upon financial targets and budgetary controls tend to work best in multibusiness companies with relatively few, closely-related, technology-intensive businesses

The development of portfolio planning techniques at the end of the 1960s was initiated by:

The primary purpose of the "Ashridge portfolio display" is to:

The changes in the ways in which CEOs and senior executives have been compensated in recent decades, particularly the growth of share options and performance incentives have:

The record of most large, mature corporations in developing new businesses is poor.

Typically, a common corporate identity and well-established corporate systems means that there are few barriers to transferring best practices between business units within a company.

The corporate headquarters of diversified companies that comprise loosely-related businesses (e.g.Berkshire Hathaway, Danaher, Jardine Matheson, and the Tata Group) differ from the corporate headquarters of closely-related business (e.g.Royal Dutch Shell, IBM, BASF, and Unilever) in the following way:

The principal mechanisms through which the corporate headquarters seeks to improve the strategic and operational management of its businesses are:

For conglomerate companies (companies that comprise unrelated businesses) portfolio management is likely to be more important source of value creation than in a diversified company that comprises closely-related businesses.

The principal merit of the BCG portfolio planning matrix is:

The type of corporate strategy through which most leading private equity groups such as Carlyle Group, Kohlberg Kravis Roberts, and Blackstone add value to the businesses they acquire is best described as:

Corporate management can enhance the performance of its individual businesses through imposing corporate systems for performance management and resource allocation, however, the main downside of such corporate intervention is: