Exam 8: Corporate Strategy: Vertical Integration and Diversification

Evara Inc.started as a luxury brand for designer apparel.Soon, the company expanded by launching its own line of premium perfumes, watches, bags, and home furnishings.This expansion allowed the businesses under the company to share a few, if not all, of the common competencies in products, services, technology, and distribution.Which of the following corporate strategies is Evara pursuing in this scenario?

General Electric's CEO, Jeffrey Immelt, decided to refocus GE's portfolio of businesses and leverage the firm's core competency in industrial engineering while pursuing future-growth industries.The two industries that CEO Immelt had identified as major future-growth industries were the:

Neon Electronics Inc.sourced touchscreens required for its tablet computers, cell phones, and televisions from a manufacturer in China.But the demand for such components was high globally, and the supplier could not meet the quality standards of Neon Electronics.Thus, Neon Electronics decided to set up its own unit to develop and manufacture the required touchscreens.What does this scenario best illustrate?

Which of the following best illustrates site specificity?

Strategic business units that have a relatively low market share but have the potential to grow are best categorized under _____ in the Boston Consulting Group (BCG)growth-share matrix.

Why do investments in specialized assets tend to incur high opportunity costs?

A corporation's star SBUs will:

Which of the following best illustrates forward vertical integration?

When a firm is said to be pursuing a geographic diversification strategy, it means that the firm will:

What kind of businesses is categorized under dogs in the Boston Consulting Group (BCG)growth-share matrix?

What are the advantages and disadvantages of organizing economic activity within firms?

The 3D television division of a large consumer electronics company has been recognized as a question mark.The company's LCD television division has been categorized under dogs.Which of the following statements will hold well in this scenario?

DS & Co.is following a related-linked diversification strategy, and GreenWing Inc.is following a related-constrained diversification strategy.How do the two firms differ from each other?

Which of the following best illustrates physical-asset specificity?

Bill is in an interview for a sales job that requires no experience.He is trying to portray himself as a highly enthusiastic, energetic person with high-level communication and interpersonal skills.The interviewer is convinced that Bill should be hired as a sales person in the company.However, in his resume, Bill had not mentioned his previous work experience as he was fired from that job on the account of using illegal drugs.Which of the following does this scenario best illustrate?

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing.

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self interests.What does this best illustrate?

With reference to the Strategy Highlight 8.2, the Tata Group's corporate strategy is attempting to:

WJ Group Inc., a large multinational conglomerate, had begun to experience declining revenues over the years.The top management at the headquarters of the company decided that it was important for the company to avoid deviating from its core competencies.Thus, a few of the company's key businesses like energy, telecommunications, and automobiles were centralized, giving the top management more control over them.Also, relatively newer businesses like beverages and food processing were divested.In this scenario, WJ Group is involved in:

Why are generic industry value chains called vertical value chains?