Exam 7: Developing Corporate Strategy

Substantial empirical evidence indicates that some forms of diversification can create significant shareholder wealth.

What are the six key aspects of corporate strategy as it affects diversification decisions?

________ is achieved when the joint cash flows of two or more collectively owned business units exceed the sum of cash flows that they would generate independently.

Why is increased horizontal scope attractive?

What was the impact of the Sherman Antitrust Act of 1890 on corporate diversification strategies?

General Electric is a company that is only involved in electronics-related businesses.

The profit to be gained from buying a parent firm and selling off its portfolio piecemeal gives potential buyers a significant ________.

What are the two dimensions that intersect to exploit potential economies of scope and revenue-enhancement synergies?

Firms expand vertically to take advantage of ________.

Using Ford Motor Company, give examples of possible vertical integration.

When the collective market value of a firm exceeds the independent market values of the firm's portfolio of business units, financial markets recognize the existence of a ________.

In seeking to diversify, many firms try to acquire and ________ complementary resources and capabilities.

Revenue-enhancement synergy exists when total sales are greater if two products are sold and distributed ________.

Common core competencies are the unique resources and knowledge that a company's management must consider when developing strategy.

In some cases, firms can create values by moving into buyers' value chains if it can bundle complementary products.

A ________ is a business that has a weak competitive position and is in a slow-growth industry.

A firm's corporate strategy is created annually and remains stable until the following year.

The extent to which a firm participates in related market segments or industries outside its existing value-chain activities is called ________.

Discuss some of the possible side effects of too much diversification.

Revenue-enhancement synergy may result from a variety of tactics, including ________.