Exam 7: Developing Corporate Strategy

A special case of resource sharing that can create both cost savings and revenue-enhancement is ________ capabilities.

Synergy is the degree to which a firm conducts business in more than one arena.

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

Businesses that are managed separately always have an advantage over a corporation that maintains ownership over multiple business units because of their ability to gain specialized knowledge.

Managerial know-how is a general resource that could be exploited in any number of contexts.

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.

To secure needed resources, large firms often move "downstream" in the industry value chain.

The strategy of common ownership can dissipate potential shareholder value.

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

A firm's corporate strategy usually stays close to the same over time.

3M has entered most of its businesses through internal innovation, but recently it increased its pace of acquisitions.

The main determinant of CEO pay is the firm's industry.

Compare corporate strategies in dynamic and stable contexts.

How might investors make reasonable estimates of a business unit's potential independent value?

Diversification strategies always lead to increased shareholder value.

All of the following put pressure on conglomerates to reorganize except ________.

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

The first form of organizational diversification in the United States was probably horizontal diversification.

Financial markets will recognize the existence of a parenting advantage when the collective market value is less than the independent market value of a portfolio of business units.

Complex firms are more difficult to manage than simple firms.