Exam 13: Implementing Corporate Strategy: Managing the Multibusiness Firm

The choice between strategic planning and financial control as a corporate management style for a particular company depends upon:

The benefits and the costs from extending (or reducing)corporate scope are critically dependent upon how corporate strategy is implemented.

The concept of "parenting advantage" is best summarized by the following statement:

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

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

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

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

In large multibusiness,multinational companies shared service organizations are almost always located close to their corporate headquarters.

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 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.

According to Jack Welch,the advantages of focus that single business companies possess are outweighed the advantage that multibusiness companies possess in terms of their ability to share the ideas from many different sources.

Managing linkages among businesses through transferring skills and sharing resources would appear to offer greater potential for creating value than portfolio management because:

The success of Berkshire Hathaway over the past five decades under the leadership of Warren Buffett may be attributed primarily to:

Most multibusiness companies have a dual planning process: strategic planning focuses on the short and medium term,financial planning on the medium to long term