Deck 9: Corporate/multi-business strategy

Question 1

According to Hubbard,Rice and Galvin,one of the reasons for a single business wanting to diversify is that:

A) the macro environment becomes conducive to mounting a takeover
B) the industry's competitive environment becomes attractive to consolidation
C) the business has an exact capability match to the diversification opportunity
D) the diversification allows managers to improve their compensation

Answer 1

D

Question 2

The dimensions of the BCG growth-market share matrix are:

A) real industry growth and real market share
B) real organisational growth and relative market share
C) real industry growth and relative market share
D) real industry profitability and relative market share

Answer 2

C

Question 3

Collis and Montgomery's five implementation factors do NOT include:

A) nature of the capabilities to be reallocated
B) scope of the businesses
C) type of coordinating mechanisms
D) control systems and head office size

Answer 3

A

Question 4

The ways for the corporate centre to add value do NOT include:

A) value created by financial restructuring/engineering
B) increased value of new business options
C) increased motivation of employees from indirect ownership
D) improvements to individual business units' performance

Question 5

The BCG growth-market share matrix considers the business' position in terms of its:

A) market growth relative to the largest industry competitor and of real industry size
B) market share relative to the largest industry competitor and of real industry growth rate
C) market size relative to the largest industry competitor and of gross domestic product
D) market share relative to a comparable US firm and of its future growth potential

Question 6

According to Miller:

A) more related corporations perform better
B) more diversified corporations perform better
C) moderately related corporations perform better
D) more related corporations perform poorly

Question 7

Hubbard,Rice and Galvin's four questions of corporate strategy do NOT include:

A) What amount of growth and level of profitability does the corporation want to achieve?
B) How are the businesses separated from each other?
C) What position does the corporation want to achieve?
D) What is the 'corporate vision' of the corporation?

Question 8

The golden rule of corporate strategy can be expressed as:

A) Value (A + B) < Value (A) + Value (B) + Coordination Costs (A + B)
B) Value (A + B) > Value (A) + Value (B) + Coordination Costs (A + B)
C) Value (A + B) < Value (A) + Value (B) - Coordination Costs (A + B)
D) Value (A + B) > Value (A) + Value (B) - Coordination Costs (A + B)

Question 9

The ways that vertical integration can create value is NOT:

A) by building barriers to entry
B) by protecting product quality
C) by achieving improved scheduling
D) by trading unrelated products

Question 10

___ is the extent to which the organisation can use the capabilities that it already has in other businesses:

A) economies of scale
B) economies of scope
C) capability development
D) none of the above

Question 11

The GE business strength-industry attractiveness matrix:

A) has 16 cells
B) has two axes with factors determined by General Electric's CEO Jack Welsh
C) incorporates the PIMS data gathered from a wide range of US businesses
D) allows weights to be applied to each factor to obtain an 'objective' assessment

Question 12

The five types of unrelated diversification that may create value are:

A) stakeholder value, family conglomerates, synergistic, escape, capacity-based
B) triple bottom line, family feud, opportunistic, escape, capability-based
C) shareholder value, family conglomerates, opportunistic, escape, capability-based
D) shareholder value, family confederations, synergistic, evasion, capacity-based

Question 13

Advantages of the diversified corporation do NOT include the claim that:

A) good diversified corporations have good control systems
B) diversification spreads risk
C) diversification trains general managers
D) diversification encourages efficient capital accumulation

Question 14

Capability-based diversification comprises three ways in which capability can be transferred:

A) parent to new business, old business to new business, new business to old business
B) parent to old business, old business to new business, new business to old business
C) parent to new business, old business to old business, new business to new business
D) all of the above

Question 15

The McKinsey model's 'three horizons' do NOT include:

A) business ideas: create viable options to convert to emerging businesses
B) emerging business: to become major future businesses
C) blue sky business: brainstorm and skunkworks to generate potential viable options
D) current business: defend and extend

Question 16

The objective of corporate strategy,as with business strategy,is to add value.

Question 17

Increasing market share for current products in current markets is:

A) related diversification
B) horizontal integration
C) product development
D) market penetration

Question 18

Possible parenting capabilities of the new business could include:

A) defining the business
B) sharing common capabilities
C) making minor changes in areas where the business has little managerial experience
D) re-establishing bureaucracy

Question 19

Hubbard,Rice and Galvin's definition of 'diversification' does NOT include:

A) the development of competitive scope though vertical and horizontal integration
B) changes in its administrative structures, systems and other management processes
C) byprocesses of internal business development or acquisition
D) the entry of a firm or business unit into new lines of activity

Question 20

'Parenting capabilities' imply that:

A) the owned businesses usually inherit 'genetic defects' from their corporate parent
B) the current corporate owner can always create more value than a new corporate owner
C) the owned businesses carry a form of 'corporate DNA' that determines performance
D) the parent in a corporation can transfer to other businesses within the corporation.

Question 21

Studies show that organisations which are vertically integrated are less volatile in activity and profitability than non-vertically integrated organisations.

Question 22

'Defensive managerial goals' imply diversification to focus attention on existing performance.

Question 23

Market penetration strategy allows organisations to increase market share for present products in the same markets.

Question 24

According to Hubbard et al.there is only one way in which capabilities can be transferred across the business portfolio.

Question 25

Compare the BCG and GE tools and contrast their relative strengths and weaknesses as analytical devices.

Question 26

The first golden rule of corporate strategy suggests that the corporate centre's value creation should be equal to the coordination costs.

Question 27

Discuss any two advantages offered by a parent organisation to a new business.

Question 28

Product development strategy allows organisations to increase market share for new products in new markets.

Question 29

According to Aw and Eng,diversification in Asia compared to Europe leads to different performance.

Question 30

In what ways can a 'corporate centre' add value to the corporation? Is it essential to have a 'corporate centre'?