GBU 480 Final Exam

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GBU 480 Final Exam
2012-08-02 03:15:44
gbu 480

Business Strategy Final Exam
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  1. When a firm operates in multiple industries or markets simultaneously.
    Corporate diversification strategy
  2. When a firm operates in multiple industries simultaneously.
    Product diversification strategy
  3. When a firm operates in multiple geographic markets simultaneously.
    Geographic market diversification strategy
  4. When a firm implements both types of diversification simultaneously.
    Product-market diversification strategy
  5. When all or most of a firm's business activities fall within a single industy and geographic market.
    Limited corporate diversification
  6. Firms with greater than 95% of their total sales in a single-product market.
    Single-business firms
  7. Firms with between 70 and 95% of their total sales in a single-product market.
    Dominant-business firms
  8. When less than 70% of a firm's revenue comes from a single-product market and these multiple lines of business are linked.
    Related corporate diversification
  9. When all of the businesses in which a firm operates share a significant number of inputs, production technologies, distribution channels, similar customers, etc.
  10. WHen the different businesses a single firm pursues are linked only on a couple of dimensions, or f different sets of businesses are linked along very different dimensions.
  11. When less than 70% of a firm's revenues are generated in a single-product market, and when a firm's businesses share few, if any, common attributes.
    Unrelated corporate diversification strategy
  12. When the value of the products or services a firm sells increases as a function of the number of businesses in which that firm operates.
    Economies of scope
  13. Type of economies of scope - Shared activities; Core competencies
    Operational economies of scope
  14. Type of economies of scope - Internal capital allocation; Risk reduction; Tax advantages
    Financial economies of scope
  15. Type of economies of scope - Multipoint competition; Exploiting market power
    Anticompetitive economies of scope
  16. Type of economies of scope - Maximizing management compensation
    Employee and stakeholder incentives for diversification
  17. Complex sets fo resources and capabilities that link different businesses in a diversifiied firm through managerial and technical know-how, experience, and wisdom.
    Core competence
  18. Diversified firms that are exploiting core competencies as an economy of scope but are not doing so with any shared activities.
    Seemingly unrelated diversified firms
  19. A form of tacit collusion whereby firms tacitly agree to not compete in one industry in order to avoid competition in a second industry.
    Mutual forbearance
  20. When firms cooperate to reduce rivalry below the level expected under perfect competition.
    Tacit collusion
  21. The most common organizational structure for implementing a corporate diversification strategy.
    M-form (multidivisional)
  22. 3 critical management control processes for firms implementing diversification strategies:
    • 1. Evaluating the performance divisions
    • 2. Allocating capital across divisions
    • 3. Transferring intermediate products between divisions
  23. Monitor decision making in a firm to ensure that it is consistent with the interests of outside equity holders.
    Board of directors
  24. Monitor decision making to ensure that it is consistent with the interests of major institutional equity investors.
    Institutional investors
  25. Formulate corporate strategies consistent with equity holders' interests and assure strategy implementation.
    Senior executives
  26. Provides information to the senior executive about internal and external environments for strategy formulation and implementation.
    Corporate staff
  27. Formulate divisional strategies consistent with corporate strategies and assure strategy implementation.
    Divisional general managers
  28. Support the operations of multiple divisions.
    Shared activity managers
  29. Whenever two or more independent organizations cooperate in the development, manufacture, or sale of products or services.
    Strategic alliance
  30. Cooperating firms agree to work together to develop, manufacture, or sell products or services, but do not take equity positions in each other or form an independent organizational unit to manager their cooperative efforts.
    Nonequity alliance
  31. Cooperating firms supplement contracts with equity holdings in alliance partners.
    Equity alliance
  32. Cooperating firms create a legally independent firm in which they invest and from which they share any profits that are created.
    Joint venture
  33. When firms directly communicate with each other to coordinate their levels of production, prices, etc. Illegal in most countries.
    Explicit collusion
  34. Potential partners misrepresent the value of the skills and abilities they bring to the alliance.
    Adverse selection
  35. Partners provide to the alliance skills and abilities of lower quality than they promised.
    Moral hazard
  36. Partners exploit the transaction-specific investments made by others in the alliance.
  37. 2 substitutes for strategic alliances:
    • 1. Going it alone
    • 2. Acquisitions