BUSI 4940 EXAM 2 STUDY GUIDE
Business Unit Strategy - Answers - The search for competitive advantage within a
single industry, market, or line of business
Corporate Strategy - Answers - The search for value and competitive advantages
through participation in several different industries and markets
Vertical Integration - Answers - Movement into adjacent markets by a firm along its own
value chain. Movement in the direction of raw materials is backward integration.
Movement in the direction of sales, service, or warranty operations is forward integration
Horizontal Diversification - Answers - The movement into adjacent, or unrelated, market
that isn't along a firm's own value chain
Single Business - Answers - A firm earning more than 95 percent of the revenues from
a single line of business
Dominant Vertical Business - Answers - 70+ percent of revenue from main line of
business, remainder from businesses located along value chain
Dominant Business - Answers - 70+ percent of revenue from main line, remainder from
other lines across value chains
Related-constrained Diversification - Answers - less than 70% of revenue from main
line, other lines share product, technological, and distribution linkages with main
business
Related-linked Diversification - Answers - Firm operates in related markets, but fewer
linkages exist between new and existing markets that the elements create separately
Unrelated Diversified Firm - Answers - Competes in product categories and markets
with few, if any, links between them
(Six S's of CA) Employ Slack - Answers - Unused Resources
Management Skills
(Six S's of CA) Creating Synergy - Answers - Disney whole exceeds sum of its parts
(Six S's of CA) Shared Knowledge - Answers - Leveraging core competencies
, (Six S's of CA) Similar Business Models - Answers - Dominant Logic: A
conceptualization of a business, or a set of rules for competition, that applies to
seemingly unrelated product markets or industries
(Six S's of CA) Spreading Capital - Answers - Internal Capital Market (financial and
talent)
Spread Risk (Cyclical Businesses)
(Six S's of CA) Stepping Stone to a New Industry - Answers - exit dying business
Greenfield Entry (Build It Yourself) - Answers - Existing resources move from existing to
new business
Brand, customer knowledge, technology overlap
Speed not essential
Acquisition Entry (Buy your way in) - Answers - Resources don't move from existing to
new business
No brand equity, new customers, new technology
Speed essential
Acquisition Integration Strategies - Answers - Bury - Acquirer completely absorbs target
Build - Together build a new integrated organization
Blend - Loose coupling of the two, leverage target's best attributes, take over everything
else
Bolt-on - Remain two companies with one owner
Reasons for Vertical Integration (3C's) - Answers - Capabilites
Coordination
Control
Dangers of Vertical Integration - Answers - Loss of Flexibility
Loss of Focus
Advantages of Outsourcing - Answers - Flexibility
Business Unit Strategy - Answers - The search for competitive advantage within a
single industry, market, or line of business
Corporate Strategy - Answers - The search for value and competitive advantages
through participation in several different industries and markets
Vertical Integration - Answers - Movement into adjacent markets by a firm along its own
value chain. Movement in the direction of raw materials is backward integration.
Movement in the direction of sales, service, or warranty operations is forward integration
Horizontal Diversification - Answers - The movement into adjacent, or unrelated, market
that isn't along a firm's own value chain
Single Business - Answers - A firm earning more than 95 percent of the revenues from
a single line of business
Dominant Vertical Business - Answers - 70+ percent of revenue from main line of
business, remainder from businesses located along value chain
Dominant Business - Answers - 70+ percent of revenue from main line, remainder from
other lines across value chains
Related-constrained Diversification - Answers - less than 70% of revenue from main
line, other lines share product, technological, and distribution linkages with main
business
Related-linked Diversification - Answers - Firm operates in related markets, but fewer
linkages exist between new and existing markets that the elements create separately
Unrelated Diversified Firm - Answers - Competes in product categories and markets
with few, if any, links between them
(Six S's of CA) Employ Slack - Answers - Unused Resources
Management Skills
(Six S's of CA) Creating Synergy - Answers - Disney whole exceeds sum of its parts
(Six S's of CA) Shared Knowledge - Answers - Leveraging core competencies
, (Six S's of CA) Similar Business Models - Answers - Dominant Logic: A
conceptualization of a business, or a set of rules for competition, that applies to
seemingly unrelated product markets or industries
(Six S's of CA) Spreading Capital - Answers - Internal Capital Market (financial and
talent)
Spread Risk (Cyclical Businesses)
(Six S's of CA) Stepping Stone to a New Industry - Answers - exit dying business
Greenfield Entry (Build It Yourself) - Answers - Existing resources move from existing to
new business
Brand, customer knowledge, technology overlap
Speed not essential
Acquisition Entry (Buy your way in) - Answers - Resources don't move from existing to
new business
No brand equity, new customers, new technology
Speed essential
Acquisition Integration Strategies - Answers - Bury - Acquirer completely absorbs target
Build - Together build a new integrated organization
Blend - Loose coupling of the two, leverage target's best attributes, take over everything
else
Bolt-on - Remain two companies with one owner
Reasons for Vertical Integration (3C's) - Answers - Capabilites
Coordination
Control
Dangers of Vertical Integration - Answers - Loss of Flexibility
Loss of Focus
Advantages of Outsourcing - Answers - Flexibility
