MANA 4322: Exam II Test Questions
and Answers.
Corporate strategy - Answer Identifies a set of businesses, markets, or industries in which an
organization competes and the distribution of resources among those entities
Vertical growth - Answer Involves acquisition or development of new businesses that
produce parts or components of the organization's product
Horizontal growth - Answer Adds new businesses that produce related products or are
involved in related markets and activities.
Diversification - Answer The process of firms expanding their operations by entering new
businesses. Trying to add value to our shareholders. Should be synergistic.
Related businesses - Answer Horizontal relationships. Sharing tangible and intangible
resources
Unrelated business - Answer Hierarchical relationships. Value creation devices from
corporation. Uses leveraging support activities
Related diversification - Answer A firm entering a different business in which it can benefit
from leveraging core competencies, sharing activities, or building market power. Ex: 3M,
Marriott, J&J
Vertical integration - Answer Occurs when a firm becomes its own supplier or distributor.
Pros: secure source of raw materials, protection over valuable assets, and new business
opportunities
Cons: Costs/expenses associated with increased overhead. Loss of flexibility
Unrelated diversification - Answer A firm entering a different business that has little
horizontal interaction with other businesses of a firm. Ex: Tyco, Berkshire Hathaway
Parenting advantage - Answer The positive contributions of the corporate office to a new
business as a result of expertise and support provided
Restructuring - Answer The intervention of the corporate office in a new business that
substantially changes the assets, capital structure, and/or management
, Portfolio management - Answer Assessing the competitive position of a portfolio of
businesses within a corporation, suggesting strategic alternatives for each business, and
identifying priorities for the allocation of resources across the businesses
Portfolio matrix - Answer Cash cows: high market share with a growth rate that isn't very
high
High industry growth rate: have to spend more money to keep growth
Political and economic risk - Answer -Social unrest
-Military turmoil
-Demonstrations
-Violent conflicts and terrorism
-Laws and their enforcement
Currency risks - Answer The potential threat to a
firm's operations in a
country due to fluctuations
in the local
currency's exchange
rate. Appreciation of the US dollar
Management risks - Answer The potential threat to a firm's operations in
a country due to the problems that managers have making decisions in the context of
foreign markets. Ex: culture, customs, language, income levels, customer preferences,
distribution system
Transnational strategy - Answer A strategy based on firms' optimizing
the trade-offs associated with efficiency,
local adaptation, and learning, used in industries where the pressures for both local adaptation
and lowering costs are high. Ex: Coke
International strategy - Answer A strategy based on firms' diffusion
and adaptation of the parent companies'
knowledge and expertise to foreign
markets, used in industries where the
and Answers.
Corporate strategy - Answer Identifies a set of businesses, markets, or industries in which an
organization competes and the distribution of resources among those entities
Vertical growth - Answer Involves acquisition or development of new businesses that
produce parts or components of the organization's product
Horizontal growth - Answer Adds new businesses that produce related products or are
involved in related markets and activities.
Diversification - Answer The process of firms expanding their operations by entering new
businesses. Trying to add value to our shareholders. Should be synergistic.
Related businesses - Answer Horizontal relationships. Sharing tangible and intangible
resources
Unrelated business - Answer Hierarchical relationships. Value creation devices from
corporation. Uses leveraging support activities
Related diversification - Answer A firm entering a different business in which it can benefit
from leveraging core competencies, sharing activities, or building market power. Ex: 3M,
Marriott, J&J
Vertical integration - Answer Occurs when a firm becomes its own supplier or distributor.
Pros: secure source of raw materials, protection over valuable assets, and new business
opportunities
Cons: Costs/expenses associated with increased overhead. Loss of flexibility
Unrelated diversification - Answer A firm entering a different business that has little
horizontal interaction with other businesses of a firm. Ex: Tyco, Berkshire Hathaway
Parenting advantage - Answer The positive contributions of the corporate office to a new
business as a result of expertise and support provided
Restructuring - Answer The intervention of the corporate office in a new business that
substantially changes the assets, capital structure, and/or management
, Portfolio management - Answer Assessing the competitive position of a portfolio of
businesses within a corporation, suggesting strategic alternatives for each business, and
identifying priorities for the allocation of resources across the businesses
Portfolio matrix - Answer Cash cows: high market share with a growth rate that isn't very
high
High industry growth rate: have to spend more money to keep growth
Political and economic risk - Answer -Social unrest
-Military turmoil
-Demonstrations
-Violent conflicts and terrorism
-Laws and their enforcement
Currency risks - Answer The potential threat to a
firm's operations in a
country due to fluctuations
in the local
currency's exchange
rate. Appreciation of the US dollar
Management risks - Answer The potential threat to a firm's operations in
a country due to the problems that managers have making decisions in the context of
foreign markets. Ex: culture, customs, language, income levels, customer preferences,
distribution system
Transnational strategy - Answer A strategy based on firms' optimizing
the trade-offs associated with efficiency,
local adaptation, and learning, used in industries where the pressures for both local adaptation
and lowering costs are high. Ex: Coke
International strategy - Answer A strategy based on firms' diffusion
and adaptation of the parent companies'
knowledge and expertise to foreign
markets, used in industries where the
