MGT 8803 BUSINESS STRATEGY UPDATED
ACTUAL QUESTIONS AND CORRECT
ANSWERS COMPREHENSIVE STUDY GUIDE
●● Business Level Strategy
Answer: Single product market with a focus on competitive advantage
●● Corporate Level Strategy
Answer: multiple industries and markets simultaneously with a focus on
firm scope and resource allocation
●● Stability Strategy
Answer: a strategy that is characterized by an absence of significant
change. Maintain the firm's competitive advantage or remain in
competitive parity
●● Justifications for Maintaining Status Quo
Answer: -No expected significant changes in the external environment
or the environment is so uncertain management adopts a wait and see
attitude
-Firm needs to pause to consolidate recent growth or to devote its efforts
on improving efficiency
,-Expected future economic conditions calls for a period of conserving
cash flow
-Industry is mature with few or no growth prospects
●● Renewal Strategy
Answer: A strategy that is characterized by an absence of significant
change
●● Justifications for Renewal Strategies
Answer: -strategy characteristic of a company that is reducing its size
usually in an environment of decline
-Sub-Strategies: retrenchment, turnaround, divestiture, liquidation
●● Types of Bankruptcy (US Law)
Answer: Chapter 7: Liquidation
Chapter 11: Reorganization
●● Growth Strategy
Answer: A strategy in which the business expands the number of
industries or market or geographies served or expands the number of
products or product lines offered in either its current market or new
markets
●● Why Growth is Important
, Answer: -higher firm profits and greater returns for investors
-drives more economies of scale and lower operatings costs (per
transaction)
-signals firm as an industry leader
-can mask weaknesses in other parts of the business that are not growing
-Attracts better management and employee talent
-can be a significant motivator
●● Concentration
Answer: the firm focuses on a single market or product. This allows the
company to invest more resources in production and marketing in that
one area, but carries the risk of significant losses in the event of a drop
in demand or increases in the level of competition.
●● Vertical Integration
Answer: A firm acquires business operations within the same production
vertical. It can be forward or backward in nature. The firm owns
multiple stages in industry value chain: supply chain, manufacturing,
distribution, retail.
●● Horizontal Integration
Answer: the merger or acquisition of copmanies at the same stage of
production in the same industry. When all producers of a good or service
in a market merge, it is the creation of a monopoly. If only a few
competitors remain, it is termed an oligopoly
ACTUAL QUESTIONS AND CORRECT
ANSWERS COMPREHENSIVE STUDY GUIDE
●● Business Level Strategy
Answer: Single product market with a focus on competitive advantage
●● Corporate Level Strategy
Answer: multiple industries and markets simultaneously with a focus on
firm scope and resource allocation
●● Stability Strategy
Answer: a strategy that is characterized by an absence of significant
change. Maintain the firm's competitive advantage or remain in
competitive parity
●● Justifications for Maintaining Status Quo
Answer: -No expected significant changes in the external environment
or the environment is so uncertain management adopts a wait and see
attitude
-Firm needs to pause to consolidate recent growth or to devote its efforts
on improving efficiency
,-Expected future economic conditions calls for a period of conserving
cash flow
-Industry is mature with few or no growth prospects
●● Renewal Strategy
Answer: A strategy that is characterized by an absence of significant
change
●● Justifications for Renewal Strategies
Answer: -strategy characteristic of a company that is reducing its size
usually in an environment of decline
-Sub-Strategies: retrenchment, turnaround, divestiture, liquidation
●● Types of Bankruptcy (US Law)
Answer: Chapter 7: Liquidation
Chapter 11: Reorganization
●● Growth Strategy
Answer: A strategy in which the business expands the number of
industries or market or geographies served or expands the number of
products or product lines offered in either its current market or new
markets
●● Why Growth is Important
, Answer: -higher firm profits and greater returns for investors
-drives more economies of scale and lower operatings costs (per
transaction)
-signals firm as an industry leader
-can mask weaknesses in other parts of the business that are not growing
-Attracts better management and employee talent
-can be a significant motivator
●● Concentration
Answer: the firm focuses on a single market or product. This allows the
company to invest more resources in production and marketing in that
one area, but carries the risk of significant losses in the event of a drop
in demand or increases in the level of competition.
●● Vertical Integration
Answer: A firm acquires business operations within the same production
vertical. It can be forward or backward in nature. The firm owns
multiple stages in industry value chain: supply chain, manufacturing,
distribution, retail.
●● Horizontal Integration
Answer: the merger or acquisition of copmanies at the same stage of
production in the same industry. When all producers of a good or service
in a market merge, it is the creation of a monopoly. If only a few
competitors remain, it is termed an oligopoly
