Business Strategy Top Grade Compiled Questions and Correct Answers 2024

corporate strategy - The decisions made and goal oriented actions to gain a sustainable competitive advantage in several industries and markets simultaneously goals of corporate strategy - growth: -Increase profits -Decrease costs -Market power -Risks -Motivate Management mergers - The joining of two independent companies to form a combined entity how merging improves a firm's strategic position - lower costs, reduced competition, differentiation horizontal integration - The process of merging with a competitor at the same stage of the industry value chain why firms need to grow - 1. increase profits and shareholder return 2. to lower costs and achieve economies of scale 3. to increase market power 4. to reduce risk through diversification 5. to motivate management Questions that executives ask to determine corporate strategy - 1. In what stages of the industry value chain should we participate? (vertical integration + core competencies) 2. What range of products and services should the we offer? (diversification) 3. Where should we compete geographically? (geographic scope) vertical integration and core competencies - In what stages of the industry value chain should we participate? diversification - What range of products and services should the we offer? geographic scope - Where should we compete geographically? transaction costs - costs associated with an economic exchange. external transaction costs - Searching for contractors. Negotiating, monitoring, and enforcing contracts. internal transaction costs - Recruiting and retaining employees. Setting up a shop floor. make - If Costs in-house Costs market, Vertically integrate. Own production of the inputs. Or own output distribution channels. buy - If Costs market Costs in-house, The firm should consider purchasing instead. firm advantages - Command and control (flat & hierarchical) Coordination Transaction specific investments Community of knowledge