Midterm MGMT 4513 (Chapters 1-6)
questions and answers 2025/2026
Corporate level strategy - answerabout how to achieve above normal returns (competitive advantage)
by operating in more than one business/industry
Market Development - answermoving into different geographic markets
Product Development - answerdeveloping new products and/or significantly improving on existing
products
Horizontal Integration - answeracquisition of competitors; horizontal movement at the same point in
the value chain
Vertical Integration - answerbecoming your own supplier or distributor through acquisition; vertical
movement up or down the value chain
Related Diversification - answerA firm is related through its diversification when its businesses share
links across products, technologies, distribution channels
Related Diversification Costs - answerCoordination costs, Integration costs
Related Diversification Benefits - answerEconomies of scope, Sharing activities, Transferring core
competencies, Market power, Vertical integration
Economies of scope - answerCost savings that occur when a firm transfers capabilities and competencies
developed in one of its businesses to another of its businesses
Synergy - answerRevenue enhancement from being within the same corporate parent
Operational Relatedness - answerCreated by sharing either a primary activity such as inventory delivery
systems, or a support activity such as purchasing
, Corporate Relatedness - answerUsing complex sets of resources and capabilities to link different
businesses through managerial and technological knowledge, experience, and expertise
Market power - answerSell its products above the existing competitive level and/or Reduce the costs of
its primary and support activities below the competitive level
Unrelated Diversification Costs - answerManagement costs
Unrelated Diversification Benefits - answerEfficient internal capital allocation and Business restructuring
Financial Economies - answerCost savings are realized through improved allocations of financial
resources
Two types of financial economies - answerEfficient internal capital allocations and Purchasing other
corporations and restructuring their assets
Efficient Internal Capital Market Allocation - answerCorporate office distributes capital to business
divisions to create value for overall company
Restructuring - answerA firm creates value by buying and selling other firms' assets in the external
market
Competitors - answerFirms operating in the same market, offering similar products and targeting similar
customers
Competitive rivalry - answerThe ongoing set of competitive actions and responses occurring between
competitors. Influences a firm's ability to gain and sustain competitive advantages
Competitive dynamics - answerThe total set of actions and responses taken by all firms competing
within a market
questions and answers 2025/2026
Corporate level strategy - answerabout how to achieve above normal returns (competitive advantage)
by operating in more than one business/industry
Market Development - answermoving into different geographic markets
Product Development - answerdeveloping new products and/or significantly improving on existing
products
Horizontal Integration - answeracquisition of competitors; horizontal movement at the same point in
the value chain
Vertical Integration - answerbecoming your own supplier or distributor through acquisition; vertical
movement up or down the value chain
Related Diversification - answerA firm is related through its diversification when its businesses share
links across products, technologies, distribution channels
Related Diversification Costs - answerCoordination costs, Integration costs
Related Diversification Benefits - answerEconomies of scope, Sharing activities, Transferring core
competencies, Market power, Vertical integration
Economies of scope - answerCost savings that occur when a firm transfers capabilities and competencies
developed in one of its businesses to another of its businesses
Synergy - answerRevenue enhancement from being within the same corporate parent
Operational Relatedness - answerCreated by sharing either a primary activity such as inventory delivery
systems, or a support activity such as purchasing
, Corporate Relatedness - answerUsing complex sets of resources and capabilities to link different
businesses through managerial and technological knowledge, experience, and expertise
Market power - answerSell its products above the existing competitive level and/or Reduce the costs of
its primary and support activities below the competitive level
Unrelated Diversification Costs - answerManagement costs
Unrelated Diversification Benefits - answerEfficient internal capital allocation and Business restructuring
Financial Economies - answerCost savings are realized through improved allocations of financial
resources
Two types of financial economies - answerEfficient internal capital allocations and Purchasing other
corporations and restructuring their assets
Efficient Internal Capital Market Allocation - answerCorporate office distributes capital to business
divisions to create value for overall company
Restructuring - answerA firm creates value by buying and selling other firms' assets in the external
market
Competitors - answerFirms operating in the same market, offering similar products and targeting similar
customers
Competitive rivalry - answerThe ongoing set of competitive actions and responses occurring between
competitors. Influences a firm's ability to gain and sustain competitive advantages
Competitive dynamics - answerThe total set of actions and responses taken by all firms competing
within a market
