MGCR 423 Final || with 100% Error-free Solutions.

What is corporate strategy? correct answers A decision about what business/industries a firm should be in Do all firms (even single-line ones) have a corporate strategy? correct answers YES! The decision to NOT engage in certain industries is an important decision Competition occurs at the _____ level correct answers business-unit Being part of a diversified company involves inevitable _____ for business units that are _____ correct answers costs; often underestimated Coprorate strategy must produce a clear and _____ gain in the ______ of businesses to account for the competition costs correct answers offsetting; competitive advantage The 5 types of diversification (from least to most) correct answers 1. Single business (95% of revenue comes from 1 biz) 2. Dominant business (70-95% of rev comes from 1 biz) 3. Related constrained (70% of rev comes from 1 biz, biz share links between them) 4. Related link (70% of rev comes from 1 biz, biz share some links between them) 5. Unrelated (70% of rev comes from dominant business, no common links between them) Value-Reducing Diversification correct answers - Lowering managerial risk (bad managers have more places to be rotated into) - Increasing managerial compensation Reasons for diversification correct answers Generic reason: There is an opportunity to increase profit by selling more products, increasing price and/or reducing cost Economies of scope: - Cost savings when the firm shares resources (ex. can use the same machine for multiple businesses) - Transferring of core competencies (ex. one firm can teach the other how to streamline customer service... lower OCR and higher WTP) - Value creation / increased amount of sales from the bundling of products Financial economies: - More efficient internal capital allocation (ie. sharing assets on the balance sheet) - Risk hedging (ex. geographical diversification means you're not beholden to economic conditions in your home market) Other: - Increase the brand image of firm - Protection from competitors