MGMT 485 FINAL EXAM QUESTIONS AND CORRECT
ANSWERS 100% VERIFIED
corporate level strategy - ANSWER specifies action a firm takes to gain a competitive
advantage by selecting and managing a group of different businesses competing in
different product markets
horizontal integration - ANSWER acquiring or merging with companies of similar or
complementary business
vertical integration types (2) - ANSWER backward or forward integration
benefits of vertical integration (5) - ANSWER save on operations, avoid market costs,
improve product quality, protect technology from imitation, strong ties between assets
that have no corresponding market price
limitations of vertical integration (4) - ANSWER outside suppliers may provide inputs at
lower cost and/or higher quality, cost of coordinating vertically integrated activities may
exceed value of control, decrease in strategic competitiveness if internal unit doesn't
keep up with changes in technology, may required building facilities with capacity that
exceeds ability of internal unites forcing sale to outside users to achieve economies of
scale
virtual integration - ANSWER benefits of vertical integration achieved through
e-commerce and information technology
backward integration - ANSWER when company produces its own inputs
forward integration - ANSWER when company owns it own source of distribution
,low levels of diversification (2) - ANSWER single business, dominant business
moderate to high levels of diversification (2) - ANSWER related constrained, related
linked (mixed related and unrelated)
very high levels of diversification - ANSWER unrelated
single business - ANSWER 95% or more of revenue comes from a single business
dominant business - ANSWER between 70-95% of revenue comes from a single business
related constrained - ANSWER less than 70% of revenue comes from the dominant
business and all businesses share product, technological, and distribution linkages
related linked - ANSWER less than 70% of revenue comes from dominant business and
only limited links between businesses
unrelated - ANSWER less than 70% of revenue comes from dominant business and no
common links exist between businesses
success in implementing unrelated diversification strategies (2) - ANSWER focus on
firms in mature/low tech industries, avoid service businesses because of client/sale
orientation
conglomerates - ANSWER firms following unrelated diversification strategies (dominate
the private sector in Latin America and other emerging economies)
corporate level relatedness (transferring core competencies into businesses) -
ANSWER achieving corporate level core competencies and creating value
, corporate level core competencies - ANSWER using complex sets of
resources/capabilities to link different businesses through managerial and
technological knowledge, experience, and expertise
ways corporate relatedness can create value (2) - ANSWER eliminates resource
duplication (costs related to developing competence have already been incurred),
provides intangible resources that are not as visible and therefore difficult for
competitors to understand and imitate (giving it immediate competitive advantage over
rivals)
operational relatedness (sharing activities between businesses) - ANSWER created by
sharing either primary activity like inventory delivery system or support activity like
purchasing which requires strategic control over business units and can be risky
because business unit ties create links between outcomes
related constrained diversification: operational and corporate relatedness - ANSWER
high operational and low corporate, typically achieved through vertical integration and
brings increased market power
unrelated diversification: operational and corporate relatedness - ANSWER low
operational and corporate, typically brings financial economies
related linked diversification: operational and corporate relatedness - ANSWER low
operations and high corporate, typically brings economies of scope
both high operational and corporate relatedness - ANSWER rare capability that creates
diseconomies of scope because it involves using two sources of knowledge
simultaneously involving economies of scope of both operational and corporate forms,
often failing because of implementation difficulties
reasons for diversification (3) - ANSWER value creating, value neutral, value reducing
value creating (influences) (3) - ANSWER economies of scope, market power, financial
economies
ANSWERS 100% VERIFIED
corporate level strategy - ANSWER specifies action a firm takes to gain a competitive
advantage by selecting and managing a group of different businesses competing in
different product markets
horizontal integration - ANSWER acquiring or merging with companies of similar or
complementary business
vertical integration types (2) - ANSWER backward or forward integration
benefits of vertical integration (5) - ANSWER save on operations, avoid market costs,
improve product quality, protect technology from imitation, strong ties between assets
that have no corresponding market price
limitations of vertical integration (4) - ANSWER outside suppliers may provide inputs at
lower cost and/or higher quality, cost of coordinating vertically integrated activities may
exceed value of control, decrease in strategic competitiveness if internal unit doesn't
keep up with changes in technology, may required building facilities with capacity that
exceeds ability of internal unites forcing sale to outside users to achieve economies of
scale
virtual integration - ANSWER benefits of vertical integration achieved through
e-commerce and information technology
backward integration - ANSWER when company produces its own inputs
forward integration - ANSWER when company owns it own source of distribution
,low levels of diversification (2) - ANSWER single business, dominant business
moderate to high levels of diversification (2) - ANSWER related constrained, related
linked (mixed related and unrelated)
very high levels of diversification - ANSWER unrelated
single business - ANSWER 95% or more of revenue comes from a single business
dominant business - ANSWER between 70-95% of revenue comes from a single business
related constrained - ANSWER less than 70% of revenue comes from the dominant
business and all businesses share product, technological, and distribution linkages
related linked - ANSWER less than 70% of revenue comes from dominant business and
only limited links between businesses
unrelated - ANSWER less than 70% of revenue comes from dominant business and no
common links exist between businesses
success in implementing unrelated diversification strategies (2) - ANSWER focus on
firms in mature/low tech industries, avoid service businesses because of client/sale
orientation
conglomerates - ANSWER firms following unrelated diversification strategies (dominate
the private sector in Latin America and other emerging economies)
corporate level relatedness (transferring core competencies into businesses) -
ANSWER achieving corporate level core competencies and creating value
, corporate level core competencies - ANSWER using complex sets of
resources/capabilities to link different businesses through managerial and
technological knowledge, experience, and expertise
ways corporate relatedness can create value (2) - ANSWER eliminates resource
duplication (costs related to developing competence have already been incurred),
provides intangible resources that are not as visible and therefore difficult for
competitors to understand and imitate (giving it immediate competitive advantage over
rivals)
operational relatedness (sharing activities between businesses) - ANSWER created by
sharing either primary activity like inventory delivery system or support activity like
purchasing which requires strategic control over business units and can be risky
because business unit ties create links between outcomes
related constrained diversification: operational and corporate relatedness - ANSWER
high operational and low corporate, typically achieved through vertical integration and
brings increased market power
unrelated diversification: operational and corporate relatedness - ANSWER low
operational and corporate, typically brings financial economies
related linked diversification: operational and corporate relatedness - ANSWER low
operations and high corporate, typically brings economies of scope
both high operational and corporate relatedness - ANSWER rare capability that creates
diseconomies of scope because it involves using two sources of knowledge
simultaneously involving economies of scope of both operational and corporate forms,
often failing because of implementation difficulties
reasons for diversification (3) - ANSWER value creating, value neutral, value reducing
value creating (influences) (3) - ANSWER economies of scope, market power, financial
economies
