MGT 8803 Exam 2 UPDATED ACTUAL
Exam Questions and CORRECT Answers
Examples of Growth Strategy - CORRECT ANSWER - Concentration, Diversification,
Vertical Integration & Horizontal Integration
Concentration - CORRECT ANSWER - Focus on single market/product
Vertical Integration - CORRECT ANSWER - Acquire forward (distribution) or backwards
(supplier) on production vertical
Horizontal Integration - CORRECT ANSWER - Merger or acquisition of companies at same
stage of production; results in less competition than vertical
Diversification - CORRECT ANSWER - Increase products, markets or industries
Corporate Strategy - CORRECT ANSWER - Address which businesses the firm will be in
and how capital will be allocated among those businesses (scope of firm, allocation of resources,
Acquisitions and divestments and overall performance of firm)
Inorganic Growth - CORRECT ANSWER - Occurs through acquisition
Organic Growth - CORRECT ANSWER - Occurs through building new capabilities
Competitive Advantage - CORRECT ANSWER - Characteristics of both the industry and the
firm
Single Business Diversification Strategy - CORRECT ANSWER - >95% of total firm
revenues from a single line of business
, Dominant Business Diversification Strategy - CORRECT ANSWER - 70-95% of total firm
revenues from a single line of business
Diversification Strategy - CORRECT ANSWER - Related or unrelated; <70% of total firm
revenues from a single line of business; has multiple competitive strategies
Grand Strategies - CORRECT ANSWER - Growth, stability & renewal
Combination Stategies - CORRECT ANSWER - Often difficult because they are inherently
contradictory; goal is to provide unique value in an efficient manner; ignore Porter's advice
Productivity Frontier - CORRECT ANSWER - The theoretical limit of the cost value
relationship (differentiation vs cost leadership) and captures the sum of all existing best
practices; drawn as a concave curve
Differentiation Strategy - CORRECT ANSWER - Driven by innovation and creativity -
focused on value. Can occur in a niche market or broad market
Cost Leadership - CORRECT ANSWER - Becoming the lowest cost producer in an industry.
Cost doesn't always mean price. Risks include anything that will erode margins (new
production/technology); Typically produce standardized products and focus on operational
excellence
"Stuck in the Middle" - CORRECT ANSWER - A firm has tried to implement both a
differentiation and low cost producer strategy concurrently but has not succeeded in either
Blue Ocean Strategy - CORRECT ANSWER - A business level strategy that successfully
combines differentiation and cost leadership activities using Value Innovation to reconcile the
inherent tradeoffs
Concentration Strategy - CORRECT ANSWER - Focused on growth in existing markets
Exam Questions and CORRECT Answers
Examples of Growth Strategy - CORRECT ANSWER - Concentration, Diversification,
Vertical Integration & Horizontal Integration
Concentration - CORRECT ANSWER - Focus on single market/product
Vertical Integration - CORRECT ANSWER - Acquire forward (distribution) or backwards
(supplier) on production vertical
Horizontal Integration - CORRECT ANSWER - Merger or acquisition of companies at same
stage of production; results in less competition than vertical
Diversification - CORRECT ANSWER - Increase products, markets or industries
Corporate Strategy - CORRECT ANSWER - Address which businesses the firm will be in
and how capital will be allocated among those businesses (scope of firm, allocation of resources,
Acquisitions and divestments and overall performance of firm)
Inorganic Growth - CORRECT ANSWER - Occurs through acquisition
Organic Growth - CORRECT ANSWER - Occurs through building new capabilities
Competitive Advantage - CORRECT ANSWER - Characteristics of both the industry and the
firm
Single Business Diversification Strategy - CORRECT ANSWER - >95% of total firm
revenues from a single line of business
, Dominant Business Diversification Strategy - CORRECT ANSWER - 70-95% of total firm
revenues from a single line of business
Diversification Strategy - CORRECT ANSWER - Related or unrelated; <70% of total firm
revenues from a single line of business; has multiple competitive strategies
Grand Strategies - CORRECT ANSWER - Growth, stability & renewal
Combination Stategies - CORRECT ANSWER - Often difficult because they are inherently
contradictory; goal is to provide unique value in an efficient manner; ignore Porter's advice
Productivity Frontier - CORRECT ANSWER - The theoretical limit of the cost value
relationship (differentiation vs cost leadership) and captures the sum of all existing best
practices; drawn as a concave curve
Differentiation Strategy - CORRECT ANSWER - Driven by innovation and creativity -
focused on value. Can occur in a niche market or broad market
Cost Leadership - CORRECT ANSWER - Becoming the lowest cost producer in an industry.
Cost doesn't always mean price. Risks include anything that will erode margins (new
production/technology); Typically produce standardized products and focus on operational
excellence
"Stuck in the Middle" - CORRECT ANSWER - A firm has tried to implement both a
differentiation and low cost producer strategy concurrently but has not succeeded in either
Blue Ocean Strategy - CORRECT ANSWER - A business level strategy that successfully
combines differentiation and cost leadership activities using Value Innovation to reconcile the
inherent tradeoffs
Concentration Strategy - CORRECT ANSWER - Focused on growth in existing markets
