WPC 480 MASTER SUMMARY & CORE
CONCEPTS ACHIEVE EXCELLENCE 2026.
◍ What is most likely an explanation for why a firm that has no need
for a corporate strategy will have to engage in corporate strategy if the
firm is successful? Answer:The firm will be motivated to grow
beyond the size of a single industry or market.
◍ SBU is an acronym. What does it stand for? Answer:strategic
business unit
◍ What is an SBU? Answer:A seperate line of business within a firm
that has its own competitive strategy
◍ Backward integration Answer:Buying suppliers along the value
chain
◍ Forward integration Answer:Purchasing buyers along the value
chain
◍ Related diversification Answer:creating SBU's that operate in
different markets, requiring similar capabilities
, ◍ Unrelated diversification Answer:Creating SBU's that operate in a
different market that is loosely interconnected within the firm
◍ Diversification premium Answer:stock markets value the firm at
more than the sum of values of separate SBUs
◍ Diversification discount Answer:stock markets value the firm at
less than the sum of values of separate SBUs
◍ A conglomerate is a corporation with SBUs that are moderately
related. Answer:False, firms with very little relatedness between each
other are run by the same company.
◍ Relatedness between SBUs in a corporation is generally associated
with lower performance and greater risk of failure of the corporate
strategy. Answer:False
◍ Which of the following is the best indicator of the relatedness
between SBU 1 and SBU 2? Answer:Are SBU 1 and SBU 2 capable
of swapping managers in a relatively short time?
Relatedness is a concept in strategic analysis that raises the issue of
how costly it would be for a single firm to manage and operate
effectively two businesses together.The more related, the less risk and
difficulty for managers to be in charge of both firms because the firms
are very similar organizations facing similar issues
CONCEPTS ACHIEVE EXCELLENCE 2026.
◍ What is most likely an explanation for why a firm that has no need
for a corporate strategy will have to engage in corporate strategy if the
firm is successful? Answer:The firm will be motivated to grow
beyond the size of a single industry or market.
◍ SBU is an acronym. What does it stand for? Answer:strategic
business unit
◍ What is an SBU? Answer:A seperate line of business within a firm
that has its own competitive strategy
◍ Backward integration Answer:Buying suppliers along the value
chain
◍ Forward integration Answer:Purchasing buyers along the value
chain
◍ Related diversification Answer:creating SBU's that operate in
different markets, requiring similar capabilities
, ◍ Unrelated diversification Answer:Creating SBU's that operate in a
different market that is loosely interconnected within the firm
◍ Diversification premium Answer:stock markets value the firm at
more than the sum of values of separate SBUs
◍ Diversification discount Answer:stock markets value the firm at
less than the sum of values of separate SBUs
◍ A conglomerate is a corporation with SBUs that are moderately
related. Answer:False, firms with very little relatedness between each
other are run by the same company.
◍ Relatedness between SBUs in a corporation is generally associated
with lower performance and greater risk of failure of the corporate
strategy. Answer:False
◍ Which of the following is the best indicator of the relatedness
between SBU 1 and SBU 2? Answer:Are SBU 1 and SBU 2 capable
of swapping managers in a relatively short time?
Relatedness is a concept in strategic analysis that raises the issue of
how costly it would be for a single firm to manage and operate
effectively two businesses together.The more related, the less risk and
difficulty for managers to be in charge of both firms because the firms
are very similar organizations facing similar issues
