MBA 705 Exam 2 – Advanced Business
Administration Study Guide & Practice
Social Forces - -- answer ---Societal values
-Trends
-Traditions
-Religious practices
-Concern for the environment
Strategic Alliances (Partnerships) - -- answer --}Strategic alliances—often called
partnerships—occur when two or more firms agree to share the costs, risks, and
benefits associated with pursuing new business opportunities.
Stability Strategy - -- answer --}Stability—attempting to maintain the present size
and scope of operations—may be more attractive than growth when:
1.Industry growth is slow or non-existent.
2.Costs associated with growth do not exceed its benefits.
3.Growth may place great strains on quality and customer service.
4.Large, dominant firms may not want to risk prosecution for monopolistic
practices.
,Retrenchment Strategies - -- answer --}When performance is disappointing,
however, a retrenchment strategy may be appropriate. A firm deliberately
reduces its size when it employs a retrenchment strategy.
}A retrenchment strategy is often accompanied by a reorganization process
known as corporate restructuring.
}The three forms of retrenchment are presented in the following slides.
Turnaround - -- answer --}A turnaround seeks to transform the corporation into a
leaner, more effective firm, and includes such actions as eliminating unprofitable
outputs, pruning assets, reducing the size of the workforce, cutting costs of
distribution, and reassessing the firm's product lines and customer groups.
Divestment - -- answer --selling one or more of a firm's business units—may be
necessary when the industry is in decline, or when a business unit drains
resources from more profitable units, is not performing well, or is not synergistic
with other corporate holdings.
Liquidation - -- answer --is the strategy of last resort, and terminates the business
unit by selling its assets. In effect, liquidation represents a divestment of all the
firm's business units and should be adopted only under extreme conditions.
Case Analysis Step 9: Identify the Corporate Strategy - -- answer --}What is the
corporate profile?
}What is the corporate strategy?
}Provide support and explain the details.
,BCG Growth-Share Matrix - -- answer --}The Boston Consulting Group (BCG)
Matrix is corporate portfolio framework that examines the relationships among
business units held by a single firm. There are four kinds of businesses within the
matrix:
1.Stars- high growth potential & high market share
2.Question Marks- high growth potential, but low market share
3.Cash Cows- low growth potential, but high market share
4.Dogs- low growth potential & low market share
BCG Matrix Four Options for Strategic Managers - -- answer --1.Build market
share with stars and question marks.
2.Hold market share with cash cows.
3.Harvest (milk) as much short-term cash as possible.
4.Divest a business unit.
Corporate Strategy Considerations - -- answer --}Involvement at the international
level (minimal)
}Involvement at the multinational level (moderate)
}Involvement at the global level (maximum)
, Global Corporate Strategy Option 1:Involvement at the International Level - --
answer --}Importing
}Exporting
}International Licensing
}International Franchising
}Strategic Alliances
Global Corporate Strategy Option 2:Involvement at the Multinational Level - --
answer --In addition to the International Level...
}Direct investments in other countries
}Subsidiaries operate independently from each other.
Global Corporate Strategy Option 3:Involvement at the Global Level - -- answer --
In addition to the International Level...
}Direct investments abroad
}Subdivisions are interdependent
Six Global Orientation Considerations: Which Option Is Most Appropriate? - --
answer --1.Are customer needs abroad similar to those in the firm's domestic
market?
2.Are differences in transportation and other costs abroad conducive to
producing goods and services abroad?
3.Are the firm's customers or partners already involved in global business?
4.Will it be difficult to distribute goods and services abroad?
5.Will government trade policies facilitate global expansion?
6.Can managers in one country learn from managers in other countries?
Administration Study Guide & Practice
Social Forces - -- answer ---Societal values
-Trends
-Traditions
-Religious practices
-Concern for the environment
Strategic Alliances (Partnerships) - -- answer --}Strategic alliances—often called
partnerships—occur when two or more firms agree to share the costs, risks, and
benefits associated with pursuing new business opportunities.
Stability Strategy - -- answer --}Stability—attempting to maintain the present size
and scope of operations—may be more attractive than growth when:
1.Industry growth is slow or non-existent.
2.Costs associated with growth do not exceed its benefits.
3.Growth may place great strains on quality and customer service.
4.Large, dominant firms may not want to risk prosecution for monopolistic
practices.
,Retrenchment Strategies - -- answer --}When performance is disappointing,
however, a retrenchment strategy may be appropriate. A firm deliberately
reduces its size when it employs a retrenchment strategy.
}A retrenchment strategy is often accompanied by a reorganization process
known as corporate restructuring.
}The three forms of retrenchment are presented in the following slides.
Turnaround - -- answer --}A turnaround seeks to transform the corporation into a
leaner, more effective firm, and includes such actions as eliminating unprofitable
outputs, pruning assets, reducing the size of the workforce, cutting costs of
distribution, and reassessing the firm's product lines and customer groups.
Divestment - -- answer --selling one or more of a firm's business units—may be
necessary when the industry is in decline, or when a business unit drains
resources from more profitable units, is not performing well, or is not synergistic
with other corporate holdings.
Liquidation - -- answer --is the strategy of last resort, and terminates the business
unit by selling its assets. In effect, liquidation represents a divestment of all the
firm's business units and should be adopted only under extreme conditions.
Case Analysis Step 9: Identify the Corporate Strategy - -- answer --}What is the
corporate profile?
}What is the corporate strategy?
}Provide support and explain the details.
,BCG Growth-Share Matrix - -- answer --}The Boston Consulting Group (BCG)
Matrix is corporate portfolio framework that examines the relationships among
business units held by a single firm. There are four kinds of businesses within the
matrix:
1.Stars- high growth potential & high market share
2.Question Marks- high growth potential, but low market share
3.Cash Cows- low growth potential, but high market share
4.Dogs- low growth potential & low market share
BCG Matrix Four Options for Strategic Managers - -- answer --1.Build market
share with stars and question marks.
2.Hold market share with cash cows.
3.Harvest (milk) as much short-term cash as possible.
4.Divest a business unit.
Corporate Strategy Considerations - -- answer --}Involvement at the international
level (minimal)
}Involvement at the multinational level (moderate)
}Involvement at the global level (maximum)
, Global Corporate Strategy Option 1:Involvement at the International Level - --
answer --}Importing
}Exporting
}International Licensing
}International Franchising
}Strategic Alliances
Global Corporate Strategy Option 2:Involvement at the Multinational Level - --
answer --In addition to the International Level...
}Direct investments in other countries
}Subsidiaries operate independently from each other.
Global Corporate Strategy Option 3:Involvement at the Global Level - -- answer --
In addition to the International Level...
}Direct investments abroad
}Subdivisions are interdependent
Six Global Orientation Considerations: Which Option Is Most Appropriate? - --
answer --1.Are customer needs abroad similar to those in the firm's domestic
market?
2.Are differences in transportation and other costs abroad conducive to
producing goods and services abroad?
3.Are the firm's customers or partners already involved in global business?
4.Will it be difficult to distribute goods and services abroad?
5.Will government trade policies facilitate global expansion?
6.Can managers in one country learn from managers in other countries?
