BUSI 4940 Test 2 Questions with Correct Answers 100% Verified by Experts|
2025/2026 Latest Update
Business Unit Strategy The search for competitive advantage within a single industry,
market, or line of business
Corporate Strategy The search for value and competitive advantages through participation
in several different industries and markets
Vertical Integration Movement into adjacent markets by a firm along its own value chain.
Movement in the direction of sales, service, or warranty operations is forward integration
Horizontal Diversification The movement into an adjacent, or unrelated, market that is not
along a firm's own value chain. Also referred to as diversification.
Managers diversify their firms through one of three methods: Greenfield or Organic Entry
Alliance
Acquisition
Single Business A firm earning more than 95 percent of the revenues from a single line of
business
Dominant Vertical Business A firm that earns more than 70 percent of its revenue from its
main line of business and the rest from businesses located along the value chain
Dominant Business A firm that earns more than 70 percent of revenue from its main line of
business and the remainder from other lines across different value chains
Related-Constrained Diversification A firm that earns less than 70 percent of its revenue
from its main line of business and its other liens ob business share product, technological, and
distribution linkages with the main business.
,Related-Linked Diversification A firm that operates in related markets, but fewer linkages
exist between the new and existing markets than the elements create separately
Unrelated Diversified Firm Competes in product categories and markets with few, if any,
links between them
Diversification adds value when: Expansion into an adjacent business either EXPLOITS the
firm's core and valuable resources and capabilities
Or ENHANCES and grows the resource base
Adjacent Market A market or industry that is closely related to markets or industries a firm
currently competes in
Slack Unused resource capacity
Economy of Scope Activities where the average cost of producing two different products is
less when delivered together than separately
Management Skill The individual and collective abilities of a firm's management team to
engage in value-creating activities
Synergy Action between different elements of a system that creates more value together
than the elements create separately
Six S's Employing SLACK
Creating SYNERGY
Leveraging SHARED knowledge
Utilizing SIMILAR models for success
, SPREADING human and financial capital to its best use
Providing a STEPPING STONE for the company to a completely new business sector
Core Competencies / Shared Knowledge Collective knowledge that can be distributed
throughout the organization to create value
Business Model A method to enable the creation and exchange of value between companies
and their customers
Dominant Logic A conceptualization of a business, or a set of rules for competition, that
applies to seemingly unrelated product markets or industries
Internal Capital Market The movement of funds, talent, or knowledge from unit to unit
directed by the leaders of the firm
Hubris Excessive pride, arrogance, or overconfidence
Sunk Cost Fallacy The belief of managers that investment in a failed acquisition must
continue because significant amounts have already been invested. Managers make this mistake
when they act on their gut feelings rather than data/research
BCG Matrix: Cash Cows - High market share but low growth and can generate large cash
flows that can be used to fund growth businesses. (Typically minimize investments in cash cows
bc you want to milk it).
Stars - High Share and High Growth (Heavily invest in these units to maintain / improve position
over time).
Question Marks - Low Market Share, High Growth Rate (Require significant investment and
effective strategic management. Can become stars, but can also, if managed poorly, become a
dog).
Dogs - Low share and low growth (Add little profitability to a company's overall portfolio
business.) Divest.
2025/2026 Latest Update
Business Unit Strategy The search for competitive advantage within a single industry,
market, or line of business
Corporate Strategy The search for value and competitive advantages through participation
in several different industries and markets
Vertical Integration Movement into adjacent markets by a firm along its own value chain.
Movement in the direction of sales, service, or warranty operations is forward integration
Horizontal Diversification The movement into an adjacent, or unrelated, market that is not
along a firm's own value chain. Also referred to as diversification.
Managers diversify their firms through one of three methods: Greenfield or Organic Entry
Alliance
Acquisition
Single Business A firm earning more than 95 percent of the revenues from a single line of
business
Dominant Vertical Business A firm that earns more than 70 percent of its revenue from its
main line of business and the rest from businesses located along the value chain
Dominant Business A firm that earns more than 70 percent of revenue from its main line of
business and the remainder from other lines across different value chains
Related-Constrained Diversification A firm that earns less than 70 percent of its revenue
from its main line of business and its other liens ob business share product, technological, and
distribution linkages with the main business.
,Related-Linked Diversification A firm that operates in related markets, but fewer linkages
exist between the new and existing markets than the elements create separately
Unrelated Diversified Firm Competes in product categories and markets with few, if any,
links between them
Diversification adds value when: Expansion into an adjacent business either EXPLOITS the
firm's core and valuable resources and capabilities
Or ENHANCES and grows the resource base
Adjacent Market A market or industry that is closely related to markets or industries a firm
currently competes in
Slack Unused resource capacity
Economy of Scope Activities where the average cost of producing two different products is
less when delivered together than separately
Management Skill The individual and collective abilities of a firm's management team to
engage in value-creating activities
Synergy Action between different elements of a system that creates more value together
than the elements create separately
Six S's Employing SLACK
Creating SYNERGY
Leveraging SHARED knowledge
Utilizing SIMILAR models for success
, SPREADING human and financial capital to its best use
Providing a STEPPING STONE for the company to a completely new business sector
Core Competencies / Shared Knowledge Collective knowledge that can be distributed
throughout the organization to create value
Business Model A method to enable the creation and exchange of value between companies
and their customers
Dominant Logic A conceptualization of a business, or a set of rules for competition, that
applies to seemingly unrelated product markets or industries
Internal Capital Market The movement of funds, talent, or knowledge from unit to unit
directed by the leaders of the firm
Hubris Excessive pride, arrogance, or overconfidence
Sunk Cost Fallacy The belief of managers that investment in a failed acquisition must
continue because significant amounts have already been invested. Managers make this mistake
when they act on their gut feelings rather than data/research
BCG Matrix: Cash Cows - High market share but low growth and can generate large cash
flows that can be used to fund growth businesses. (Typically minimize investments in cash cows
bc you want to milk it).
Stars - High Share and High Growth (Heavily invest in these units to maintain / improve position
over time).
Question Marks - Low Market Share, High Growth Rate (Require significant investment and
effective strategic management. Can become stars, but can also, if managed poorly, become a
dog).
Dogs - Low share and low growth (Add little profitability to a company's overall portfolio
business.) Divest.
