EXAM 1 - Business strategy Questions with Correct Answers 2024 CH6 notes corporate level strategy - Correct Answer the strategy that top management formulates for the overall company.corporate profile - Correct Answer Identification of the industry or industries in which a firm operates.A firm may choose one of three basic profiles - Correct Answer 1. To operate in a single industry
- To operate in multiple related industries
- To operate in multiple unrelated industries
competing in one industry examples and benefits - Correct Answer UPS, Home-depot.Benefit from the specialized knowledge that they develop from concentrating their efforts on one business area. This can help the firm improve product or service quality and become more efficient in its operations.
Cons: more susceptible to sharp downturns in business cycle.
this is why large firms persue diversification and compete in more than one industry.Diversification - Correct Answer company growth through starting up or acquiring businesses outside the company's current products and markets. allows a firm to grow (potentially use their products more ffectively, and make use of surplus revenue) reduce the risk and uncertainty associated with operating in a single industry.related diversification - Correct Answer diversification into a similar business that may complement the original or primary business.
ex: walmart, which also operate sams club.
unrelated diversification - Correct Answer growth strategy where new business lacks an common elements with the present business. 1 / 2
cons: Because their interests are dispersed throughout unrelated business units, strategic managers may not stay abreast of market and technological changes that affect the businesses.The key to successful related diversification is the development of - Correct Answer SYNERGY Synergy - Correct Answer When the combination of two firms results in higher efficiency and effectiveness than would otherwise be achieved by the two firms separately.(may occur when there are similarities in product or service lines,
example:
After the corporate profile is selected, the next consideration is the - Correct Answer corporate strategy
- basic strategic alternatives exist at the corporate level: - Correct Answer growth, stability, and
- / 2
retrenchment growth strategy - Correct Answer A corporate-level strategy designed to increase profits, sales, and/or market share (a firm should adopt a growth strategy only if the firm is expected to increase firm value) ) Growth strategies a.Internal growth b.External growth Internal growth - Correct Answer A corporate-level growth strategy in which a firm expands by internally increasing its size and sales, rather than by acquiring other companies.Internal growth enables a firm to maintain control over the enterprise by adding new products, facilities, or businesses incrementally. Internal growth enables the firm to preserve its corporate culture and image while expanding at a more controlled pace.ex: McDonald's has grown internally by attracting customers in nonpeak periods and expanding hours of operation in many of its stores. Many of its locations throughout the world are now open 24 hours a day. McDonald's main-tains its leadership position with a $28 billion share