Geb4890 Exam 2 Test (Questions And Answers) Updated

Corporate strategy {Ans: } Establishes the overall game plan for managing a set of businesses in a diversified, multi-business company.A firm should consider diversifying when {Ans: } 1. Growth ops are limited because principle markets are reaching maturity and buyer demand is either plateauing or set to decline 2. Changing industry conditions are undermining firm's competitive positionRelated business diversification {Ans: } Possess competitively valuable cross-business value chain and resource commonalities (strategic fit with cross-business)Unrelated business diversification {Ans: } Dissimilar value chains resource requirements with no competitively important cross-business commonalities at the value chain levelChoosing between related and unrelated {Ans: } All about the resources and capabilities each business needs to performSynergy {Ans: } Maximizes profits in related business diversificationTests for building shareholder value through diversification (long-term) {Ans: } Attractiveness, cost of entry, better-offMethods of diversification {Ans: } Acquisition, internal startup, joint ventureAcquisition {Ans: } Advantages: -Quick entry into an industry -Barriers to entry avoided -Access to complementary resources and capabilities Disadvantages: -Cost of acquisition—whether to pay a premium for a successful firm or seek a bargain in a struggling firm -Underestimating costs for integrating acquired firm -Overestimating the acquisition's potential to deliver added shareholder valueInternal Startup {Ans: } Advantages of