Business Strategy Test 2 - Ch 6

Front 1

Cost Leadership and Focused cost leadership focus on ___ through ___:

Back 1

Strong Process Activities
Economies of Scale

Front 2

Differentiation and focused differentiation focus on __ through ___ :

Back 2

creating value
perception

Front 3

Focus on what _____ and _____ the rest.

Back 3

what we do best
outsource

Front 4

An action plan the firm uses to compete in different product markets:

Back 4

Multiproduct Strategies

Front 5

Primary reason firms use multiproduct strategies is to improve:

Back 5

performance

Front 6

Multiproduct strategy allows firms to create one of these three items:

Back 6

1. operational relatedness,
2. corporate relatedness, or
3. financial economies

Front 7

interacts primarily to share information and to make decisions to help each member perform within his or her area of responsibility

Back 7

Group

Front 8

1 + 1 + 1 = 3

Back 8

Group

Front 9

1 + 1 + 1 = 2 ;
when a person isn't carrying their weight:

Back 9

Social Loafing

Front 10

Overall output is greater than the sum of the indivdual inputs:

Back 10

Synergy

Front 11

Another term for social loafing:

Back 11

Free-riding

Front 12

Another term for Synergy:

Back 12

"Firm diversification"

Front 13

individual efforts result in a performance that is greater than the sum of the individual inputs.

Back 13

Team

Front 14

1 + 1 + 1 = 4
Results in a joint effort:

Back 14

Synergy

Front 15

The five levels of diversification(in terms of sales) are:

Back 15

Low levels of diversification
1.Single businesses
2.Dominant businesses

Moderate to High levels of diversification
3.Related constrained
4.Related linked

Very High levels of diversification
5.Unrelated

Front 16

In a Single Business Multiproduct Strategy-

The Level of diversification is:

Percent of sales revenue from is:

Draw the piture

Back 16

very low

Greater than 95%

Front 17

In a Dominant Business Multiproduct Strategy -

The Level of diversification is:

Percent of sales revenue from a single business is:

Draw Picture

Back 17

Low
Between 70 - 95%

Front 18

In a Related Constrained Multiproduct Strategy -

The Level of diversification is:

Percent of sales revenue from the dominant business is:

You gain Economies of ___:
Draw Picture

Back 18

Moderate to High

Less than 70%

Scope

Front 19

In Related Linked Multiproduct Strategy (limited relationships exist b/t the firms businesses):

The Level of diversification is:

Percent of sales revenue from the dominant business is:

You gain Economies of __:
Draw Picture

Back 19

Moderate to High

Less than 70%

Scope

Front 20

In Unrelated Multiproduct Strategy:

The Level of diversification is:

Percent of sales revenue from the dominant business is:

-You loss synergy/Ecomomies of Scope

Draw Picture

Back 20

Very High

Less than 70% (there is no dominate business)

Front 21

3 Economies we gain in business strategy:

Back 21

1. Economies of Scale
2. Economies of Scope
3. Financial Economies

Front 22

Cost savings the firm accures when it successfully shares some of its resources and activities b/t it's businesses or transfers corporate-level core competencies into its businesses (Gain/leads to Synergy):

Back 22

Economies of Scope

Front 23

Achieved when the firm's businesses successfully share resources & activities to produce & sell their products:

Back 23

Operational Relatedness

Front 24

Achieved when corporate-level core competencies (what we do well are successfully transferred into some of the firm's businesses:

Back 24

Corporate Relatedness

Front 25

Involves the sharing of tangible resources:

Back 25

Operational Relatedness

Front 26

Involves the sharing of intangible resources:

Back 26

Corporate Relatedness

Front 27

Complex sets of resourcess and capabilites that link different businesses, primarily through managerial and technological knowledge, experience, and expertise:

Back 27

Corporate-level core competencies

Front 28

Draw Figure- 6.2 Value-Creating Strategies of diversification: Operational and Corporate relatedness

Back 28

P.115

Front 29

Operational Relatedness & the Related Constrained Strategy-

BOX 1 // DRAW STRATEGY PICTURE:

Type of resources being shared:

Firms must ensure that efforts to share resources and activities are effectively implemented.

Back 29

Tangible resources

Front 30

Corporate Relatedness & the Related Linked Strategy -

BOX 2 // DRAW STRATEGY PICTURE

Type of resources being shared:

Back 30

Intangible

Front 31

Both Operational and Corporate Relatedness -

BOX 3

It is ___ for firms to achieve operational and corporate relatedness simultaneously

Firms able to do so have developed a competitive advantage that is difficult for competitors to ___ .

Back 31

Difficult

imitate

Front 32

Unrelated Diversification -

BOX 4 // DRAW STRATEGY PICTURE

Does not emphasize economies of scope (either operational relatedness or corporate relatedness)

You gain the following economy:

Back 32

Financial ecomomies

Front 33

Cost savings or higher returns generated when the firm effectively allocates it financial resources based on investments inside or outside the firm (how we make more money, te tope managers become investors of the company's money):

Back 33

Financial economies

Front 34

A semi-autonomous unit of a diversified firm with a collection of related businesses:

Back 34

Strategic business unit (SBU)

Front 35

When we invest in internal businesses, we become more competitive and efficient (created financial economies):

Back 35

Unrelated diversification strategy

Front 36

Efficiency results as investors take an quity position in firms by purchaing shares of stock in companies they believe have high future cash flow value:

Back 36

Financial resource Allocation

Front 37

These allocate capital in the form of debt as shareholders and debt holders seek to improve the value of their investments but taking stakes in firms they believe have high growth and profitability prospects:

Back 37

Capital markets - efficient markets

Front 38

Allocations in firms using the unrelated diversification strategy may be the basis for superior returns to shareholders to returns shareholders would receive as a result of allocation externally:

Back 38

Internal vs. external capital markets

Front 39

Potential benefit of internal capital market allocation, that allows youto internally discipline poorly performing units by allocating fewer or different types of resources to them:

Back 39

Internal performance evaluation

Front 40

An advantage of reinvesting in ones own company:

Back 40

insider information

Front 41

Insider info from outside is :

Back 41

illegal

Front 42

Changes made reguarding the assets of a firm by buying some or all the assets of another company:

Back 42

Restructuring
(1st instance)

Front 43

Buy another's assets, make them more productive, them sell them:

Back 43

Restructuring
(2nd instance)

Front 44

Reducing the risk of losing their job: (if one part of the buiness fails, they still have others to fall back on)

The relationship between firm size and executive compensation: (the larger the company, the higher the pay=EMPIRE BUILDING**)

Goal alignment between the firm and the top manager

Strategize to avoid opportunistic behavior

Back 44

Managerial Motives to Diversify

Front 45

An organizational structure in which the firm is organized to generate economies of scope or financial economiew:

Back 45

**Multidivisional (M-form) Structure

Front 46

(1 of the 3 "M-forms") An organizational structure in which horizontal integration is used so that divisions can share resources and activities:

Back 46

Cooperative M-form

Front 47

(1 of the 3 "M-forms") An organizational structure in which corporate headquarters personnel try to transfer corporate-level core competencies into the firm's businesses:

Back 47

Strategic Business until (SBU) M-form

Front 48

(1 of the 3 "M-forms") An organizational structure characterized by complete independence between the firm's divisions:

Back 48

Competitive M-form

Front 49

In this M-form:
-share resources & activities = Economies of scope
-to produce & sell products = operational relatedness
-Related constraints
-Horizontal Integration (try to share synergy across divisions)

Back 49

Cooperative Structure

Front 50

In this M-form:
- Corporate relatedness
-related lined

Back 50

SBU form

Front 51

In this form:
-competition amongst divisions (financial economies)
-unrelated diversification strategy
-conglomerates
-no links
-no economies of scope: (no operational/corporate relatedness nor synergy)
-doesn't have a heterogeneous TMT

Back 51

Competitive Form