BA 418: Management Policies, Unit 2 Quizzes

What is the difference between economies of scale and economies of scope?

Scale refers to cost savings that accrue directly from larger-sized operations, while scope stems directly from strategic fit along the value chains of related businesses.

Diversification ought to be considered when a

company is under pressure to create a more attractive and cost-efficient value chain.

Profit sanctuaries are country markets or geographic regions where a company

derives substantial profits because of its protected market position or unassailable competitive advantage.

Crafting a strategy to compete in one or more foreign markets can be considered complex because

different government policies and economic conditions make the business climate more favorable in some countries than in others.

The task of crafting a company's overall corporate strategy for a diversified company encompasses all of the following except

divesting well-performing businesses.

Using domestic plants as a production base for exporting goods to selected foreign country markets can be a(n)

excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets.

The world economy is globalizing at an accelerated pace because

growth-minded companies are racing to build stronger competitive positions in the markets of more countries.

What is it called when a diversified company can add value by shifting capital from business units generating free cash flow to those needing additional capital to expand and realize their growth potential?

internal capital market

The two biggest drawbacks or disadvantages of unrelated diversification are

the difficulties of competently managing many different businesses and being without the added source of competitive advantage that cross-business strategic fit provides.

When is it appropriate to use a think-local, act-local approach strategy?

when the need for local responsiveness is high due to significant cross-country differences in demographic, cultural, and market conditions and where benefits from standardization is limited