Chapter 8

PDiversify companies that are able to create more value in the businesses and other diversify company tablet that

Parenting advantage

When a firm with a related diversification strategy has businesses that match specialized resource requirements at point along their value chains that are critical for the business and marketing process they are said to have

Resource fit

Steps involved in creating a diversified company's corporate strategy include

1. Establishing investment priorities 2. Leveraging cross business value chain relationships into competitive advantage 3. Picking new industries to enter and the means for entering them

The ranking of a diversified company's business units from best to worst

1. Rankinngs help high level executives prioritize businesses for resource support wnd capital investment 2. Future revenue and earnings for fast growing industries usually look superior to those for slow growing industries 3. The position of different businesses in the nine cell Mateus is a good criteria for identifying high opportunity and low opportunity businesses

True of multi business diversification strategies

1. Some companies are narrowly diversified around 2 to 5 related or unrelated businesses 2. Some multi businesses enterprises are diversified into ambulated areas would have a group of related businesses within each area 3. Combination related unrelated diversification strategies are attractive two companies with a mix of valuable competitive assets

Hate diversified company in which one core business accounts for 50% to 80% of total revenues and other businesses account for the remainder is known as

A dominant business enterprise

The decision to diversify should begin with

An economic justification

Cross business strategic fit can exist

At various points along the value chain, and customer service activities, and supply chain activities

Which of the following would be misguided reasons for pursuing unrelated diversification

Boosting managerial compensation, risk reduction, reducing earnings volatility

Strategic analysis of diversified companies

Builds on the same ideas and techniques used for analyzing single business companies

Businesses with strategic fit in supply chain activities are able to perform better together by

Cooperating with plumbing supply chain partners obtaining volume discounts on incoming component sharing logistical resources

Choosing how best to enter a new business

Depends partly on determining the least costly mode of entry

The nine cell attractiveness strength matrix

Identifies the business strength of businesses, the industry attractiveness of businesses, helps diversified companies allocate resources among their businesses

Which of the following our terms that referred to diversification by starting a new business subsidiary from scratch

Internal development, new venture development, corporate venturing

Which of the following statements is true concerning the pursuit of growth through unrelated diversification

It can be misguided if the growth is not profitable growth

Which of the following are benefits of acquisition

It is quicker than trying to launch a new operation It allows access to hard to find resources and capabilities that work well with those of the acquiring company It is a useful way to get over entry barriers such as building brand awareness

In order to pass the three tiers of corporate advantage executives must

Negotiate favorite actresses and prices, do a superior job of corporate parenting via high-level manager oversight, diversify into industries where the businesses can produce consistently good earnings and return on investment

Companies practicing I'm related to versification overwhelmingly enter new businesses by

Obtaining an established company

Strategic options for increasing a corporation's overall success

Sticking closely with business minor in pursuing opportunities presented by these businesses Re-trenching to a narrower Scope of diversification by the divesting poorly performing businesses Broadening the scope of diversification by entering additional industries

Businesses are said to be related when

Their value chains exhibit competitively important cross business commonalities

Internal development of a new business is a good idea win which of the following conditions are met

There is plenty of time to start the business The parent company has the in-house resources needed to launch the company It is cheaper to enter internally then through an acquisition

Which of the following is true about joint ventures

They are usually short lived ending as soon as the partners decide to part ways

Corporate parents effectively contribute to the success of the businesses by

Utilizing popular umbrella brands Providing general resources that lower their operating costs

Which of the following are among the four questions that need to be asked when determining how best to enter end of

Which is the least costly mode of entry given the companies and Jack is are there entry barriers to overcome is feeding important factor in the farms chances for success for entry

Diversification is not really viewed as a success unless it

Yield added long-term economic value for shareholders

Corporate brands that do not have a connotation of any specific type of products are known as

umbrella brands