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