MGMT 695 Final (Ch. 7-10)

Unrelated Diversification hinges on the ability of the parent company to:

- do a superior job of identifying and acquiring new businesses that can produce consistently good earnings and returns on investment - do an excellent job of negotiating favorable acquisition prices - do such a good job of overseeing and parenting the collection of businesses that they perform at a higher level than they would on their own efforts

Entry into new businesses can take any of three forms:

-Acquisition: provides the quickest entry into a new business -Internal development: takes the longest to produce home-run results -Joint venture/ strategic partnership: tends to be the least durable

Companies electing to expand into international markets must consider:

-Cross-country differences in buyer tastes -Market sizes and growth potential -location-based cost drivers -adverse exchange rates -host-government policies when evaluating strategy options

Options for entering foreign markets include:

-Maintaining a national (one-country) production base -exporting goods to foreign markets -Licensing foreign firms to use the company's technology or produce and distribute the company's products -Employing a franchising strategy -Establishing a foreign subsidiary -Using strategic alliances or other collaborative partnerships

Two fundamental approaches to diversification:

-Related -Unrelated

To succeed in emerging markets, companies often have to:

-compete on the basis of lower price -be prepared to modify aspects of the company's business model or strategy to accommodate local circumstances -try to change the local market to better match the way the company does business elsewhere

The six steps of evaluating a company's diversification strategy

1) evaluate the long-term attractiveness of the industries into which the firm has diversified 2.) evaluate the relative competitive strength of each company's business units 3.) Check for cross-business strategic fit 4.) check whether the firm's resources fit the requirements of its present business lineup 5.) rank the performance prospects of the businesses from best to worst, and determine what the corporate parent's priority should be in allocating resources to it's various businesses 6.) crafting new strategic moves to improve overall corporate performance

In posturing to compete in foreign markets, a company has three basic options:

1.) A multidomestic or think local, act local approach to crafting a strategy 2.) a global or think global, act global approach to crafting a strategy 3.) a transnational startegy or combination think global, act local approach

Competing in international markets allows multinational companies to:

1.) Gain access to new customers 2.) Achieve lower costs and enhance the firm's competitiveness by more easily capturing scale economies or learning-curve effects 3.) Leverage core competencies refined domestically in additional country markets 4.) Gain access to resources and capabilities located in foreign markets 5.) spread business risk across a wider market base

Two general ways in which a firm can gain competitive advantage:

1.) Locating various value chain activities among nations in a manner that lowers costs or achieves greater production differentiation 2.) Draw on a multinational or global competitor's ability to deepen or broaden its resources and capabilities and to coordinate its dispersed activities in ways that a domestic-only competitor cannot

Which of the following is an important appeal of a related diversification strategy? A.) It offers opportunities to transfer skills, expertise, technical know-how, or other capabilities from one business to another. B.) It is typically more profitable than unrelated diversification, which is a major factor in helping related diversification pass the attractiveness test. C.) It represents an effective way of capturing valuable financial fit benefits. D.) It is more likely to pass the cost-of-entry test and the capital gains test than unrelated diversification. E.) It offers significant opportunities to strongly differentiate a company's product offerings from those of rivals.

A.) It offers opportunities to transfer skills, expertise, technical know-how, or other capabilities from one business to another.

VF Corporation spun off its entire jean division and outlet store chain as an independent public company in 2019 and acquired the Supreme streetwear brand in 2020. These strategic movers are examples of: A.) corporate restructuring. B.) purchasing a business by selling shares of stock to the investing public or borrowing funds. C.) reinvesting in an unwanted business to make a more financially and managerially stable company. D.) purchasing a business outright from another company. E.) selecting only businesses that have ample resources to compete successfully on their own for sale to another company.

A.) corporate restructuring.

In 2018, Suelin Chen and Mark Zheng co-founded Cake, a free social media app that catalogs users' end-of-life wishes, instructions, and documents such as obituaries. Cake, based in Boston, makes money through strategic partnerships primarily with healthcare providers and will eventually add fee-based premium services in global markets. Cake has decided to expand outside its U.S. home market via a strategic alliance in order to: A.) gain access to resources and capabilities located in foreign markets. B.)achieve differentiation through economies of scale, experience, and increased purchasing power. C.) identify newer and stronger resources and capabilities in its home market. D.) gain access to new customers for the company's products/services. E.)compete with rival global social media providers such as WeChat and TikTok.

A.) gain access to resources and capabilities located in foreign markets.

The drawbacks of a localized multi domestic strategy include: A.) hindering transfer of a company's competencies and resources across country boundaries, and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates. B.) the difficulty in and costs of being responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions. C.) the difficulty in taking into account significant country-to-country differences in distribution channels and marketing methods. D.) hindering the use of cross-market subsidization techniques and increasing company vulnerability to adverse shifts in currency exchange rates. E.) being unsuitable for competing in the markets of emerging countries and posing added difficulty in building multiple profit sanctuaries.

A.) hindering transfer of a company's competencies and resources across country boundaries, and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates.

The one factor that company executives need not worry about when their company is managing many diverse, unrelated firms is: A.) picking business-unit heads who have the requisite combination of managerial skills and know-how to motivate people. B.) staying abreast of what's happening in each industry and subsidiary. C.) "managing by the numbers"—that is, keeping a close track on the financial and operating results of each subsidiary. D.)understanding the true value of strategic investment proposals by business-unit managers. E.) knowing what to do if a business unit stumbles.

A.) picking business-unit heads who have the requisite combination of managerial skills and know-how to motivate people.

A joint venture is an attractive way for a company to enter a new industry when: A.) the firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps. B.) the firm has not built up a hoard of cash with which to finance a diversification effort. C.) the firm needs access to economies of scope and good financial fits in order to be cost-competitive. D.) it is uneconomical for the firm to achieve economies of scope on its own initiative. E.) the firm has no prior experience with diversification.

A.) the firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps.

Unlikely candidates for divestiture in Nike's corporate restructuring effort are: A.) Nike's businesses in unattractive industries. B.) Nike's businesses that are still compatible with the company's revised diversification strategy. C.) Nike's weak performers. D.) Nike's businesses that are cash hogs or that lack other types of resource fit. E.) business units that lack strategic fit with the businesses to be retained by Nike.

B.) Nike's businesses that are still compatible with the company's revised diversification strategy.

Teresa, CEO of a multinational tourism and leisure company, is researching cross-country differences in demographic, cultural, and market conditions. She would not likely discover that: A.) Keurig has acquired a large coffee farm in Costa Rica. B.) Scotland provides low-costs loans to U.S. craft whisky distillers seeking entry to its markets in order to stimulate competitive rivalry. C.) Intel's silicon chips are identical across the world. D.) McDonald's offers 100 percent beef-free products in its outlets in India. E.) Nike produces its own line of skate shoes.

B.) Scotland provides low-costs loans to U.S. craft whisky distillers seeking entry to its markets in order to stimulate competitive rivalry.

Airbus established a major assembly site for its commercial aircraft in Alabama in order to: A.) hedge against the risks of fluctuating exchange rates and adverse political developments. B.) allow better coordination of related activities associated with assembling commercial aircraft. C.) benefit from a steep learning curve associated with assembling commercial aircraft. D.) take advantage of significant scale economies associated with assembling commercial aircraft. E.) use export, licensing, or franchising strategies so as to minimize risk and capital investment in its European operations.

B.) allow better coordination of related activities associated with assembling commercial aircraft.

Diversifying into new businesses can be considered a success only if it: A.) results in increased profit margins and bigger total profits. B.) builds shareholder value. C.) leads to the development of a greater variety of distinctive competencies and competitive capabilities. D.) helps a company escape the rigors of competition in its present business. E.) helps the company overcome the barriers to entering additional foreign markets.

B.) builds shareholder value.

Unrelated diversification makes sense only when doing so: A.) results in risk reduction by spreading a company's investments over a set of diverse industries. B.) delivers enhanced shareholder value if an undervalued company can be purchased at a bargain price. C.) meets expectations for rapid or continuous growth. D.) stabilizes earnings, i.e., market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses. E.) supports managerial motives including the prospects for higher compensation.

B.) delivers enhanced shareholder value if an undervalued company can be purchased at a bargain price.

Companies that aspire to global market leadership need to prioritize competing in the markets where: A.) they can employ a strategy akin to that used in the markets of developed countries. B.) economies are developing and living standards are climbing toward levels in the advanced industrialized world. C.) high barriers to entry and government regulations protect incumbent firms. D.) they can employ a strategy akin to that used in the markets of developed countries where business risks are lowest. E.) economies are advanced and living standards are highest.

B.) economies are developing and living standards are climbing toward levels in the advanced industrialized world.

Calculating quantitative industry attractiveness scores for each industry a company has diversified into: A.) ignores seasonal and cyclical factors, industry profitability, and whether an industry has significant social, political, regulatory, and environmental problems. B.) provides a basis for drawing analysis-based conclusions about the attractiveness of the industries a company has diversified into, both individually and as a group, and further to provide an indication of which industries offer the best and worst long-term prospects. C.) permits a ranking of the attractiveness of the various industry value chains, from best to worst. D.) helps ascertain which industries have the easiest-to-achieve key success factors and strategic fits. E.) enables managers to get in position to rank the industries from most competitive to least competitive.

B.) provides a basis for drawing analysis-based conclusions about the attractiveness of the industries a company has diversified into, both individually and as a group, and further to provide an indication of which industries offer the best and worst long-term prospects.

Adidas located its first robotic "speedfactory" in Germany to accomplish which objective? A.) to disperse its primary activities among various countries in a manner that lowered costs or helped to achieve greater product differentiation in foreign markets B.) to benefit from Germany's superior technological resources and allow greater oversight from company headquarters, also located in Germany C.) to use export, licensing, or franchising strategies so as to minimize risk and capital investment D.) to build a state-of-the-art facility in order to fully capture scale economies via an export strategy E.) to locate buyer-related activities in all countries where it sells its product

B.) to benefit from Germany's superior technological resources and allow greater oversight from company headquarters, also located in Germany

Imagine that you are the CEO of a fishing bait-and-tackle retailer that is considering broadening the company's scope, by building positions in new related business such as guiding fishing expeditions or unrelated businesses such as a mobile app that enables visitors to check last-minute camping and lodging availability at national and state parks. You would be ill-advised to pursue a diversification strategy at this time because: A.) your company has resources or capabilities that are eminently transferable to other related or complementary businesses. B.) your company's wants to lessen its vulnerability to seasonal or recessionary influences or to threats from emerging new technologies, legislative regulations, and new product innovations that alter buyer preferences and resource requirements. C.) your company is willing to make the tradeoffs between high integration costs and excessive acquisition premiums in

B.) your company's wants to lessen its vulnerability to seasonal or recessionary influences or to threats from emerging new technologies, legislative regulations, and new product innovations that alter buyer preferences and resource requirements.

Related Diversification

Based on a cross-business strategic fit: diversify into businesses with strategic fit along their respective valur chains, capitalize on strategic-fit relationships to gain competitive advantage, and then use competitive advantage to achieve the desired 1+1=3 impact on shareholder value

Which of the following is not a typical option that companies have to consider in order to tailor their strategy to fit the circumstances of emerging country markets? A.) Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances. B.) Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding). C.) Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly. D.) Prepare to compete on the basis of low price. E.) Try to change the local market to better match the way the company does business elsewhere.

C.) Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly.

Which of the following is not an accurate statement concerning competing in the markets of foreign countries? A.) There are country-to-country differences in Kellogg's cereal customers' buying habits and buyer tastes and preferences. B.) Ulta Beauty's cosmetic products considered suitable for Chinese consumers are often inappropriate in Singapore and Malaysia. C.) Localizing Apple's product offerings country-by-country leads to its low-cost advantage. D.) Venezuela's nationalization of a GM manufacturing plant is an example of a government pursuing state capitalism in industries deemed to be of national importance. E.) Ferrari, Maserati, and Ducati are located in an industry cluster in Italy known as the "engine technological district."

C.) Localizing Apple's product offerings country-by-country leads to its low-cost advantage.

A cash cow type of business: A.) generates unusually high profits and returns on equity investment. B.) is so profitable that it has no long-term debt. C.) generates positive cash flows over and above its internal requirements, thus providing a corporate parent with cash flows that can be used for financing new acquisitions, investing in cash-hog businesses, funding share buyback programs, and/or paying dividends. D.) has good strategic fit with a cash-hog business. E.) is a business with such a strong competitive advantage that it generates big profits, big returns on investment, and big cash surpluses after dividends are paid.

C.) generates positive cash flows over and above its internal requirements, thus providing a corporate parent with cash flows that can be used for financing new acquisitions, investing in cash-hog businesses, funding share buyback programs, and/or paying dividends.

Government host policies are not likely to increase a country's political and economic risks when: A.) there is new onerous legislation or regulations on foreign-owned businesses. B.) there is distress in the country's monetary system. C.) incentives such as reduced taxes, low-cost loans, and site-development assistance are provided to companies agreeing to construct or expand production and distribution facilities. D.) the national government is unstable or weak. E.) there are threats from piracy and lack of protection for the company's intellectual property.

C.) incentives such as reduced taxes, low-cost loans, and site-development assistance are provided to companies agreeing to construct or expand production and distribution facilities.

Which of the following rationales for pursuing unrelated diversification is likely to increase shareholder value? A.) to enable a company to achieve rapid or continuous growth B.) to reduce risk by way of spreading the company's investments over a set of truly diverse industries C.) to restructure an underperforming business D.) to provide benefits to managers such as high compensation and reduction in employment risk E.) to stabilize earnings; that is, market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses

C.) to restructure an underperforming business

Imagine that you are the manager of an aspiring multinational social media company. What would not be a strategic reason for your company to expand outside your domestic market to improve its overall competitiveness? A.) to establish a subsidiary in a foreign market B.) to develop export markets C.) to seek a profit sanctuary D.) to franchise operations under local ownership E.) to create new licensing opportunities

C.) to seek a profit sanctuary

Kia has obtained the experience needed to upgrade its capabilities to a higher performance standard by entering international markets primarily because of its initial customer base in South Korea: A.) poses challenges to a weaker set of international competitors. B.) contributes to a guaranteed recipe for competitive success. C.) too small to support the resource buildup needed to achieve such depth. D.) provides a comparative advantage. E.) supports the resource buildup needed to achieve depth in a developing or protected market.

C.) too small to support the resource buildup needed to achieve such depth.

When a company operates in the markets of two or more different countries, its foremost strategic decision is: A.) which foreign companies to team up with via strategic alliances or joint ventures. B.) whether to use strategic alliances to help defeat its rivals. C.) whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries. D.) whether to test the waters with an export strategy before committing to some other competitive approach. E.) whether to maintain a national (one-country) manufacturing base and export goods to the other countries.

C.) whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.

Multidomestic strategy

Calls for varying a company's product offering and competitive approach from country to country in an effort to be responsive to significant cross -country differences in customer preferences, buyer purchasing habits, distribution channels, or marketing methods

Leyla and Sofia have been assigned a capstone strategy project to identify approaches to defend against the entry of multinational companies into Vietnam, considered an emerging market. What are two such strategic approaches? A.) Take concrete steps to (1) concentrate each activity your company performs in each emerging market, and (2) locate specific activities in only those emerging markets that are low-wage countries. B.) Pursue (1) new actions to contend on a domestic level and (2) rely solely on joint ventures with domestic businesses. C.) Attempt to (1) change the local market to better match the way the company does business elsewhere and (2) reassign managers and staff from other nations to "glocalize" the business. D.) Deploy (1) acquisition and (2) rapid-growth strategies to better defend against expansion-minded internationals. E.) Be prepared to (1) modify aspects of the company's business model and

D.) Deploy (1) acquisition and (2) rapid-growth strategies to better defend against expansion-minded internationals.

Economies of scope: A.) are more associated with unrelated diversification than related diversification. B.) are present whenever diversification satisfies the attractiveness test and the cost-of-entry test. C.) arise only from strategic-fit relationships in the production portions of the value chains of sister businesses. D.) are cost reductions that flow from cost-saving strategic fits along the value chains of related businesses in the business lineup of a multibusiness corporation. E.) arise mainly from strategic-fit relationships in the distribution portions of the value chains of unrelated businesses.

D.) are cost reductions that flow from cost-saving strategic fits along the value chains of related businesses in the business lineup of a multibusiness corporation.

Imagine that you are the general manager of a regional HR staffing company. What strategic consideration would be least likely to influence your decision to diversify your firm into new, related or unrelated business services? A.) establishing investment priorities and steering corporate resources into the most attractive business units B.) leveraging cross-business value chain relationships and strategic fit to achieve a competitive advantage C.) selecting among new industries to enter and deciding on the means of entry D.) assessing and settling on the appropriate value chain for each business the company has entered E.) taking actions to boost the combined performance of any new lines of business the firm has entered

D.) assessing and settling on the appropriate value chain for each business the company has entered

The strength of a think-local, act-local multidomestic strategy is that: A.) it avoids host-country ownership requirements, and import quotas. B.) each of a company's country strategies is almost totally different from and unrelated to its strategies in other countries. C.) it eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries. D.) it matches a company's competitive approach to prevailing market and competitive conditions in each country market. E.) the plants located in different countries can be operated independently of one another, thus promoting greater achievement of scale economies.

D.) it matches a company's competitive approach to prevailing market and competitive conditions in each country market.

The option of sticking with the current business lineup makes sense when: A.) corporate executives are satisfied with current performance of each of their businesses and can use redirect capabilities and resources for expansion opportunities. B.) corporate executives are excited about market opportunities. C.) companies are seeking multinational diversification. D.) the company's present businesses offer attractive growth opportunities and can be counted on to generate good earnings and cash flows for shareholders. E.) corporate executives want to divest some businesses and retrench to a narrower diversification base.

D.) the company's present businesses offer attractive growth opportunities and can be counted on to generate good earnings and cash flows for shareholders.

Which of the following is not a reason why a company decides to enter foreign markets? A.) to spread business risk across a wider geographic market base B.) to capture economies of scale in product development, manufacturing, or marketing C.) to achieve lower costs through economies of scale, experience, and increased purchasing power D.) to impart technical knowledge to high-cost human resources in developing nations E.) to capitalize on company competencies and capabilities

D.) to impart technical knowledge to high-cost human resources in developing nations

Your classmate, Ming-Chi, is considering strategies for Chinese market entry by her Napa-based luxury wine company, and she has asked you for advice. What would you be least likely to advise Ming-Chi to do? A.) Use her company's resources and competencies to rapidly equip a new subsidiary in China. B.) Develop a startup subsidiary that can capitalize on her Napa winery's brand name to gain good distribution access in China. C.) Enter China via internal development and build a foreign subsidiary from scratch.Incorrect D.) Develop a startup subsidiary in China that has the size, cost structure, and resources to compete head-to-head against local rivals. E.) Add new wine production capacity in China even if doing so might adversely impact the supply-demand balance in the local market.

E.) Add new wine production capacity in China even if doing so might adversely impact the supply-demand balance in the local market.

Tiffany & Co. opted to enter into the mining industry in Canada in order to: A.) achieve lower costs and enhance the firm's competitiveness. B.) exploit its core competencies and capabilities. C.) gain access to new customers in new markets. D.) to achieve lower costs, thereby enhancing the firm's competitiveness. E.) access diamonds that could be certified as "conflict-free" and not associated with unethical mining practices or the finding of military activities in Africa.

E.) access diamonds that could be certified as "conflict-free" and not associated with unethical mining practices or the finding of military activities in Africa.

To use location to build competitive advantage, a company that operates multi-nationally or globally must: A.) concentrate all of its value chain activities in a single country—the one that has the best combination of low wage rates, low shipping costs, and low tax rates on profits. B.) scatter its production plants across many countries in different parts of the world so as to minimize transportation costs. C.) employ either an export strategy or a franchising strategy. D.) locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs. E.) consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

E.) consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

The advantages of using a franchising strategy to pursue opportunities in foreign markets include: A.) the ability to build multiple profit sanctuaries. B.) its being particularly well suited to companies that employ cross-market subsidization. C.) its being particularly well suited to the global expansion efforts of companies with multicountry strategies. D.) its being particularly well suited to the global expansion efforts of manufacturers. E.) franchisees bear most of the costs and risks of establishing foreign locations, and the franchisor is required to expend only the resources to recruit, train, and support foreign franchisees.

E.) franchisees bear most of the costs and risks of establishing foreign locations, and the franchisor is required to expend only the resources to recruit, train, and support foreign franchisees.

A diversified company has a parenting advantage when it: A.) avoids acquiring undervalued companies and thus reduces risks. B.) is more able than other companies to create positive collaboration within its portfolio for different specialty groups and geographic locations. C.) manages a set of fundamentally similar business operations inside fundamentally similar industries and environments. D.) results in supporting short-term economic shareholder value. E.) is more able than other companies to boost the combined performance of its individual businesses through its high-level guidance, general oversight, and other corporate-level contributions.

E.) is more able than other companies to boost the combined performance of its individual businesses through its high-level guidance, general oversight, and other corporate-level contributions.

The advantages of using an export strategy to build a customer base in foreign markets include: A.) being able to minimize shipping costs, avoid tariffs, and curb the effects of fluctuating exchange rates. B.) being cheaper and more cost effective than a multicountry strategy. C.) facilitating the establishment of profit sanctuaries in foreign countries and being more suited to accommodating local buyer tastes than a global strategy. D.) being cheaper and more cost effective than licensing and franchising. E.) minimizing capital requirements and involvement in foreign markets.

E.) minimizing capital requirements and involvement in foreign markets.

The basic purpose of calculating competitive strength scores for each of a diversified company's business units is to: A.) determine which business unit has the greatest number of resource strengths, competencies, and competitive capabilities, and which one has the least. B.) rank each business unit's strategy from best to worst. C.) rank the business unit from best to worst in terms of potential for cost reduction and profit margin improvement. D.) determine which one has the biggest market share and is growing the fastest. E.) provide a quantitative measure of the overall market strength and competitive standing for each business unit.

E.) provide a quantitative measure of the overall market strength and competitive standing for each business unit.

Which of the following is not a major consideration in evaluating the pluses and minuses of a diversified company's strategy? A.) checking whether the company's resources fit the requirements of its present business lineup B.) evaluating the extent of cross-business strategic fits C.) assessing the competitive strength of each business the company has diversified into D.) ranking the performance prospects of the various businesses from best to worst and determining what the corporate parent's priorities should be in allocating resources to its different businesses E.) scrutinizing each industry/business to determine where driving forces are strongest/weakest and how many profitable strategic groups the company has diversified into

E.) scrutinizing each industry/business to determine where driving forces are strongest/weakest and how many profitable strategic groups the company has diversified into

The $62.6 billion merger between Kraft and Heinz that was finalized in 2015: A.) was less expensive for Kraft than launching a new startup operation, thus passing the cost-of-entry test. B.) guaranteed that Kraft Heinz would be able to exploit its cross-business value chain activities and resource similarities immediately to more efficiently introduce innovative products, produce, distribute, and sell profitable processed food products. c.) was more likely to result in Kraft's passing the shareholder value test, the profitability test, and the better-off test. D.) offered Kraft the prospect of gaining an immediate competitive advantage in the new industry and thus helped ensure that the diversification move could pass the competitive advantage test for building shareholder value. E.) was a merger predicated on the idea that the strategic fit between these two companies was such that they could create more value as

E.) was a merger predicated on the idea that the strategic fit between these two companies was such that they could create more value as a combined enterprise than they could as two separate companies.

Tanisha is CEO of a multinational corporate event planning firm. What would make it unappealing to her to consider diversification into a new industry, such as lodging, by forming an internal startup subsidiary to enter and compete in that target industry? A.) when her company possesses the skills and resources to overcome entry barriers and there is ample time to launch the business and compete effectively B.) when incumbent firms are likely to be slow or ineffective in combating a new entrant's efforts to crack the market C.) when internal entry is cheaper than entry via acquisition D.) when adding new lodging capacity will not adversely impact the supply/demand balance in the industry by creating oversupply conditions E.) when the corporate event planning industry is growing rapidly and the target lodging industry is comprised of several relatively large and well-established firms

E.) when the corporate event planning industry is growing rapidly and the target lodging industry is comprised of several relatively large and well-established firms

Procter & Gamble's acquisition of Gillette was integral to a corporate diversification strategy for building the company around businesses: a.) that are highly independent, proficient, and efficient operating firms. B.) that can also include unrelated businesses with dissimilar resource requirements. C.) that have dissimilar value chain activities with no cross-business commonalities. D.) with strategic fit across separate value chain activities that drive each business. E.) with strategic fit in respect to key value chain activities and competitive assets.

E.) with strategic fit in respect to key value chain activities and competitive assets.

Global strategies

Employ the same basic competitive approach in all countries where a company operates and are best suited to industries that are globally standardized in terms of customer preferences, buyer purchasing habits, distribution channels, or marketing methods (This is the think global, act global theme)

Think local, act local

Essential strategy- making approaches when host-governement regulations or trade policies preclude a uniform, coordinated worldwide market approach

Strategic Fit

Strategic fit exists when value chains of different businesses present opportunities for cross- business skills transfer, cross sharing, or brand sharing

International strategy

Strategy for competing in two or more countries simultaneously

Corporate Venturing

The process of developing new businesses as an outgrowth of a company's established business operations. It is also referred to as corporate intrapreneurship since it requires entrepreneurial-like qualities within a larger enterprise

Added Shareholder Value

Value that shareholders cannot capture on their own by spreading their investments across the stocks of companies in different industries

Transnational strategy

a think global, act local approach to strategy making that involves employing essentially the same strategic theme (low-cost, differentiation, focuses, best-cost) in all country markets, while allowing some country-to-country customization to fit local market conditions

Think global, act global

employs the same basic competitive approach in all countries where the company operates and puts strategic emphasis on building a global brand name and aggressively pursuing opportunities to transfer ideas, new products, and capabilities from one country to another

Specialized Resources and Capabilities

have very specific applications and their use is limited to a restricted range of industry and business types

Political Risks stem from:

instability or weakness in national governments and hostility to foreign business

think global, act local

intended to accommodate cross-county variations in buyer tastes, local customs, and market conditions while also striving for the benefits of standardization

Economic Risks stem from:

the stability of a country's monetary system, economic and regulatory policies, and the lack of property rights protection

The purpose of diversification is to build shareholder value- the goal is:

to achieve not just a 1+1=2 result but rather to realize important 1+1=3 performance benefits