MGMT 481: Ch. 8 (minicase)
T
A conglomerate receives less than 70 percent of its revenues from any single business and features a number of strategic business units that have little to no relationship with each other.
T
A firm that decides to stop purchasing components from suppliers and start producing them in-house is pursuing backward vertical integration.
B. The green economy; health care
ChapterCase 8 highlights the corporate-level strategy of General Electric. As noted, CEO Jeffrey Immelt decided to refocus GE's portfolio of businesses and leverage the firm's core competencies in industrial engineering while pursuing future-growth industries. The two industries CEO Immelt had decided will provide strategic importance to the firm are ___________ and ____________. A. Home appliances; entertainment B. The green economy; health care C. Capital markets; information technology D. Consumer electronics; education
F
Corporate strategy is focused solely on determining the geographic locations in which the firm should compete.
T
Firms are more capable than markets at coordinating highly complex tasks, while markets are more capable of providing high-powered incentives for entrepreneurship.
F
Firms that pursue extremely high or extremely low levels of diversification perform better than those that pursue moderate levels of diversification.
e. GE Capital
Jack Welch structured the company to be mainly U.S.-based and created a business unit that created most of the profits for the firm. The business unit was later responsible for huge losses. The unit was: a. GE Power Systems b. GE Appliances c. NBC & Systems d. GE Industrial Systems e. GE Capital
F
Managers have exactly two choices when determining the boundaries of the firm: produce goods and services in-house ("make") or purchase them externally ("buy").
T
Not all firms are motivated by a need to grow.
F
Sending jobs out of the country to lower costs is known as outsourcing.
T
T/F: In ChapterCase 8, CEO Jeffrey Immelt restructured GE's portfolio partly because its future performance potential was too reliant on the GE Capital division.
b. vertical integration, diversification, and geographic scope
The GE case is an example of corporate strategy and its three dimensions. The three dimensions are: a. horizontal integration, diversification, and geographic scope b. vertical integration, diversification, and geographic scope c. diversification, cost-leadership, and blue-ocean strategy d. corporate strategy, business strategy, and unit strategy e. general environment, industry environment, and task environment
F
The internal and external costs associated with an economic exchange are known as interaction costs.
T
The most challenging diversification strategy is likely to be one that combines new core competencies with new and emerging markets.
a. a diversified discount
According to the case, conglomerates such as GE that pursue unrelated diversification often experience __________, which is when the stock price of such highly diversified firms is valued at less than the sum of their individual business units. a. a diversified discount b. economies of scale c. economies of scope d. unrelated diversification e. a diversification advantage
e. Immelt had overpaid for new assets and sold others for too little
After Jeffrey Immelt, CEO, restructured the company in 2009 with the goal of achieving "reliable and sustainable future growth", by 2018, the company continued to lose money. According to the case, the cause for the underperformance was: a. the economy had shifted, causing businesses to lose market share b. new competitors had entered the market, challenging many of the units c. Immelt used too much of the company's cash for acquisitions d. moral in the company was too low e. Immelt had overpaid for new assets and sold others for too little
