Strategic Planning/Business Policy Ch. 6

______ refers to a firm's strategic resources that reflect the collective learning in the organization.

Core competencies

Select all that apply Which of the following are traits of a healthy ego? (Check all that apply.) drive to go to any lengths to win ability to cope with change clearheadedness confidence

ability to cope with change clearheadedness confidence

When a company incorporates more processes toward the original source of raw materials, it is called ______ integration.

backward

When managers attempt to shape a firm's strategy to serve their selfish interests rather than maximizing long-term shareholder value, they are guilty of ______.

egotism

One way to increase negotiating power with suppliers is ______.

for similar business units to work together and pool their raw material procurement

A(n) ______ is a prearranged contract with managers specifying that, in the event of a hostile takeover, the target firm's managers will be paid a significant severance package.

golden parachute

Select all that apply Which of the following are antitakeover tactics that managers use? (Check all that apply.) poison pill executive handcuffs greenmail golden parachute

poison pill greenmail golden parachute

Select all that apply Which of the following are the two types of market power? (Check all that apply.) pooled negotiating power horizontal integration activity sharing vertical integration

pooled negotiating power vertical integration

Parenting advantage is the ______.

positive contributions of the corporate office to a new business as a result of the expertise and support provided

Select all that apply Which of the following are ways a firm can achieve the benefits of diversification? (Check all that apply.) strategic alliances or joint ventures internal development mergers and acquisitions portfolio management

strategic alliances or joint ventures internal development mergers and acquisitions

Select all that apply Which of the following statements about growth for growth's sake are correct? CEOs often have huge incentives for increasing the size of their firm. Many high-tech firms have suffered from the negative impact of uncontrolled growth. Long-term company success is often fueled by rapid growth. CEOs are especially driven to pursue acquisitions.

-CEOs often have huge incentives for increasing the size of their firm. -Many high-tech firms have suffered from the negative impact of uncontrolled growth. -CEOs are especially driven to pursue acquisitions.

Select all that apply A firm's core competencies include which of the following? (Check all that apply.) Acquiring companies and establishing subsidiaries Coordinating diverse production skills Integrating multiple streams of technologies Marketing diverse products and services

-Coordinating diverse production skills -Integrating multiple streams of technologies -Marketing diverse products and services

Select all that apply Which of the following are true about engaging in internal development? (Check all that apply.) Firms often develop new products or services at relatively lower costs. It is faster than other methods such as mergers and acquisitions. Difficulties with combining companies' value-chain activities and merging cultures are not an issue. Value is created by the company internally, thus it does not have to share the wealth with alliance partners.

-Firms often develop new products or services at relatively lower costs. -Difficulties with combining companies' value-chain activities and merging cultures are not an issue. -Value is created by the company internally, thus it does not have to share the wealth with alliance partners.

Select all that apply Which of the following are objectives that divesting a business can accomplish for the parent? (Check all that apply.) It raises cash to help fund existing businesses. It enables managers to gain economies of scope. It enables managers to focus on the firm's core businesses. It provides the firm with more resources to spend on attractive alternatives.

-It raises cash to help fund existing businesses. -It enables managers to focus on the firm's core businesses. -It provides the firm with more resources to spend on attractive alternatives.

Select all that apply Which of the following statements about shareholders and managers are true? (Check all that apply.) Shareholders expect that managers will grow the company solely for the sake of growth. Shareholders expect managers to maximize long-term shareholder value. Shareholders expect managers to be rational beings. Shareholders expect managers to act in the best interest of shareholders.

-Shareholders expect managers to maximize long-term shareholder value. -Shareholders expect managers to be rational beings. -Shareholders expect managers to act in the best interest of shareholders.

Select all that apply Which of the following statements regarding unrelated diversification are correct? (Check all that apply.) Synergy is created through business units' interactions with the corporate office. Potential benefits are gained from horizontal relationships, i.e., leveraging core competencies across business units. Potential benefits are derived from vertical (hierarchical) relationships. The corporate office enhances value by establishing human resource practices and financial controls for each business unit.

-Synergy is created through business units' interactions with the corporate office. -Potential benefits are derived from vertical (hierarchical) relationships. -The corporate office enhances value by establishing human resource practices and financial controls for each business unit.

Select all that apply Which of the following are ways that synergy is created through the use of unrelated diversification? (Check all that apply.) The corporate office contributes through parenting. The parent company restructures the acquired business. The corporate office enhances operations and profit through vertical integration. The corporate office adds value to the overall organization through pooled negotiating power, which decreases raw material costs. The corporate office adds value by allocating resources throughout the entire corporation to optimize corporate profitability goals.

-The corporate office contributes through parenting. -The parent company restructures the acquired business. -The corporate office adds value by allocating resources throughout the entire corporation to optimize corporate profitability goals.

Select all that apply Which of the following are motives for and benefits of using mergers and acquisitions as a strategy? (Check all that apply.) They provide a means for companies to enter new market segments. They help obtain valuable resources that can help expand product and service offerings. They are a slow but low-cost way of redistributing a company's portfolio. They are faster than building internal resources from scratch. They provide the opportunity to attain synergy by leveraging core competencies, sharing activities, and building market power. They are more effective in gaining access to new capabilities than a strategic alliance or joint venture.

-They provide a means for companies to enter new market segments. -They help obtain valuable resources that can help expand product and service offerings. -They are faster than building internal resources from scratch. -They provide the opportunity to attain synergy by leveraging core competencies, sharing activities, and building market power.

Select all that apply Which of the following are benefits of vertical integration? (Check all that apply.) a secured supply of raw materials or distribution channels protection and control over valuable assets units working together to share manufacturing facilities and employees simplified procurement and administrative procedures proprietary access to new technologies

-a secured supply of raw materials or distribution channels -protection and control over valuable assets -simplified procurement and administrative procedures -proprietary access to new technologies

Select all that apply Which of the following are transaction-related costs, according to the transaction cost perspective? (Check all that apply.) costs due to the searching for and purchase of inputs from an outside source costs associated with negotiating terms costs associated with creating the contract costs associated with acquiring the other party at the end of the trial period costs associated with monitoring and enforcing the terms of the contract

-costs due to the searching for and purchase of inputs from an outside source -costs associated with negotiating terms -costs associated with creating the contract -costs associated with monitoring and enforcing the terms of the contract

Select all that apply Companies that implement a related diversification strategy may benefit from which of the following? (Check all that apply.) economies of scope leveraging core competencies and sharing activities horizontal relationships across different businesses in the diversified corporation developing a more effective asset structure through parenting

-economies of scope -leveraging core competencies and sharing activities -horizontal relationships across different businesses in the diversified corporation

Select all that apply Which of the following are ways that parent companies create value through their management expertise? (Check all that apply.) improving plans and budgets providing consulting on business units' acquisitions, divestitures, and new internal development decisions providing horizontal relationships across all business units providing central functions such as human resource management and procurement

-improving plans and budgets -providing consulting on business units' acquisitions, divestitures, and new internal development decisions -providing central functions such as human resource management and procurement

elect all that apply Which of the following are examples of the risks of vertical integration? (Check all that apply.) -lower administrative costs associated with managing a more complex activities -problems associated with unbalanced capacities along the value chain -less complex administrative procedures and reduced costs related to the integration of activities -loss of flexibility resulting from large investments -additional administrative costs associated with managing a more complex set of activities

-problems associated with unbalanced capacities along the value chain -loss of flexibility resulting from large investments -additional administrative costs associated with managing a more complex set of activities

Select all that apply Mergers and acquisitions have been especially popular in high-technology and knowledge-based industries, because ______. (Check all that apply.) they help companies become viable they are nearly almost always more successful than other means available to companies that operate in these industries they help companies to get to market very quickly the industry operates in a highly dynamic environment where changes in the market and technology occur very quickly and unpredictably

-they help companies become viable -they help companies to get to market very quickly -the industry operates in a highly dynamic environment where changes in the market and technology occur very quickly and unpredictably

______ are managers' actions to avoid losing wealth or power as a result of a hostile takeover.

Antitakeover tactics

Which of the following is one of the best-known portfolio management frameworks?

Boston Consulting Group's growth/share matrix

______ is the exit of a business from a company's portfolio.

Divestment

______ is a payment by a firm to a hostile party for the firm's stock at a premium, made when the firm's management feels that the hostile party is about to make a tender offer.

Greenmail

______ is/are a result of managers' actions to grow the size of their firms not to increase long-term profitability but to serve managerial self-interest.

Growth for growth's sake

______ is entering a new business through investment in new facilities. It is often called corporate entrepreneurship and new venture development.

Internal development

Which of the following is an example of how managerial motives can erode value creation?

Managers who act in their own self-interest.

______ refers to firms' abilities to profit through restricting or controlling supply to a market or coordinating with other firms to reduce investment.

Market power

______ is the improvement in bargaining position relative to suppliers and customers.

Pooled negotiating power

______ is when a firm enters a different business in which it can benefit from leveraging core competencies, sharing activities, or building market power.

Related diversification

______ is when value-chain activities of two or more businesses are performed by only one of the businesses.

Sharing activities

______ is a perspective where every market transaction involves specific costs.

Transaction cost

______ is an expansion or extension of the firm by integrating preceding or successive production processes.

Vertical integration

The primary goal in selecting the best means of diversification should be which vehicle will ______.

create the greatest value for shareholders

The process of firms expanding their operations by entering new businesses is called ______.

diversification

While sharing activities may decrease costs, increase revenues, and enhance product differentiation, it sometimes can have an unintended negative effect, such as ______.

lowered perceptions of the product's quality and prestige

In addition to preventing a hostile takeover, greenmail ______.

protects the jobs of the target firm's management

Select all that apply Which of the following are quadrants in the Boston Consulting Group's portfolio matrix? (Check all that apply.) . question mark dog gazelle cash cow

question mark dog cash cow

Select all that apply Sharing activities can potentially provide which of the following two payoffs? (Check all that apply.) better portfolio management revenue enhancements cost savings increased core competencies

revenue enhancements cost savings

Firms pursuing differentiation strategies might engage in ______, such as using a shared order-processing system.

sharing activities

What should senior management's primary motivation be for implementing a diversification strategy?

to create shareholder value

The main purpose of a golden parachute is to protect ______.

top managers' income if they lose their jobs due to a hostile takeover