Question 1

The mechanisms through which the corporate headquarters exercises control over individual businesses can be classified into "input control" and "output control." Performance management systems represent a form of "input control."

Accepted Answer

Performance management systems are typically considered a form of "output control" because they focus on measuring and managing the outcomes or results of business activities, rather than controlling the inputs or resources that go into the production process.

Question 2

For conglomerate companies (companies that comprise unrelated businesses) portfolio management is likely to be more important source of value creation than in a diversified company that comprises closely-related businesses.

Accepted Answer

False

Question 3

The axes of the BCG and GE/McKinsey business portfolio matrixes represent the two fundamental sources of profitability for a business: the attractiveness of its industry and its competitive advantage.

Accepted Answer

The BCG and GE/McKinsey business portfolio matrixes both use industry attractiveness and competitive advantage as the axes to assess a business's profitability.

Question 4

.The GE/McKinsey portfolio planning matrix is less sophisticated than the BCG growth-share matrix, but is easier to apply.

Accepted Answer

The GE/McKinsey portfolio planning matrix is more sophisticated than the BCG growth-share matrix, offering a more nuanced approach to evaluating business units by considering industry attractiveness and business unit strength, rather than just market growth rate and market share.

Question 5

Typically, a common corporate identity and well-established corporate systems means that there are few barriers to transferring best practices between business units within a company.

Accepted Answer

The answer of Typically, a common corporate identity and well-established...

Question 6

Most multibusiness companies have a dual planning process: strategic planning focuses on the short and medium term, financial planning on the medium to long term

Accepted Answer

Strategic planning typically focuses on the long term and sets the overall direction for the company, while financial planning often focuses on the short to medium term, managing the company's financial resources and budgeting.

Question 7

In large multibusiness, multinational companies shared service organizations are almost always located close to their corporate headquarters.

Accepted Answer

Shared service organizations within large multibusiness, multinational companies are often located in various global locations to take advantage of cost efficiencies, talent availability, and local market expertise, rather than being situated close to corporate headquarters.

Question 8

Sharing resources and activities between business units can often impose costs which exceed the value of the synergies gained.

Accepted Answer

Sharing resources and activities between business units can be logistically challenging and can lead to coordination costs, communication breakdowns, and conflicts over resources. In some cases, the benefits of synergy may not outweigh these costs, and it may be more efficient for each business unit to operate independently.

Question 9

The closer the linkages between the business units of a multibusiness corporation, the more involved must corporate management be in coordinating across the businesses.

Accepted Answer

This is because greater linkages between business units mean that their activities and strategies are more intertwined, making it necessary for corporate management to be involved in coordinating and aligning them. Otherwise, there is a risk of conflicting goals and activities that can negatively impact the performance and value of the corporation as a whole.

Question 10

According to Jack Welch, the advantages of focus that single business companies possess are outweighed the advantage that multibusiness companies possess in terms of their ability to share the ideas from many different sources.

Accepted Answer

Jack Welch, the former CEO of General Electric, was a proponent of the idea that multibusiness companies have a significant advantage over single business companies due to their ability to share ideas, resources, and innovations across diverse business units, thereby creating a more robust and innovative organization.

Question 11

Within a multidivisional company, "portfolio management" involves managing the linkages among the businesses in order to exploit the synergies between them.

Accepted Answer

The answer of Within a multidivisional company, "portfolio management" involves...

Question 12

A key challenge for the strategic planning systems of large corporations is reconciling top-down strategic leadership with bottom-up strategy initiatives.

Accepted Answer

Large corporations often have a centralized approach to strategy development, with top executives leading the planning process. However, this can be challenging when it comes to incorporating ideas and feedback from employees at all levels of the organization. Successful strategic planning systems often find ways to balance top-down leadership with bottom-up initiatives, allowing for a more collaborative and inclusive approach to strategy development.

Question 13

The Ashridge portfolio display is distinguished by the fact that it takes account of fit between each business and the corporate owner.

Accepted Answer

The statement is true. The Ashridge portfolio display considers the fit between each business and the corporate owner in order to evaluate the portfolio's overall performance.

Question 14

If corporate management focuses heavily upon enforcing financial performance targets on its individual businesses, this increases the need for corporate management to guide the strategic plans of the individual businesses.

Accepted Answer

The answer of If corporate management focuses heavily upon enforcing...

Question 15

Implementing corporate strategy mainly involves the relationships between the corporate headquarters and the individual businesses.

Accepted Answer

Corporate strategy involves setting the overall direction and goals for the corporation as a whole, and then determining how individual businesses can contribute to achieving those goals. This requires a close relationship between the corporate headquarters and the individual businesses to ensure alignment and coordination.

Question 16

Multibusiness corporations with close linkages between their businesses tend to have smaller corporate headquarters than multibusiness corporations with more independent businesses.

Accepted Answer

The answer of Multibusiness corporations with close linkages between their...

Question 17

Increasingly, the corporate headquarters of multibusiness companies are being divided into two parts: that which exerts financial and strategic control over the businesses and that which provided common services to the businesses.

Accepted Answer

This statement is true.

Question 18

Corporate management systems based upon financial targets and budgetary controls tend to work best in multibusiness companies with relatively few, closely-related, technology-intensive businesses

Accepted Answer

Corporate management systems based solely on financial targets and budgetary controls may not work well in complex organizations with diverse business units and varying technological requirements. Such systems may fail to account for non-financial factors such as social responsibility, innovation, and customer satisfaction. Therefore, alternative management systems may be necessary to ensure effective performance in such organizations.

Question 19

The strategic planning systems of multibusiness corporations have been criticized for the fact that they do not make strategy.

Accepted Answer

Strategic planning systems in multibusiness corporations are often criticized because they tend to focus more on financial planning and budgeting rather than on the formulation and creation of new strategies. This can lead to a lack of innovative strategic direction.

Question 20

"Restructuring" is a corporate strategy that involves acquiring companies then intervening to cut costs, divest assets, revise competitive strategies, and adjust financial structure.
{see pp.323-324]

Accepted Answer

The definition of "restructuring" given in the statement is correct, thus the answer is true.

Quiz 13: Implementing Corporate Strategy: Managing the Multibusiness Firm