Deck 7: Considering Corporate Strategy

Question 1

Corporate strategists decide what businesses they want their organization to be in.

Answer 1

True

Question 2

Sony's corporate strategy includes building alliances with other companies to develop new products.

Answer 2

True

Question 3

All of Sony's products have been successful.

Answer 3

False

Question 4

A merger is a strategy in which one firm buys a controlling or 100 percent interest in another firm.

Question 5

A strategic alliance is a strategy in which two or more firms form a relationship in order to pursue mutual interests that have implications for the long-term strategy of at least one of the partner firms.

Question 6

Scale is the range of activities within a single firm or corporation.

Question 7

Scope refers to the overall size of a business, usually measured by annual revenues, unit volumes or total assets.

Question 8

Diversification is an external growth strategy in which the firm expands its scope to include businesses competing in different markets.

Question 9

Long-term contracts are formal relationships between companies that detail the provision of quantities, prices, specifications and delivery of products or services over time.

Question 10

Alliances are frequent but informal relationships between parties based on trust and reputation.

Question 11

Networks are alliances between multiple companies that focus on a particular set of activities that are linked by a common agenda.

Question 12

McDonald's suppliers have long term contracts.

Question 13

Diversification strategy defines the logic for external growth and corporate-level resource allocation across multiple business units.

Question 14

McDonald's corporation pursues an extremely diversified corporate strategy, with businesses competing in different industries.

Question 15

GE tries to add value to its individual businesses with management controls and training.

Question 16

A core competence represents the skills or knowledge used by a firm to add value across multiple business units.

Question 17

Good corporate parents impose systems that cause business units to perform below what they would if they were on their own.

Question 18

New United Motor Manufacturing Inc. (NUMMI) is an alliance between Toyota and Ford.

Question 19

Tacit knowledge is know-how that is easy to codify and transfer.

Question 20

Pursuing learning in relationships blocked by cultural differences can waste management's time and shareholder resources.

Question 21

Which of the following is not an example of a question that a corporate strategist would ask?

A) What business are you in?
B) Should we be affiliated with this other business?
C) How should we be affiliated with this other business?
D) How should we manage the business?

Question 22

Which of the following is not true about Sony?

A) Originally named Tokyo Telecommunications Engineering
B) Name is based on the term sonus (Latin for 'sound') and sonny ('little man')
C) Growth depended only on internal development
D) Developed the first color TV, home video recorder and personal audio player

Question 23

Which of the following is not true about Berkshire Hathaway?

A) $10,000 worth of stock in 1975 would be worth over $9.8 million in 1998
B) Run by Warren Buffett
C) Viewed as a portfolio of assets
D) Headquartered in New York City

Question 24

Which of the following describes companies in which most or all of the firm revenues come from one industry?

A) Dominant business
B) Related-constrained diversifier
C) Related-linked diversifier
D) Unrelated-linked diversifier

Question 25

Conglomerates pursue which diversification strategy?

A) Dominant business
B) Related-constrained diversifier
C) Related-linked diversifier
D) Unrelated-linked diversifier

Question 26

Which of the following is not typically exchanged in a spot market?

A) Gold
B) Crude oil
C) Software

Question 27

Tacit knowledge is:

A) Easy to articulate in words
B) Acquired by experience
C) The same thing as explicit knowledge
D) All of the above
E) None of the above

Question 28

Which of the following is not an example of corporate strategy?

A) Sony decides which industries to compete in.
B) Disney determines what industry activities it will undertake
C) GE decides what industries it will not compete in
D) Disney executives plan the marketing strategy for a new film

Question 29

Which of the following describes a corporation's scope?

A) Overall size of the business
B) Total annual revenues
C) Range of activities undertaken
D) Total assets

Question 30

Acquisition is a strategy in which one firm ____________ interest in another firm.

A) Buys a small
B) Buys a controlling
C) Sells a small
D) Sells a controlling

Question 31

Which of the following is not a Sony acquisition?

A) CBS Records
B) Columbia Pictures
C) Samsung Electronics

Question 32

A _______ is often used to define the date on which an equity joint venture ceases to exist.

A) End date
B) Spot market
C) Sunrise clause
D) Sunset clause

Question 33

An alliance describes an informal relationship between two parties based on __________.

A) Contracts
B) Supply and demand
C) Transaction costs
D) Trust and reputation

Question 34

How large is the headquarters staff of Warren Buffet's company Berkshire Hathaway (a conglomerate with approximately $200 billion market capitalization)?

A) 1.5 people
B) 11.5 people
C) 115 people
D) 1115 people

Question 35

Which of the following is the best definition of a core competence?

A) Know-how that is difficult to codify and transfer
B) Risk that the knowledge of one firm will inadvertently transfer to others
C) Skills or knowledge used by a corporation to add value across multiple business units
D) Strategic choice to contract corporate boundaries.

Question 36

_____________ is when one firm takes advantage of another firm by neglecting or shirking their obligation (either explicit or implicit) in an arrangement.

A) Diversifying
B) Networking
C) Opportunism
D) Parenting

Question 37

Which of the following is a major benefit of corporate hierarchies?

A) Ability to coordinate relationship activities
B) Always have the lowest direct and indirect costs
C) High levels of autonomy
D) Most efficient means of producing a product/service

Question 38

UTC's business units include Pratt & Whitney (jet engines), Sikorsky (helicopters), Otis (elevators) and Carrier (air-conditioning equipment), making the firm an example of a__________ corporation:

A) Dominant business
B) Related diversified
C) Unrelated diversified

Question 39

GE Capital's decision to sell its business unit Center for Leadership Effectiveness' training and development to other units within GE is an example of which of the following transaction?

A) Equity joint venture
B) Hierarchy
C) Market
D) Spot market exchange

Question 40

Which of the following is not true about corporate parenting?

A) Bad corporate parents impose systems that cause business units to perform below what they would if they were on their own.
B) Corporate parents cannot choose their children
C) Good corporate parents add value to the businesses they own.
D) It is important to assess the fit between a corporation's skills and the opportunities for improving the businesses they acquire.

Question 41

What is corporate strategy?

Question 42

What are three ways in which expansion can influence firm performance?

Question 43

What are some of the barriers to learning in an alliance?

Question 44

What are some principles that can yield to more effective learning in strategic alliances?

Question 45

What are costs and benefits of markets and hierarchies?

Question 46

What is a divestment? Why might a firm choose to make a divestment?

Question 47

What is transactions cost analysis? What types of costs does it take into account?

Question 48

Why might the size of corporate headquarters be decreasing?

Question 49

How are economic transactions among firms facilitated? Define and provide examples of five types of economic transactions.

Question 50

Why might managers diversify beyond their current competence?