Question 1

Williamson believed that one of the key advantages of the M-form was that it centralized decision making in corporate headquarters.

Accepted Answer

The answer of Williamson believed that one of the key...

Question 2

Strategic planning focuses on medium-term strategic targets for a firm, while financial control systems focus on long-term financial results

Accepted Answer

Strategic planning focuses on both short-term and long-term strategic targets, while financial control systems are designed to monitor and control financial performance in the short and medium term.

Question 3

According to the OECD's Principles of Corporate Governance Board Directors of a group are required to act "…in good faith … in the best interests of the company and its creditors."

Accepted Answer

The OECD's Principles of Corporate Governance emphasize acting in the best interests of the company and its shareholders, not specifically its creditors.

Question 4

Oliver Williamson was the first person to provide a theoretical rationale for the multidivisional (M-form, as he called it) firm

Accepted Answer

Oliver Williamson's 1975 paper "Markets and Hierarchies: Analysis and Antitrust Implications" provided the theoretical rationale for the M-form firm.

Question 5

Vital questions relate to the role of the corporate head office and its relationships with the businesses

Accepted Answer

The statement highlights an important issue in corporate governance and strategy, which is the relationship between the central corporate headquarters and the various business units or subsidiaries within a larger organization. This can affect decision-making, resource allocation, performance management, and other key aspects of business operations. Companies need to carefully consider the most effective structure and processes for managing these relationships to achieve their strategic objectives.

Question 6

Williamson thought the M-form solved two key problems of large multibusiness organizations: allocation of resources, and peripheral agency proliferation costs

Accepted Answer

Williamson's M-form (multidivisional form) primarily addressed issues of efficient resource allocation and control, but not specifically peripheral agency proliferation costs.

Question 7

A strategic inflection point is a point where major changes in a firm's competitive environment require a complete change of strategy

Accepted Answer

A strategic inflection point is a time when significant shifts in a firm's competitive landscape occur, necessitating a complete overhaul of their strategy to remain competitive. It may be caused by new technologies or disruptive competitors, and it is a critical moment that requires decisive action.

Question 8

The two axes of the BCG growth-share matrix are real growth rate of the market, and market share

Accepted Answer

The two axes of the BCG growth-share matrix are market growth rate and relative market share.

Question 9

By focusing on annual planning cycles strategic planning systems have often proved irrelevant to the actual strategies executed by businesses

Accepted Answer

Annual planning cycles often do not keep up with the rapidly changing business environment, rendering strategic planning systems irrelevant to the actual strategies implemented by businesses. In today's dynamic market, businesses need to be flexible and capable of adapting quickly to changes in order to remain competitive.

Question 10

In multibusiness corporations, corporate management invariably takes primary responsibility for business level strategy

Accepted Answer

In multibusiness corporations, each business unit has its own management team responsible for developing and implementing their own business level strategy. Corporate management may provide guidance and support, but they do not take primary responsibility for it.

Question 11

The closer the linkages between groups of businesses, the fewer the opportunities for creating value from sharing resources or transferring capabilities, and the smaller the need for coordination across businesses

Accepted Answer

The statement is opposite of what is true. The closer the linkages between groups of businesses, the greater the opportunities for creating value from sharing resources or transferring capabilities, and the larger the need for coordination across businesses.

Question 12

The notion of parenting advantage refers to the need for the corporate head office of a firm to offer larger gains to its divisions than rival corporations could

Accepted Answer

The concept of parenting advantage suggests that a corporate head office should provide more value to its divisions than competitors, ensuring the divisions benefit more from being part of the corporation than they would elsewhere.

Question 13

The final step in the McKinsey pentagon is to establish the value of the company after optimizing for all internal restructurings and external improvements, so that management can rapidly sell the business to a corporate raider

Accepted Answer

The final step in the McKinsey pentagon is to establish the value of the company after optimizing for all internal restructurings and external improvements, but this is not necessarily for the purpose of selling the business to a corporate raider.

Question 14

For a multidivisional firm, managing a business portfolio refers to any actions which impact the composition and balance of that portfolio.

Accepted Answer

Managing a business portfolio involves making strategic decisions that impact the mix of businesses within the portfolio, including adding or divesting businesses, allocating resources, and assessing performance.

Question 15

Differences in national cultures and corporate cultures can readily be minimized by rapid post-merger integration.

Accepted Answer

Differences in national cultures and corporate cultures are deeply ingrained and cannot be easily minimized by rapid post-merger integration. It takes a lot of time, effort, and sensitivity to merge two different cultures successfully.

Question 16

Almost every study shows that the shareholders of firms being taken over lose out from being taken over.

Accepted Answer

Shareholders of firms being taken over typically benefit from takeover premiums, as acquiring companies often pay a higher price than the current market value for the shares.

Question 17

The fit or misfit between the business's needs and the parent's corporate style

Accepted Answer

The fit or misfit between the business's needs and the parent's corporate style is an important factor to consider in determining the success of a subsidiary within a larger parent company.

Question 18

A simple advantage of a multibusiness is the ability to share the ideas generated by wide and rich inputs from multiple global sources

Accepted Answer

A multibusiness has the advantage of being able to tap into a diverse range of ideas from its different business units and locations, enabling it to gain a broader perspective and access to different market insights.

Question 19

Mintzberg criticized the M-form for having two rigidities: in practice decentralization is limited only to division CEOs, and in practice the corporate centre tends to impose standard deadlines on all divisions

Accepted Answer

The answer of Mintzberg criticized the M-form for having two...

Quiz 17: Implementing Corporate Strategy: Management of the Multibusiness Firm