What is the difference between the General External Environment and the Industry Environment?
Compared with the general environment, the industry environment has a more direct effect on firms’ competitive actions and responses.
What is considered industry environment
threat of new entrants power of suppliers power of buyers threat of product subs intensity of rivalry
What is industry environment
set of factors that directly influences a firm and it competitive actions and responses
What does a competitive analysis focuses only on what?
direct competitors
to cope with often an ambiguous and incomplete environmental data and to increase understanding of the general environment firms complete…
external environmental analysis
What are the 4 parts of an external environmental analysis
scanning monitoring forecasting assessing
What is scanning
part of the 4 parts of an external environmental analysis identifying early signals of environmental changes and trends
what is monitoring
part iof the 4 parts of an external environemtal analysis detecting meaning through ongoing observations of environmental changes and trends
what is forecasting
developing projections of anticipated outcomes based on monitored changes and trends
assessing
determining the timing and importance of environmental changes and trends for firms strategies and their management
through scanning firms
identify early signals of potential changes in the general environment detect changes that are already under way
What happens in monitoring
when monitoring analysts observe environemntal changes to see if an important trend is emerging from among those spotted through scanning
What happens in forecasting
when forcasting analysts develop feasible projections of what might happen
what happens in assessing
when assessing the objective is to determine the timing and significance of the effects of environmental changes and trends that have been identified
general environment is composed if the following segments that are external to the firm
demographic economic political/legal sociocultural technological global sustainable physical environment
political/legal segment
part of the general environment how organizations and governments try to influence each other
global segment
includes relevant new global markets and their critical cultural and institutional chracterisitcs existing markets that are changing and important international political events susch as trade agreements
firms competing in global markets should recognize each markets sociocultural and institutional attributes an example of this is
Guanxi – about making perosnal connections interperosnal relationships
sociocultural segment
often drive demogrpahic, economic, plotical/legal, and technological conditions and changes
what are the two groups
incumbents potential entrants
to study an indutry the frim examines five forces that affect the ability of all firms to operate profitably within a given industry
threats posed by new entrants power of suppliers power of buyers product subs the intensity of rivalry among competitors
WHat are some entry barriers
economies of scale product differentiation capital requiremnts switiching costs access to distribution channels cost disadvantages independent of scale governement policy
what is economies of scale
with economies of scale the cost of the cost of producing each unit declines as the quantity of a product produced during a given period increases
When prodcut differentiation is high does that mean the new entrants are more or less likley?
fewer less likely
Switiching costs
•Switching costs are the one-time costs customers incur when they buy from a different supplier. •If switching costs are high, a new entrant must attract buyers by offering either: •A substantially lower price •A much better product
What happens with frequent-flyer airline programs and frequent-guest hotel programs?
Frequent flyer program increaee switching costs
cost disadvantages independent of scale
proprietary product technology favorable access to raw materials desirable locations government subsidies
how likely firms will enter an industry is a function of two factors
1. barriers to entry 2. the retaliation expected from current industry participants
A supplier group is powerful when
it poses a credible threat to integrate forward into the buyers industry
Customers (buyer groups) are powerful when:
they could switch to another product at little, if any, cost the buyers pose a credible threat if they were to integrate backward into the sellers industry
What are sub products
goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces
what is the function of a substitute
is to place a ceiling on the prices that firms can charge
Factors that increase the intensity of rivalries among firms include:
slow industry growth lack of differentiation or low switching costs high exit barriers
examples of high exit barriers
specialized assets – assets with values linked to a particular business -> intensifies rivalry fixed costs of exit – such as restrictive labor agreements government concern regarding job loss employee loyalty
an unattractive industry has
low entry barriers suppliers and buyers with strong bargaining positions strong comp threats from product sub intense rivalry among comp
attractive industry has
high entry barriers suppliers and buyers with little bargaining power few comp threats from product subs relativley moderate rivalry
unattractive industry
has low profit potential
attractive industry
has high profit potential
what is a strategic group
a set of firms emphasizing simiar strategic dimensions and using a simialr strategy
the more intense the rivalry…
the greater is the threat to each firms profitability
The strength of the Five Forces differs across strategic groups. The closer the strategic groups are in terms of strategies, the greater is the likelihood of rivalry Competitive rivalry is greater within a strategic group than between strategic groups
what does a competitor analysis focus on
each company against which a firm competes against
#18 A #22 C #24 B #9 D
cookies example of what
scanning
trade agreements = global
Sociocultural is society it’s us it drives the other 6 of the competitor
Difference between rivals and substitute
rivals in the same industry, subsitutues are in different industrys
Airlines are increasing your switching costs so the customer has to stay with them
Buyers are powerful when backwards integrating
supplier powerful with forward integrating
Under what circumstances should a company’s management team give serious consideration to bidding aggressively to win contracts to supply private-label footwear to chain retailers in a particular geographic region?
when the company has excess production capacity in one or more geographic regions that would otherwise be idle(becasue the number of pairs of branded footwear that company management is planning to produce is below full production
Which one of the following is NOT a way to effectively differentiate a company’s branded footwear offering from the brands of rivals?
Achieve a lower reject rate on pairs produced than most all other rivals
which one of the following actions is most likely to result in higher production costs per branded pair at one of your company’s plants?
Increasing the number of branded models/styles produced from 150 to 500
Assume a company has 10 million shares of stock outstanding and that its income statement for Year 12 is as follows; based on the above income statement data, the company’s operating profit margin and EPS are
15.6% and $2.80
Given the following year 12 balance sheet data for a footwear company: Based on the above figures and the formula for calculating the debt-assets ratio, the company’s
0.436
Assume a company’s income statement for year 12 is as follows: Based on the above income statement data(assume interest income is zero), the company’s interest coverage ratio is
5.00
The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to a company’s distribution warehouse in Latin America is to
Build a plant in Latin America and then expand it as may be needed so that the company has sufficient capacity to supply all(or at least most) of the pairs the company intends to try to sell in Latin America
Which one of the following results from the latest decision round are least important in providing guidance to company managers in making their strategic moves and decisions to improve their company’s competitiveness and rank among the top-performing companies in the upcoming decision round?
The dividend data, the credit rating data, the income statement data, and the balance sheet data for each company that are part of the Financial Performance Summary on p.5 of the FIR”
Based on the industry-average and industry-high values for the benchmarked data in each issue of the FIR,which one of the following is the strongest and most valid signal that one or more elements of the company’s costs are too high relative to those of rival companies?
The comapny’s labor costs per pair produced are close to the highest in the industry in those regions where it has production plants
Which of the following helps boost the S/Q rating of the branded pairs produced at a particular plant?
Increasing expenditure for best practices training for workers. Correct option.
Which of the following statements about the striving to reduce labor costs per pair produced at each of the company’s plants is true?
All companies regardless of the strategy being employed should pursue actions to manage employee compensation and labor productivity in a manner that results in labor costs per pair produced that are equal to or very close to the industry-low in each region where the company has plants
According to the cost allocation procedures discussed on the help screens for the private label sales report and the marketing and admin report should a company win contracts to supply chain retailers with private-label shoes at a particular plant, which one of the following is NOT included as part of a company’s production costs for private-label footwear?
Production run set-up costs Expenditures for best practices training Plant supervision costs Plant depreciation
According to information that you can confirm from the help screen for the plant operations report(see the plant investment section) if a company adds new plant capacity at a cost $45 million,then its annual depreciation costs will rise by
2250000
Pursuing a strategy of social responsibility and corporate citizenship
Helps increase a company’s imagine rating, provided the company spends a meaningful amount on socially responsible activities and such spending is sustained over a multi year period
If a management team wishes to boost the company’s stock price then it should consider
pursuing actions to increase earnings per share each year raising the company’s divident each year(ideally by at least $0.05 per share), and repurchasing shares of common stock
The plant and production cost benchmarking data reported in each issue of the footwear industry report
always merit close examination because they enable company managers to check whether certain aspects of production costs at company plants are competitive with the costs of rival companies and whether actions should be taken in the upcoming decisions round to reduce one or more production cost components that are excessively high
The industry-low, industry-average and industry-high cost Benmarks that appear on p. 6 of each issue of the Footwear Industry Report
Are worth careful scrutiny by the managers of all companies becasue when the benchmarking data signals that a company’s costs for one or more of the benchmarks are out of line, managers are well advised to take corrective action in the next decision.
In supplying private-label footwear to chain retailers, the sized of a company’s margins over direct costs(as reported on p 6 of each issue of the FIR should be viewed as
How many dollars the company had available from each pair of private label footwear sold that could be used to help pay the company’s administrative expenses and interest costs and to contribute to the company’s pre-tax profit
If a company wants to enhance the profitability of differentiating its branded product offering from rivals by offering buyers 500 models/styles to choose from, then it should consider reducing the $14 million annual costs for production run setup costs associated with producing 500 models….
Instituting plant upgrade option B at one or more of its plats(but most especially the company’s smallest plants where the associated capital costs are quickly paid for by the savings on production run setup costs
Assume a company’s Income Statement for Year 12 is as follow Based on the above data which of the following statement is false?
Marketing cost are 10.9
Eliminate tariffs on LA
Build a plant in LA and expand as needed
Striving for low labor costs
Labor costs per pairs produced to the industry low for employee compensation and pairs produced
Industry low, average, and high cost benchmarks
Are worth scrutiny because they tell what degree benchmarks cost for the benchmark cost categories and are competitive with rival companies
NOT a good indication your companies costs are too high
operating profits in all four regions are below industry high values
Most essential results
Market Snapshot-prices, SQ rating, models available etc etc
NOT for private label footwear
Proportion of marketing expenses where private label are sold
When branding footwear from brands of rivals DONOT
Achieve a lower reject rate per pairs of shoes than almost all other rivals
If co adds new plant capacity of 30 Mill then annual depreciation cost will rise by
5 % or 1,500,000
Benchmarking cost data
provide evidence to the degree of which various costs at plants are competitive to rival companies
Social responsibility and Corporate Leadership
Positive impact on image rating and social responsibility
Boost stock price?
Increase earnings per share each yr, raise companys dividend each yr, and repurchase shares of common stock
Improve SQ rating of branded shoes
Increase: Styling features, TQM/6 Sigma, Superior materials, best practices training, *not increase number styles/models produced*
In instituting sizes of companys margins over direct costs
how many sold in each pair of shoes that could be 1-allocated to paying administration expenses or interest costs 2-boost pretax profits
Under what circumstance should a company give serious consideration to provide private label to chain retailers
excess production capacity that would be idle
Lower production costs per pair
Increasing spending for enhanced styling and features
In the private-label operating benchmarks section on p. 7 of each issue of the FIR, the industry-low, industry-average, and industry-high benchmarks for the margins over direct costs (as explained in the Help section for this same page) should be interpreted as representing
how much per private label pair sold in each region was available to (1) help cover any of a seller’s branded expenses in the region not covered by branded revenues and (2) increase the seller’s operating profits in the region
In managing production worker compensation and expenditures for best practice training, the overriding objective of company managers should be to
achieve labor costs per pair produced that are at worst below the industry average and the best are very close to (or even equal to) the industry-low in each region where the company has production facilities
Based on the industry-low, industry average, and industry-high values that appear on p. 7 of each issue of the FIR, which of the following would correctly indicate that one or more elements of your company’s costs are too high compared to those of rival companies?
Your company’s operating profit per branded pair sold in the wholesale segment in the North America region is below the average
Which of the following are effective ways to try to boost a company’s stock price?
Strive to increase earning per share each year by amounts that meet or beat investor expectations, raise the company’s dividend each year (by at least $0.10 and preferably $0.25 or more for the increase to have much impact on the stock price), and repurchase shares of common stock
The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to a company’s distribution warehouse in Europe-Africa is to
build a production facility in Europe-Africa and then expand it as may be needed so that the company has sufficient capacity to supply all (at least most) of the branded and private-label pairs the company intends to try to sell in that geographic region
Assume a company’s Income Statement for Year 12 is as follows Based on the above income statement data and the formula for calculating the interest coverage ration described in the Help section for p. 5 of the Footwear Industry Report, the company’s interest coverage ration is
Operating Profit (Loss)/ Interest Income (Expense)
Which of the following is NOT a way to grow a company’s sales volume in the internet segment in the Europe-Africa region?
Refrain from bidding to supply chain retailers in Europe-Africa with private-label footwear because such sales tarnish a company’s image and brand reputation in the minds of a majority of athletic footwear buyers in this region
Which of the following results from the latest decision round is MOST HELPFUL in the guiding the efforts of company managers to improve their company’s costs and profitability in the upcoming decision round?
The benchmarking data on pp. 6 and 7 of the FIR
Under what circumstances should a company’s management team give serious consideration to making price offers to supply private-label footwear to chain retailers in one or more regions?
When company managers conclude that the company has more than enough production capacity to produce the needed pairs of branded footwear and, based on their projections, determine that the comapny’s profitability can be enhanced by making price offers to chain retailers and winning contracts to supply them with private-label footwear
If a company wants to enhance the profitability of differentiation its branded product offering from rivals by offering buyers 500 models/styles to choose from in all four regions, then it should consider reducing the $15 million annual costs for production run set up costs associated with producing 500 models/styles at each of its production facilities bu
instituting production improvement option B at each of its production facilities
Which one of the following actions is GUARANTEED to result in lower labor costs per pair produced at one fo your company’s production facilities?
Increasing total employee compensation by 4% and realizing a 6% increase in production worker productivity
Which of the following helps improve the S/Q rating of branded pairs produces at a particular production location?
Increasing expenditures for TQM/Six Sigma programs
The production cost benchmarks reported on p. 6 of each issue of the Footwear Industry Report
Always merit close examination because they enable company managers to check whether certain aspects of the production operations at their company’s production facilities are competitive (or in line) with the production outcomes at other production facilities in the same region (and other regions as well)
The industry-low, industry-average, and industry-high cost benchmarks on p. 6 of each issue of the Footwear Industry Report
are worth careful scrutiny by the managers of all companies because they help managers determine the degree to which their company’s costs for the benchmarked cost categories are competitive with those rival companies
Given the following Year 12 balance sheet data for a footwear company: Based on the above figures and the definition of the debt-assets ration presented in the Help section for p. 5 of the Footwear Industry Report, the company’s debt-assets ratio (rounded to 2 decimal places) is
Total Liabilities/ Total Assets
Pursuing a strategy of social responsibility and corporate citizenship
has a positive impact on a company’s image rating, provided company spending on socially responsible activities is a meaningful amount and is sustained over a multi-year period
Assume a company’s Income Statement for Year 12 is as follows: Based on the above income statement data and assuming the company has 20 million shares of common stock outstanding, the company’s operating profit margin and EPS were
Operating Profit (Loss)/ Net revenues Net Income/ Shares Outstanding
If a company spends $80 million to build a facility space sufficient to hold 5 million pairs of footwear-making equipment at a site in Latin America, then the company’s annual depreciation costs for this facility space will be
$80,000,000 * 2.5 = $2,000,000
If a company spends $80 million to build facility space sufficient to hold 5 million pairs of footwear-making equipment at a site in Latin America, then the company’s annual depreciation costs for this facility space will be
$8,000,000
Which one of the following actions will definitely not result in lower production costs per branded pair at one of your company’s production facilities?
A 5% increase in the annual base wage that is accompanied by a 7% increase in worker productivity
The industry-low, industry-average, and industry-high cost benchmarks that appear on p. 6 and p. 7 of each issue of the Footwear Industry Report
are important enough to always merit attention by your company’s managers; this is because when the benchmarks for one or more measures reveal that your company(s) outcomes were too far out-of-line and almost certainly impaired/weakened your company’s overall performance, then your management team is well-advised to consider taking corrective action in the next decision round.
Pursuing a strategy of social responsibility and corporate citizenship
helps increase a company’s image rating, provided the company spends a meaningful amount on socially responsible activities and such spending is sustained over a multi-year period.
If a management team wishes to boost the company’s stock price, then it should consider actions to
repurchase shares of common stock, increase earnings per share annually by amounts that meet or beat investor expectations, and raise the company’s dividend payments to shareholders (by at least $0.10 and preferably $0.25 or more for the increase to have much impact on the stock price).???
Based on the industry-low, industry-average, and industry-high values that appear on p. 7 of each issue of the FIR, which one of the following would correctly indicate that one or more elements of your company’s costs are too high compared to those of rival companies?
Your company’s operating profit in the Wholesale segment of the North America region is only 5% above the industry low???
Which one of the following is not a way to attract bigger numbers of online shoppers in the Latin America region to purchase a company’s brand of athletic footwear?
Offer a higher mail-in rebate than most all other rivals competing in the Internet segment in the Latin America region???
In the private-label operating benchmarks section on p. 7 of each issue of the FIR, the industry-low, industry-average, and industry-high benchmarks for the margins over direct costs (as explained in the Help section for this same page) should be interpreted as representing
how much sellers of private-label footwear received over and above the costs per pair sold; these margins, if positive, serve to improve a seller’s operating profit in the designated region.
Which on of the following is not a way to improve the S/Q rating of branded pairs produced at a particular production facility?
Increasing expenditures for fringe benefit packages for production workers
The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to a company’s distribution warehouse in Europe-Africa is to
?
It is reasonable for a company’s management team to abandon efforts to win contracts to supply private-label footwear to chain retailers in a given year when
?
Which one of the following results from the latest decision round are least important in providing guidance to company managers in deciding how to improve their company’s overall performance and competitiveness versus rival companies in the upcoming decision round?
?
If a company wants to enhance the probability of differentiating its branded product offering from rivals by offering buyers 500 models/styles to choose from in all four regions, then it should consider reducing the $15 million annual costs for production run setup costs associated with producing 500 models/styles at each of it production facilities by
?
If a company is pursuing a strategy to differentiate its branded footwear from the offerings of rival companies, its managers should make a point of examining the facility and production cost benchmarking statistics reported on p. 6 of each issue of the FIR in order to
?
1. The two biggest factors that distinguish one competitive strategy from another boil down to
Whether a company’s market target is broad or narrow and whether the company is pursuing a competitive advantage linked to low costs or differentiation
2. Which of the following is not one of the five generic competitive strategy options?
A superior customer service strategy The 5 generic ones are: best-cost provider, focused differentiation, low-cost provider, broad differentiation
3. A low-cost provider’s basis for competitive advantage is
Lower overall costs than rivals—but not necessarily the absolutely lowest possible cost because a product offering that is too frills-free can undermine its attractiveness to buyers despite being cheaper priced
4. The two major avenues for achieving a cost advantage over rivals include
Revamping the firm’s value chain to eliminate or bypass some cost-producing activities and/or performing value chain activities more cost-effective than rivals
5. Which of the following is NOT one of the keys to being a successful low-cost provider?
Being greedy and trying to charge too high a price
6. The essence of a broad differentiation strategy is to
Offer unique product attributes that a wide range of buyers find appealing and worth paying for
7. Which one of the following is not among the options or possibilities for managing value chain activities in ways that create desirable differentiating attributes, thereby enhancing the value delivered to customers and better differentiating the company’s product/service offering from rivals’ offerings?
Striving to ensure a corporate diversity policy is introduced with effective controls Eliminate product features that might have market appeal, but excessively increase production costs Shifting to the use of technologies and/or information systems that bypass the need to perform certain value chain activities
8. Broad differentiation strategies tend to work best in market circumstances where
There are many ways to differentiate the product or service that have value to buyers
9. What sets focused (or market niche) strategies apart from low-cost leadership and broad differentiation strategies is
their concentrated attention on a narrow piece of the overall market.
10. A company achieves best-cost provider status by
Using its resources and capabilities to incorporate attractive upscale attributes at a lower cost than those rivals with comparable upscale product offerings
11. The target market of a best-cost provider is
Value-conscious buyers
12. A company’s menu of strategic choices to supplement its decision to employ one of the five generic competitive strategies does NOT include
whether to employ a preemptive strike type of green ocean strategy.
13. A blue ocean type of offensive strategy
Involves abandoning efforts to beat out competitors in existing markets and, instead, inventing a new industry or distinctive market segment that renders existing competitors largely irrelevant and allows a company to create and capture altogether new demand
14. The purposes of defensive strategies include
Lower the risk of being attacked by rivals, weaken the impact of any attack that occurs and influence challengers to aim their offensive efforts at other rivals
15. One very important advantage of a product-information-only website strategy is
Avoiding channel conflict
16. The big risk of employing an outsourcing strategy is
Hollowing out a firm’s own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm’s competitiveness and market success
17. The two best reasons for investing company resources in vertical integration (either forward or backward) are to
Strength the company’s competitive position and/or boost its profitability
18. The strategic impetus for forward vertical integration is to
Gain better access to end users and better market visibility
19. A strategic alliance
Is a collaborative arrangement where two or more companies join forces to achieve mutually beneficial outcomes
20. Experience indicates that strategic alliances
are usually a company’s best approach to building a distinctive competence.
21. The difference between a merger and an acquisition is
a merger is the combining of two or more companies into a single corporate entity, whereas an acquisition involves one company (the acquirer) purchasing and absorbing the operations of another company (the acquired).
22. Mergers and acquisitions are often driven by such strategic objectives as to
Gain quick access to new technologies or other resources and competitive capabilities, to expand a company geographic coverage, to create a more cost-efficient operation out of the combined companies, to extend a company’s business into new product categories
23. First-mover advantages are unlikely to be present in which one of the following instances?
When rapid market evolution (due to fast-paced changes in technology or buyer preferences) presents opportunities to leapfrog a first mover’s products with more attractive next-version products
24. Which of the following is not a typical reason why companies opt to sell their products/services in some or many countries?
To strengthen the capability to employ more effective offensive and defensive strategies
25. Which of the following is not a reason why crafting a strategy to compete in one or more countries or regions of the world is inherently more complex?
Because similarities in buyer tastes and preferences facilitate standardization of products and services
26. Which of the following statements falsely characterizes the strategic relevance of cross-country differences in buyer tastes, market sizes, demographics, and growth potential?
27. Multicountry competition exists when
competition in one national market is not closely connected to competition in another national market. There is no global or world market, just a collection of self-contained country markets.
28. The distinguishing characteristics of global competition are a market situation where
competitive conditions across national markets are linked strongly enough to form a true international or world market and where leading competitors compete head to head in many different countries
29. Which of the following is not one of the primary strategy options for establishing a competitive presence in the markets of foreign countries?
Employing a multiple, cross-country strategy that involves strategic alliances, joint ventures, and other cooperative agreements with foreign companies
30. The advantages of using a licensing strategy to participate in foreign markets include
Having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to extend only the resources to recruit, train, support, and monitor foreign franchisees
31. Which one of the following is not a relevant consideration or alternative approach in deciding what company strategy to employ when competing in foreign markets?
The three competitive approaches are Multicounty “Think Local, Act Local” approach, Global “Think Global, Act Global” approach, and the Hybrid “Think Global, Act Local” approach
32. Which of the following is the most unlikely element of a localized or multicountry strategy?
selling direct to buyers to avoid having to establish networks of wholesale/retail dealers in each country market
33. To use location to build competitive advantage, a company that operates multinationally or globally must
consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.
34. The classic or most pervasive reason for locating an activity in a particular country is
To achieve low costs in performing that activity
35. Profit sanctuaries
are markets (or geographic regions) where a firm earns substantial profits because of its strong or protected market position
36. A nation becomes a company’s profit sanctuary when
the company earns a substantial portion of its total profits from sales in that nation due either to its strong or protected competitive position
37. The task of crafting a diversified company’s overall or corporate strategy does not involve which one of the following tasks?
Choosing the appropriate value chain for each business the company has entered
38. In which one of the following instances does a single-business company NOT become a prime candidate for diversifying into other businesses?
When a company has more resource deficiencies than resource strengths in its principal business
39. The three tests for judging whether a particular move to diversify into a new business can produce added long-term economic value for shareholders are
the attractiveness test, the cost-of-entry test, and the better-off test
40. The essential requirement for different businesses to be “related” is that
They possess competitively valuable cross-business value-chain match-ups
41. Different businesses are said to be “unrelated” when
They have dissimilar value chains containing no competitively useful cross-business relationship or strategic fits
42. A big advantage of related diversification is that
offers ways for a firm to realize 1 + 1 = 3 benefits because the value chains of the different businesses present competitively valuable cross-business relationships. The opportunity to convert cross business strategic fits into a competitive advantage over business rivals where operations do not offer comparable strategic-fit benefits
43. Economies of scope
are cost reductions that flow from operating in multiple related businesses. Being able to eliminate or reduce costs by combining related value-chain activities of different businesses into a single operation
44. Which of the following is NOT one of the appeals of diversifying into unrelated businesses?
it is quicker and easier to build a competitive advantage over undiversified or less-diversified companies. Superior top management ability to cope with the wide variety of problems encountered in managing a broadly diversified group of businesses
45. A diversified company is said to have a parenting advantage when
it is more able than other companies to boost the combined performance of its individual businesses through high-level guidance, general oversight, and other corporate-level contributions.
46. The two biggest drawbacks or negatives of unrelated diversification are
No potential for competitive advantage beyond any benefits of corporate parenting and what each individual business can generage on its own
47. In judging the attractiveness of the industries a multi-business company has diversified into, it is important to
A) consider whether each industry the company has diversified into represents a good business for the company to be in. B) calculate industry attractiveness scores for each industry into which the company has diversified. C) consider the appeal of the whole group of industries in which the company has invested. D) consider to what extent the industries a company has invested in hold promise for attractive growth and profitability
48. A business unit’s relative market share is
the ratio of its market share to the market share held by the largest rival firm in the industry, market share measured in unit volume not dollars.
49. The value of determining the relative competitive strength of each business a company has diversified into is
To have a quantitative basis for rating them from strongest to weakest in contending for market leadership in their respective industries
50. The strategic options to improve a diversified company’s overall performance do not include which of the following categories of actions?
Increasing dividend payments to shareholders and/or repurchasing shares of the company’s stock
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