Question 1

Explain why,if businesses are interlinked,the coordination costs are a concern.

Accepted Answer

If businesses are closely interlinked (e.g.related products to the same customers) coordination costs can be high.Even where the businesses are quite independent,the corporation may insist on common accounting and reporting measures,and common financial and personnel policies,which may not be optimal for individual business units,so that extra costs are incurred.Thus,the combined operations of the businesses,together with the activities of the corporate head office,must create extra value to offset these extra coordination costs in order to continue to attract the same customers.

Question 2

According to Aw and Eng,diversification in Asia compared to Europe leads to different performance.

Accepted Answer

A) True 
 B)False  False

Question 3

Increasing market share for current products in current markets is:

Accepted Answer

A)  related diversification
B)  horizontal integration
C)  product development
D)  market penetration D

Question 4

The first golden rule of corporate strategy suggests that the corporate centre's value creation should be equal to the coordination costs.

Accepted Answer

A) True 
 B)False

Question 5

Hubbard,Rice and Galvin's four questions of corporate strategy do NOT include:

Accepted Answer

A)  How much growth is desired and how profitable do we want to be?
B)  How are the businesses separated from each other in order to achieve performance?
C)  What position does the corporation want to achieve?
D)  What is the corporate vision of the corporation?

Question 6

Possible parenting capabilities of the new business could include:

Accepted Answer

A)  defining the business
B)  sharing common capabilities
C)  making minor changes in areas where the business has little managerial experience
D)  re-establishing bureaucracy

Question 7

The ways for the corporate centre to add value do NOT include:

Accepted Answer

A)  value created by financial restructuring/engineering
B)  increased value of new business options
C)  increased motivation of employees from indirect ownership
D)  improvements to individual business units' performance

Question 8

The objective of corporate strategy,as with business strategy,is to add value.

Accepted Answer

A) True 
 B)False

Question 9

The five types of unrelated diversification that may create value are:

Accepted Answer

A)  stakeholder value,family conglomerates,synergistic,escape,capacity-based
B)  triple bottom line,family feud,opportunistic,escape,capability-based
C)  shareholder value,family conglomerates,opportunistic,escape,capability-based
D)  shareholder value,family confederations,synergistic,evasion,capacity-based

Question 10

Collis and Montgomery argued that five factors needed to be considered to explain the role of corporate head offices in maximising corporate synergies and minimising corporate costs.

Accepted Answer

A) True 
 B)False

Question 11

According to Hubbard et al. ,there is only one way in which capabilities can be transferred across the business portfolio.

Accepted Answer

A) True 
 B)False

Question 12

According to Miller:

Accepted Answer

A)  more related corporations perform better
B)  more diversified corporations perform better
C)  moderately related corporations perform better
D)  more related corporations perform poorly

Question 13

Studies show that organisations which are vertically integrated are less volatile in activity and profitability than non-vertically integrated organisations.

Accepted Answer

A) True 
 B)False

Question 14

The golden rule of corporate strategy can be expressed as:

Accepted Answer

A)  Value (A + 
B)  
B)  Value (A + 
B)  > Value (
A)  + Value (
B)  + Coordination Costs (A + 
B)  
C)  Value (A + 
B)  
D)  Value (A + 
B)  > Value (
A)  + Value (
B)  - Coordination Costs (A + 
B)

Question 15

Collis and Montgomery's five implementation factors do NOT include:

Accepted Answer

A)  nature of the capabilities to be reallocated
B)  scope of the businesses
C)  type of coordinating mechanisms
D)  control systems and head office size

Question 16

Market penetration strategy allows organisations to increase market share for present products in the same markets.

Accepted Answer

A) True 
 B)False

Question 17

According to Hubbard,Rice and Galvin,one of the reasons for a single business wanting to diversify is that:

Accepted Answer

A)  the macro environment becomes conducive to mounting a takeover
B)  the industry's competitive environment becomes attractive to consolidation
C)  the business has an exact capability match to the diversification opportunity
D)  the diversification allows managers to improve their compensation

Question 18

Advantages of the diversified corporation do NOT include the claim that:

Accepted Answer

A)  good diversified corporations have good control systems
B)  diversification spreads risk
C)  diversification trains general managers
D)  diversification encourages efficient capital accumulation

Question 19

What are the differences in the answers of corporations with closely related industries versus those with dispersed industries to the following fifth business strategy question: What position does the corporation want to achieve?

Accepted Answer

The answer of What are the differences in the answers...

Question 20

Capability-based diversification comprises three ways in which capability can be transferred:

Accepted Answer

A)  parent to new business,old business to new business,new business to old business
B)  parent to old business,old business to new business,new business to old business
C)  parent to new business,old business to old business,new business to new business
D)  all of the above

Exam 9: Corporatemulti-Business Strategy

Explain why,if businesses are interlinked,the coordination costs are a concern.

According to Aw and Eng,diversification in Asia compared to Europe leads to different performance.

Increasing market share for current products in current markets is:

The first golden rule of corporate strategy suggests that the corporate centre's value creation should be equal to the coordination costs.

Hubbard,Rice and Galvin's four questions of corporate strategy do NOT include:

Possible parenting capabilities of the new business could include:

The ways for the corporate centre to add value do NOT include:

The objective of corporate strategy,as with business strategy,is to add value.

The five types of unrelated diversification that may create value are:

Collis and Montgomery argued that five factors needed to be considered to explain the role of corporate head offices in maximising corporate synergies and minimising corporate costs.

According to Hubbard et al. ,there is only one way in which capabilities can be transferred across the business portfolio.

According to Miller:

Studies show that organisations which are vertically integrated are less volatile in activity and profitability than non-vertically integrated organisations.

The golden rule of corporate strategy can be expressed as:

Collis and Montgomery's five implementation factors do NOT include:

Market penetration strategy allows organisations to increase market share for present products in the same markets.

According to Hubbard,Rice and Galvin,one of the reasons for a single business wanting to diversify is that:

Advantages of the diversified corporation do NOT include the claim that:

What are the differences in the answers of corporations with closely related industries versus those with dispersed industries to the following fifth business strategy question: What position does the corporation want to achieve?

Capability-based diversification comprises three ways in which capability can be transferred: