Corporate Strategy

Question 1

The purchase of a company that is completely absorbed by the acquiring corporation.

Answer 1

Acquisition

Question 2

Assuming a function previously provided by a supplier.

Answer 2

Backward integration

Question 3

A retrenchment strategy that forfeits management of the firm to the courts in return for some settlement of the corporation’s obligations.

Answer 3

Bankruptcy

Question 4

A simple way to portray a corporation’s portfolio of products or divisions in terms of growth and cash flow.

Answer 4

BCG (Boston Consulting Group) Growth Share Matrix

Question 5

A type of international entry option for a company. After building a facility, the company operates the facility for a fixed period of time during which it earns back its investment, plus a profit.

Answer 5

BOT (build-operate-transfer) concept

Question 6

Dedicating a firm’s productive capacity as primary supplier to another company in exchange for a long term contract.

Answer 6

Captive company strategy

Question 7

A product that brings in far more money than is needed to maintain its market share.

Answer 7

Cash cow

Question 8

A corporate growth strategy that concentrates a corporation’s resources on competing in one industry.

Answer 8

Concentration

Question 9

A diversification growth strategy in which a firm uses its current strengths to diversify into related products in another industry.

Answer 9

Concentric diversification

Question 10

A diversification growth strategy that involves a move into another industry to provide products unrelated to its current products.

Answer 10

Conglomerate diversification

Question 11

A corporate strategy that evaluates the corporation’s business units in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units.

Answer 11

Corporate parenting

Question 12

A strategy that states a company’s overall direction in terms of its general attitude toward growth and the management of its various business and product lines.

Answer 12

Corporate strategy

Question 13

A corporate growth strategy that expands product lines by moving into another industry.

Answer 13

Diversification

Question 14

A plan that is composed of three general orientations: growth, stability, and retrenchment.

Answer 14

Directional strategy

Question 15

have low market share and do not have the potential (because they are in an unattractive industry) to bring in much cash.

Answer 15

Dogs

Question 16

(sometimes called “problem children” or “wildcats”) are new products with the potential for success, but they need a lot of cash for development.

Answer 16

Question marks

Question 17

are market leaders that are typically at the peak of their product life cycle and are able to generate enough cash to maintain their high share of the market and usually contribute to the company’s profits.

Answer 17

Stars

Question 18

Shipping goods produced in a company’s home country to other countries for marketing.

Answer 18

Exporting

Question 19

Assuming a function previously provided by a distributor.

Answer 19

Forward integration

Question 20

An international entry strategy in which a firm grants rights to another company/individual to open a retail store using the franchiser’s name and operating system.

Answer 20

Franchising

Question 21

A portfolio analysis matrix developed by General Electric, with the assistance of the McKinseMcKinseyy & Company consulting firm.

Answer 21

GE Business Screen

Question 22

a firm internally makes 100% of its key supplies and completely controls its distributors.

Answer 22

full integration

Question 23

An international entry option to build a company’s manufacturing plant and distribution system in an other country.

Answer 23

Green-field development

Question 24

A directional strategy that expands a company’s current activities.

Answer 24

Growth strategies

Question 25

A corporate growth concentration strategy that involves expanding the firm’s products into other geographic locations and/or increasing the range of products and services offered to current markets.

Answer 25

Horizontal growth

Question 25

The degree to which a firm operates in multiple geographic locations at the same point in an industry’s value chain.

Answer 25

Horizontal integration

Question 26

A corporate parenting strategy that cuts across business unit boundaries to build synergy across business units and to improve the competitive position of one or more business units.

Answer 26

Horizontal strategy

Question 27

An independent business entity created by two or more companies in a strategic alliance.

Answer 27

Joint venture

Question 28

the licensing firm grants rights to another firm in the host country to produce and/or sell a product.

Answer 28

licensing

Question 29

The termination of a firm in which all its assets are sold.

Answer 29

Liquidation

Question 30

Agreements between two separate firms to provide agreed-upon goods and services to each other for a specified period of time.

Answer 30

Long-term contract

Question 31

Agreements through which a corporation uses some of its personnel to assist a firm in another country for a specified fee and period of time.

Answer 31

Management contract

Question 32

A transaction in which two or more corporations exchange stock, but from which only one corporation survives.

Answer 32

Merger

Question 33

A rivalry in which a large multi business corporation competes against other large multibusiness firms in a number of markets.

Answer 33

Multipoint competition

Question 34

A decision to do nothing new; to continue current operations and policies for the foreseeable future.

Answer 34

No-change strategy

Question 35

The manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units

Answer 35

Parenting strategy

Question 36

a timeout—an opportunity to rest before continuing a growth or retrenchment strategy.

Answer 36

Pause/proceed-with-caution strategy

Question 37

An approach to corporate strategy in which top management views its product lines and business units as a series of investments from which it expects a profitable return.

Answer 37

Portfolio analysis

Question 38

The process of combining the higher labor skills and technology available in developed countries with the lower-cost labor available in developing countries.

Answer 38

Production sharing

Question 39

A strategy that artificially supports profits by reducing investment and short-term discretionary expenditures.

Answer 39

Profit strategy

Question 40

a company does not make any of its key supplies but purchases most of its requirements from outside suppliers that are under its partial control

Answer 40

Quasi-integration

Question 41

Corporate strategies to reduce a company’s level of activities and to return it to profitability.

Answer 41

Retrenchment strategy

Question 42

A retrenchment option used when a company has a weak competitive position resulting in poor performance.

Answer 42

Sell-out strategy

Question 43

A type of vertical integration in which a firm internally produces less than half of its own requirements and buys the rest from outside suppliers.

Answer 43

Taper integration

Question 43

Corporate strategies to make no change to the company’s current direction or activities.

Answer 43

Stability strategy

Question 44

A concept that states that the whole is greater than the sum of its parts; that two units will achieve more together than they could separately.

Answer 44

Synergy

Question 45

A theory that proposes that vertical integration is more efficient than contracting for goods and services in the marketplace when the transaction costs of buying goods on the open market become too great.

Answer 45

Transaction cost economics

Question 46

A plan that emphasizes the improvement of operational efficiency when a corporation’s problems are pervasive but not yet critical.

Answer 46

Turnaround strategy

Question 47

Contracts for the construction of operating facilities in exchange for a fee.

Answer 47

Turnkey operation

Question 48

A corporate growth strategy in which a firm takes over a function previously provided by a supplier or distributor.

Answer 48

Vertical growth

Question 49

The degree to which a firm operates in multiple locations on an in dustry’s value chain from extracting raw materials to retailing.

Answer 49

Vertical integration

Question 50

The corporation has multiple business lines and it chooses to sell off a division with low growth potential

Answer 50

Divestment