TEMA 5

Question 1

What are the three levels of business strategy?

Answer 1

1. Corporate Strategy 2. Competitive Strategy 3. Functional Strategy

Question 2

What does corporate strategy determine?

Answer 2

Where will you compete? In which businesses/sectors/industries?

Question 3

What are the key objectives of corporate strategy?

Answer 3

Profitability and financial equilibrium, survival, and long-term growth

Question 4

What are growth vectors in corporate strategy?

Answer 4

1. Current businesses: concentration strategy 2. New geographical markets: internationalization 3. New businesses: diversification

Question 5

Fill in the blank: A concentration strategy focuses on a single ______.

Answer 5

[product, service, or market]

Question 6

What is a diversification strategy?

Answer 6

Expanding into new products, markets, and technologies to create shareholder value

Question 7

What are the forms of diversification?

Answer 7

1. Related diversification 2. Non-related diversification

Question 8

True or False: Related diversification allows sharing resources among different businesses.

Answer 8

True

Question 9

What is the primary benefit of unrelated diversification?

Answer 9

Dilution of corporate risk and stable profitability over time

Question 10

What are the advantages of vertical integration?

Answer 10

1. Securing raw material supply 2. Controlling critical assets 3. Access to new technologies

Question 11

What are the risks associated with vertical integration?

Answer 11

1. Cost increases 2. Loss of flexibility 3. Administrative complexities

Question 12

What is the role of corporate management in diversified companies?

Answer 12

Creating value through individual support, searching for synergies, central functions, and corporate development

Question 13

Fill in the blank: The strategy of unrelated diversification is appealing if sectors have high ______ and low entry barriers.

Answer 13

[growth potential]

Question 14

What is the significance of core competencies in related diversification?

Answer 14

They help achieve synergies by transferring capabilities between business units

Question 15

What are the two means to achieve diversification?

Answer 15

1. External development (M&A, strategic alliances) 2. Internal development (organic growth)

Question 16

What is a harvesting strategy?

Answer 16

A strategy focused on maximizing short-term cash flow from existing operations

Question 17

What is a disinvestment strategy?

Answer 17

A strategy focused on selling off business units or assets that are underperforming

Question 18

What is the goal of corporate development?

Answer 18

To develop new businesses or expand into new geographical markets

Question 19

Fill in the blank: The major strategic problem in corporate strategy is forgetting the company’s ______.

Answer 19

[core competencies]

Question 20

How do conglomerates achieve value through unrelated diversification?

Answer 20

By managing a portfolio of diverse businesses to balance profitability, growth, and liquidity

Question 21

What is the purpose of a growth strategy?

Answer 21

To support decisions that contribute to a business unit’s growth in activity level, market share, and competitive capacity.

Question 22

What does a harvesting strategy aim to achieve?

Answer 22

To consolidate the business unit at its current activity level while generating more resources than needed in the long term.

Question 23

What is a disinvestment strategy?

Answer 23

To apply fewer resources to a business unit considered to have reduced potential for growth or future income generation.

Question 24

What does a liquidation strategy involve?

Answer 24

Selling assets, paying off external debts, and applying surplus resources into other businesses within the organization.

Question 25

What are the two main means to achieve diversification?

Answer 25

* External or inorganic development: mergers and acquisitions (M&A), strategic alliances, and joint ventures * Internal or organic development: 'Greenfield'

Question 26

What is a key advantage of mergers and acquisitions (M&A)?

Answer 26

Enables quick development into new markets and rapid acquisition of new competencies.

Question 27

What is a disadvantage of mergers and acquisitions (M&A)?

Answer 27

Expensive investment related to company acquisition and difficulties in integrating resources.

Question 28

What are the advantages of strategic alliances and joint ventures?

Answer 28

* Easier entry into new markets * Reduces production, R&D, or distribution costs * Development of new technologies

Question 29

What are potential disadvantages of strategic alliances?

Answer 29

* Lack of shared organizational structure leading to demotivation * Potential misunderstandings regarding resource contributions

Question 30

What are the most frequent reasons for the failure of M&A transactions?

Answer 30

* Anticipated synergies not achieved * Cultural shock or lack of integration * Lack of analysis on profitability and attractiveness of target sectors

Question 31

What is 'Greenfield' development?

Answer 31

Expansion of core competencies by promoting internal self-development through new knowledge and capabilities.

Question 32

What are the characteristics of sectors suitable for internal development?

Answer 32

* Few entry or mobility barriers * Shared success factors with the current sector

Question 33

What are the characteristics of sectors suitable for external development?

Answer 33

* High entry or mobility barriers * Sectors that do not share success factors with the current one

Question 34

What are the growth vectors in corporate strategy?

Answer 34

* Current businesses: concentration strategy * New geographical markets: internationalization * New businesses: diversification

Question 35

Fill in the blank: Internal development is also known as _______.

Answer 35

organic growth

Question 36

Fill in the blank: External development includes corporate mergers, acquisitions, strategic alliances, and _______.

Answer 36

joint ventures

Question 37

True or False: A company with a divestment strategy invests more resources into its business units.

Answer 37

False

Question 38

What is corporate intrapreneurship?

Answer 38

The capacity for internal generation of business ideas.

Question 39

What is the primary goal of a liquidation strategy?

Answer 39

To handle business units that do not achieve positive results by selling assets and paying off debts.

Question 40

What is the significance of tactical considerations in growth strategies?

Answer 40

They influence the decision to pursue internal or external development based on time pressure and available target companies.

Question 41

What are the three levels of business strategy?

Answer 41

* Corporate Strategy * Competitive Strategy * Functional Strategy ## Footnote Corporate Strategy deals with decisions on where to compete, Competitive Strategy focuses on achieving a competitive position, and Functional Strategy involves the implementation of the competitive position.

Question 42

What types of decisions are made at the Corporate Strategy level?

Answer 42

Decisions regarding where to compete and the role of each Business Unit ## Footnote This includes determining competitive advantages in various sectors or industries.

Question 43

What is the focus of Competitive Strategy?

Answer 43

Achieving a solid competitive position in each Business Unit ## Footnote It involves strategies to outperform competitors.

Question 44

What does Functional Strategy involve?

Answer 44

Transmitting competitive positioning to each segment, including product positioning and marketing mix policies ## Footnote This is crucial for aligning the marketing efforts with the overall competitive strategy.

Question 45

Name the four basic models of corporate management.

Answer 45

* Portfolio management * Restructuring * Capabilities transfer * Participation in shared activities ## Footnote These models guide corporate management's approach to overseeing business units.

Question 46

What is the goal of portfolio management?

Answer 46

Identifying financial imbalances and managing investments and divestments ## Footnote It focuses on optimizing the corporate portfolio's overall performance.

Question 47

What are the strategic requirements for restructuring?

Answer 47

* Ability to identify companies with restructuring potential * Willingness to transform acquired Business Units * Similarities among Business Units * Willingness to sell Business Units post-restructuring ## Footnote These criteria help assess the feasibility of restructuring initiatives.

Question 48

What is the role of capabilities transfer in corporate management?

Answer 48

Enhancing learning capacity and transferring experience among Business Units ## Footnote This is vital for leveraging existing strengths across different sectors.

Question 49

Define the criteria for participation in shared activities.

Answer 49

* Ability to share activities for competitive advantage * Benefits of sharing exceed costs * Convincing organization of cooperation advantages ## Footnote Successful shared activities can lead to synergies across Business Units.

Question 50

What are the goals of portfolio analysis techniques?

Answer 50

* Assessing maturity, attractiveness, and growth potential of business units * Facilitating investment decisions * Diagnosing overall corporate profitability ## Footnote These techniques are essential for strategic planning in diversified companies.

Question 51

What is the Boston Consulting Group Matrix used for?

Answer 51

Analyzing a company’s portfolio based on market growth rates and relative market share ## Footnote It helps categorize business units into four types: Stars, Cash Cows, Question Marks, and Dogs.

Question 52

What are the four categories in the Boston Consulting Group Matrix?

Answer 52

* Stars * Cash Cows * Question Marks * Dogs ## Footnote Each category requires different strategic approaches regarding investment and management.

Question 53

What is a key recommendation for 'Stars' in the BCG Matrix?

Answer 53

Continue growing by consolidating market leadership ## Footnote This involves ongoing investments to maintain their competitive edge.

Question 54

What are the main advantages of the Arthur D. Little Matrix?

Answer 54

* More dynamic and multidimensional approach * Considers different variables beyond market share * Adapts to specific situations of business units ## Footnote It provides a nuanced view of competitive positioning.

Question 55

What is a key disadvantage of the Mckinsey Matrix?

Answer 55

Variables can be difficult to assess and measure ## Footnote This can lead to subjectivity in strategic evaluations.

Question 56

What factors should be considered when assessing the attractiveness of each business unit?

Answer 56

* Sector attractiveness factors * Key indicators relevant to the economic context ## Footnote Weighting and rating these factors helps determine the strategic priority of each unit.

Question 57

How should weights be assigned in the attractiveness assessment process?

Answer 57

Weights must add up to 100/10 and should not be too high ## Footnote This ensures a balanced evaluation of factors affecting business unit attractiveness.

Question 58

What is the significance of the general attractiveness rating?

Answer 58

Higher ratings indicate more relevance for business units ## Footnote It guides resource allocation and strategic focus.

Question 59

What is the weighted rating for Market size and expected growth?

Answer 59

1.2 ## Footnote Calculated by multiplying weight (0.15) by rating (8)

Question 60

What factor has the highest weight in the analysis?

Answer 60

Intensity of competition ## Footnote It has a weight of 0.25

Question 61

Fill in the blank: The total weights for the factors in the analysis sum up to _______.

Answer 61

1.00

Question 62

What is the weighted rating for Sector profitability?

Answer 62

1.35 ## Footnote Calculated by multiplying weight (0.15) by rating (9)

Question 63

True or False: Technological factors have a higher weighted rating than Seasonal influences.

Answer 63

True ## Footnote Technological factors: 0.75 vs. Seasonal influences: 0.1

Question 64

What are the main conclusions of the portfolio analysis techniques?

Answer 64

They enable diagnosing: * Degree of maturity * Attractiveness * Growth potential * Financial equilibrium * Overall corporate profitability ## Footnote These conclusions help in strategic decision-making for diversified companies

Question 65

What is the weighted rating for Emerging opportunities and threats?

Answer 65

0.5 ## Footnote Calculated by multiplying weight (0.10) by rating (5)

Question 66

Fill in the blank: Portfolio analysis techniques require further analysis to establish investment or divestment _______.

Answer 66

priorities

Question 67

What is a limitation of portfolio analysis techniques?

Answer 67

They require complementary analysis to establish investment or divestment priorities ## Footnote This includes considering strategic adjustments and synergy effects

Question 68

What factor has the lowest weight in the analysis?

Answer 68

Capital requirements ## Footnote It has a weight of 0.05

Question 69

What is the weighted rating for Social, political, regulatory, and environmental factors?

Answer 69

0.15 ## Footnote Calculated by multiplying weight (0.15) by rating (1)