4. diversification and performance Flashcards
1
Q
3 test for corpo strat
A
portfolio, BOT, ownership
2
Q
conglomerate discount
A
company as a whole worth less than individual BU
3
Q
too much diversification causes
A
info process constraint, internal politics, incentive problem, lack of responsiveness
4
Q
avoiding conglomerate discount
A
focus on related business
frequently evaluate and divest underperforming
improve transparency
avoid over diversified
5
Q
3 methods to identify core business
A
historical, quantitative, qualitative
6
Q
signals to change core business
A
shrinking profit, new rivals, unsustainable growth
7
Q
when does conglomerate discount happens?
A
- insufficient investment
- subsiding poor performer BU
- investor prefer firm that focus on core business
8
Q
why pace of business change accelerate?
A
- shorter product lifecycle
- global competition
- shorter strategy lifespan
