ACHIEVING SYNERGY

Question 1

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 1

Synergy:

Question 2

According to Goold and Campbell, synergy can
take place in one of six forms:

Answer 2

Shared know-how:
Coordinated strategies:
Shared tangible resources:
Economies of scale or scope:
New business creation:
Structure follows strategy

Question 3

synergy:
Combined units often
benefit from sharing knowledge or skills.

Answer 3

Shared know-how

Question 4

synergy:
Aligning the business
strategies of two or more business units may
provide a corporation significant advantage by
reducing inter-unit competition and developing a
coordinated response to common competitors
(horizontal strategy).

Answer 4

Coordinated strategies:

Question 5

synergy:
Combined units can
sometimes save money by sharing resources,
such as a common manufacturing facility or
R&D lab.

Answer 5

Shared tangible resources:

Question 6

Coordinating the
flow of products or services of one unit with that
of another unit can reduce inventory, increase
capacity utilization, and improve market access.

Answer 6

Economies of scale or scope

Question 7

synergy:
Exchanging knowledge
and skills can facilitate new products or services
by extracting discrete activities from various
units and combining them in a new unit or by
establishing joint ventures among internal
business units.

Answer 7

New business creation

Question 8

synergy:
The process
through which changes in corporate strategy
normally lead to changes in organizational
structure.

Answer 8

Structure follows strategy

Question 9

An organizational
structure in which employees tend to be
functional specialists organized according to
product/market distinctions.

Answer 9

Divisional structure:

Question 10

A pattern of
structural development that corporations follow
as they grow and expand.

Answer 10

Stages of corporate development:

Question 11

Stages of corporate development Stages

Answer 11

STAGE 1: Simple structure:
STAGE 2: Functional structure:
STAGE 3: Divisional structure:
STAGE 4: Beyond SBUs:

Question 12

A structure for
new entrepreneurial firms in which the
employees tend to be generalists and
jacks-of-all-trades.

Answer 12

STAGE 1: Simple structure:

Question 13

A time when an
entrepreneur is personally unable to manage a
growing company.

Answer 13

Crisis of leadership:

Question 14

An
organizational structure in which employees
tend to be specialists in the business functions
important to that industry, such as
manufacturing, sales, or finance.

Answer 14

STAGE 2: Functional structure:

Question 15

A time when people
managing diversified product lines need more
decision-making freedom than top management
is willing to delegate to them.

Answer 15

Crisis of autonomy:

Question 16

An
organizational structure in which employees
tend to be functional specialists organized
according to product/market distinctions.

Answer 16

STAGE 3: Divisional structure:

Question 17

A time when business units
act to optimize their own sales and profits
without regard to the overall corporation. See
also suboptimization.

Answer 17

Crisis of control

Question 18

A phenomenon in which a
unit optimizes its goal accomplishment to the
detriment of the organization as a whole

Answer 18

Suboptimization

Question 19

A crisis that occurs when a
corporation has grown too large and complex to
be managed through formal programs.

Answer 19

Red tape crisis

Question 20

A situation that exists
when employees in collaborative organizations
eventually grow emotionally and physically
exhausted from the intensity of teamwork and
the heavy pressure for innovative solutions.

Answer 20

Pressure-cooker crisis:

Question 21

This is good at the
beginning but soon becomes a liability as
“favoritism.”

Answer 21

Loyalty to comrades:

Question 22

Focusing on the job is critical at
first but then becomes excessive attention to
detail.

Answer 22

Task-oriented:

Question 23

A grand vision is needed to
introduce a new product but can become tunnel
vision as the company grows into more markets
and products.

Answer 23

Single-mindedness:

Question 24

: This is good for a
brilliant scientist but disastrous for a CEO with
multiple constituencies.

Answer 24

Working in isolation

Question 25

How organizations
grow, develop, and eventually decline.

Answer 25

Organizational life cycle:

Question 26

It is the organizational equivalent of the product
life cycle in marketing. These stages are

Answer 26

Birth (Stage I),
Growth (Stage II),
Maturity (Stage III),
Decline (Stage IV), and
Death (Stage V).

Question 27

A core competency of
a firm that over time matures and becomes a
weakness.

Answer 27

Core rigidity/deficiency.

Question 28

A process in which unit costs are reduced by making large numbers of the same product.

Answer 28

Economies of scale

Question 29

A process in which unit costs are reduced when the value chains of two separate products or services share activities, such as the same marketing channels or manufacturing facilities.

Answer 29

Economies of scope

Question 30

Combined units can
combine their purchasing to gain bargaining
power over common suppliers to reduce costs
and improve quality

Answer 30

Pooled negotiating power: