ch.8 - selecting corporate-level strategies

Question 1

strategies that involve trying to successfully compete only within a single industry.

3 strategies: market penetration, market devlopment, product development

Answer 1

Concentration strategies

Question 2

trying to gain addittional share of a company’s existing markets using existing products.

other will rely on advertising to attract customers with existing markets.

Answer 2

Market Penetration

Question 3

taking existing proudcts and trying to sell them within new markets.

one way to reach a new market is to enter a new retail channel or geographic areas.

Answer 3

Market development

Question 4

creating new products to serve existing markets.

Answer 4

Product development

Question 5

refers to companies trying to expand their presence in an industry by acquiring or merging with one of their rivals.

Attractive because
- aimed at lowering costs by achieving greater economies of scale
- provide access to new distribution channels.

Answer 5

Horizontal integration

Question 6

Acquiring: company purchases another company.
Merger: joining of two companies into one.

*financial results ofter are very disappointing

Answer 6

Acquisition and Merger

Question 7

strategy where a company gets invloved in new portions of the value chain.

* there is a backward and forward vertical integration

Answer 7

Vertical Integration

Question 8

strategy that involves a company moving back along the value chain and entering a supplier’s business.

Answer 8

Backward vertical integration

Question 9

strategy that involves a company moving further down the value chain entering a buyer’s business.

Answer 9

Forward vertical integration

Question 10

companies use this strategy to enter entirely new industries.

Needs to pass these three tests:
* How attractive is the industry that a company is considering entering?
* How much will it cost to enter the industry?
* Will the new unit and the company be better off?

Answer 10

Diversification strategies

Question 11

occurs when a company moves into a new industry that has important similarities with the company’s existing industry or industries.

core competency= use to become more successful

Answer 11

Related Diversification

Question 12

occurs when a company enters an industry that lacks any important similarities with the company’s exisiting industry or industries.

Answer 12

Unrelated diversification

Question 13

strategy that shrink one or more of their business unites, often through laying off employees.

Answer 13

Retrenchment

Question 14

Selling off part of a company’s operations.

Answer 14

Divestment

Question 15

creating a new company whose stock is owned by investors.

Answer 15

Spin-off

Question 16

Investors stuggle to understand the complexity of diversified companies and result in relatively poor performance by the stocks of such companies.

Answer 16

Diversification discount

Question 17

Shutting down portions of a company’s operations, often at a tremendous financial loss.

Answer 17

Liquidation

Question 18

Process that helps executives:
- assess their companies’ prospects for success within each of its industries.
- offers suggestions about what to do within each industry.
- provides ideas for how to allocate resources across the industries.

Boston Consulting Group (BCG) matrix: best-known approach

Answer 18

Portfolio Planning

Question 19

requires a company’s business to be categorized as high or low along two dimensions: its share of the market and the growth rate of its industry.

Answer 19

Boston Consulting Group (BCG) matrix

Question 20

High market share units within slow-growing industries

Answer 20

Cash Cows

Question 21

Low market share units within slow-growing industries.

• good candidates for divestment.

Answer 21

Dogs

Question 22

High market share unites within fast-growing industries.

• have bright prospects and are good candidates for growth.

Answer 22

Stars

Question 23

Low market share units within fast-growing industries.

• executives must decide whether to build these units into stars or divest them.

Answer 23

Question Marks