Chapter 6: Corporate-level Strategy

Question 1

Corporate-level Strategy

Answer 1

Strategies firms use to diversify their operations from a single business competing in a single market into several product markets/businesses. A strategy that specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.

Question 2

Economies of Scope

Answer 2

Cost savings a firm creates by successfully sharing resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses.

Question 3

Corporate-level Core Competencies

Answer 3

Complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience and expertise.

Question 4

Market Power

Answer 4

When a firm is able to sell its products above the existing competitive level or to reduce the costs of its primary and support activities below the competitive level, or both.

Question 5

Multipoint Competition

Answer 5

When two or more diversified firms simultaneously compete in the same product areas or geographical markets.

Question 6

Vertical Integration

Answer 6

When a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration).

Question 7

Financial Ecomonies

Answer 7

Cost saving realized through improved allocations of financial resources based on investments inside or outside the firm.

Question 8

Synergy

Answer 8

When the value created by business units working together exceeds the value that those same units create working independently.