Chapter 7 - BUSN 450

Question 1

Diversification

Answer 1

involves increasing the range of products or markets served by an organisation.

Question 2

Related diversification

Answer 2

involves diversifying into products or services with relationships to the existing business.

Question 3

Conglomerate (unrelated) diversification

Answer 3

involves diversifying into products or services with no relationships to the existing businesses.

Question 4

Market penetration

Answer 4

strategy of increasing share of current markets with the current product range.

Question 5

Constraints of market penetration

Answer 5

1) Retaliation from competitors 2) legal constraints 3) economic constraints

Question 6

Consolidation

Answer 6

strategy by which an organisation focuses defensively on their current markets with current products.

Question 7

Retrenchment

Answer 7

strategy of withdrawal from marginal activities in order to concentrate on the most valuable segments and products within their existing business.

Question 8

Product development

Answer 8

refers to a strategy by which an organisation delivers modified or new products to existing markets.

Question 9

Market development

Answer 9

refers to a strategy by which an organisation offers existing products to new markets

Question 10

Synergy

Answer 10

refers to the benefits gained where activities or assets complement each other so that their combined effect is greater than the sum of the parts

Question 11

Vertical integration

Answer 11

describes entering activities where the organisation is its own supplier or customer

Question 12

Backward integration

Answer 12

refers to development into activities concerned with the inputs into the company’s current business.

Question 13

Forward integration

Answer 13

refers to development into activities concerned with the outputs of a company’s current business.

Question 14

Outsourcing

Answer 14

the process by which activities previously carried out internally are subcontracted to external suppliers.

Question 15

The portfolio manager

Answer 15

operates as an active investor in a way that shareholders in the stock market are either too dispersed or too inexpert to be able to do.

Question 16

The synergy manager

Answer 16

a corporate parent seeking to enhance value for business units by managing synergies across business units.

Question 17

The parental developer

Answer 17

seeks to employ its own central capabilities to add value to its businesses.

Question 18

BCG Matrix

Answer 18

Stars (H-MG,H-MS), Question Marks (H-MG,LMS), Cash Cows (L-MG,H-MS), Dogs (L-MG, L-MS)

Question 19

Heartland business units (parenting matrix

Answer 19

the parent understands these well and can add value. The core of future strategy.

Question 20

Ballast business units (parenting matrix)

Answer 20

the parent understands these well but can do little for them. They could be just as successful as independent companies.