Corporate Strategies

Question 1

What is the difference between corporate and business strategies

Answer 1

Business Strategy is HOW the firm competes

Corporate Strategy is WHERE the firm competes

Question 2

What are the three scope dimensions?

Answer 2

Geographical, Vertical and Product

Question 3

What is vertical Integration?

Answer 3

A firms ownership of adjacent vertical activities (e.g. Ikea purchasing a forest in Romania to control wood prices)

Question 4

What is Comparative Advantage?

Answer 4

A country is said to have a comparative advantage when they make intensive use of resources that are abundant within that country. EXAMPLE: Philippines relatively more efficient in the production of footwear, apparel and assembled electronic products than in the production of chemical and automobiles. Whereas, the US is relatively more efficient in the production of semiconductors and pharmaceuticals than shoes or shirts.

Question 5

What is Porters Diamond Framework?

Answer 5

Shows why industries in a nation are competitive:

1. factor conditions: ‘home grown’ resources/capabilities, more important than natural endowments.
2. demand conditions: discerning domestic customers drive quality and innovation.
3. relating and supporting industries: key role of ‘industry clusters’
4. strategy, structure and rivalry: e.g. domestic rivalry drives upgrading.