Exam 2 Multiple Choice Flashcards
What is the narrow view of corporate governance?
The relationship between capital providers and top management to maximize shareholder wealth
What is the broader view of corporate governance?
consideres various constituencies focusing on stakeholder wealth
How has the role of CEO Changed to improve governance
grater separation between roles of CEO and board chair for better board atonomy
What is the role of a corporate board in governance?
To guide strategy, oversee management, and maintain a balanced structure with insider and outsider members.
Duty of Care in governance is what?
Acting prudently in decision-making
Duty of Loyalty in governance is what?
Prioritizing organization’s interest
Duty of Obedience in governance is what?
Upholding orgs mission
Why is CEO-board power alignment important
It ensures that the CEO’s decisions align with shareholder interests and corporate strategy.
How does effective corporate governance impact strategic management?
It allows CEOs to implement strategies aligned with corporate resources and organizational strengths, fostering competitive advantage.
What is the main goal of restructuring and divestment
A) Enhance customer loyalty
B) Refocus on core activities
C) Expand employee benefits
D) Reduce market competition
B) Refocus on core activities
What is the main goal of restructuring and divestment
A) Enhance customer loyalty
B) Refocus on core activities
C) Expand employee benefits
D) Reduce market competition
B) Refocus on core activities
Vertical integration involves expanding operations to control which of the following?
A) Supply chain or distribution stages
B) Marketing and branding activities
C) Employee training programs
D) Customer service operations
A) Supply chain or distribution stages
Economies of scope are achieved by:
A) Investing heavily in technology
B) Sharing resources across units
C) Increasing market competition
D) Reducing employee turnover
B) Sharing resources across units
What is corporate strategy primarily concerned with?’
A) Maximizing shareholder returns
B) Creating value through multi-market coordination
C) Increasing brand visibility
D) Optimizing tax benefits
B) Creating value through multi-market coordination
Which of the following is a limitation of the BCG Growth-Share Matrix?
A) Assumes markets change unpredictably
B) Emphasizes execution over planning
C) Assumes slow, predictable market changes
D) Focuses on quality rather than profitability
C) Assumes slow, predictable market changes
In Collis & Montgomery’s framework, what role do “Resources” play?
A) They provide a unique competitive advantage.
B) They represent the company’s value statement.
C) They determine industry barriers.
D) They solely impact financial growth.
A) They provide a unique competitive advantage.
What is the main purpose of the Vision element in Collis & Montgomery’s Corporate Triangle Framework?
A) To set short-term goals for the organization
B) To motivate employees by providing a sense of purpose
C) To allocate resources efficiently
D) To define the competitive strategies of each business unit
B) To motivate employees by providing a sense of purpose
What are the control mechanisms
Outcome and behavior control
Outcome control
Focus on results, suitable for stable industries.
What is behavior control
Focus on actions, suitable for fast-paced industries
What is retrenchment
reduction of costs or spending due to economic difficulty
What are fill in the blanks
strategies that are designed to exist in current market with existing core competencies
What are white spaces
the strategy of use existing core competencies to explore new markets
What is permier plus 10
the competencies do we need to protect our place in market
What are mega opportunites
What will it be like in 30 years
Why do companies diversify
- company wants more revenue
- market expansion
- risk management
- optimizing resources
- competitive advantage
- adaptation to market
What is business unit strategy
Targets competitive advantage within individual units.
Give an example of corporate strategy v.s. business unit strategy
general electric, managing multiple businesses but setting distinct strategies for each
What are the 3 tests for diversification success?
Attractiveness test, Cost-of-entry test, better-off test
What is the attractiveness test
The industry must be inherently attractive or have the potential to become so.
Cost of entry test
Entry costs must not consume future profits.
Better off tests
The new unit must benefit from being part of the corporation, or vice versa.
EX: Philip Morris’s acquisition of Seven-Up failed the Better-Off Test as it couldn’t add value in an already competitive industry.
What are the 4 corporate strategy concepts?
Portfolio management
restructuring
transferring skills
sharing activites
What is portfolio management
Buying sound companies and managing them with autonomy
ITT used this approach, though it ultimately led to inefficiencies and divestments.
EX: ITT used this approach, though it ultimately led to inefficiencies and divestments.
What is restructuring
Acquiring underperforming companies and transforming them for profitability.
EX: Hanson Trust restructured Ever Ready Batteries by focusing on cost-cutting.
Transferring skills
Leveraging expertise from one unit to improve another.
Example: 3M transferring expertise in adhesives across different product lines.
What is sharing activites
Using shared resources like R&D or logistics for cost-saving.
Example: Procter & Gamble uses a unified sales force for different product categories.
