Implementing Strategy In Companies That Compete Across Industries And Countries

Question 1

List the advantages of a multidivisional structure (4)

Answer 1

Improved corporate financial control
Improved strategic control
Profitable long term growth
Stronger pursuit of internal efficiency

Question 2

List the disadvantages of a multidivisional structure (4)

Answer 2

Establishing the divisional to corporate authority relationship
Restrictive financial controls lead to short -run focus
Competition for resources
Transfer pricing
Duplication of functional resources

Question 3

List the types of global expansion strategies (4)

Answer 3

Localisation strategy
International strategy
Global standardisation strategy
Transnational strategy

Question 4

Discuss internal new venturing

Answer 4

Transferring and leveraging of competencies to create value-chain activities necessary to compete effectively in a new industry

• Intrapreneurs act as internal entrepreneurs and are responsible for leading the new-venture projects or divisions
• New venture division is a separate and independent division established to give its managers the autonomy to develop a new product

Question 5

Discuss the joint venture

Answer 5

The process involving two companies combining their resources and competencies in order to create a:

• new product
• business model to aid in new product being introduced successfully

Implementation issues include:

• allocating authority and responsibility
• loss of new tech to the company’s partner or competitor who acquires the partner
• building a new culture to unite managers from different cultures

Question 6

Mergers and acquisitions

Answer 6

Managers of the acquiring and the acquired companies:

• create new lines of authority and responsibility aimed at making the best use of their joint competencies
• coordinate operations to reduce costs and leverage and share competencies
• realise that each company has its own set of norms, values and culture

Question 7

Explain the multidivisional structure

Answer 7

Allows a company to grow and diversify while at the same time reducing coordination and control problems

• Self contained division: independent business unit or division that possesses all the necessary value chain functions to pursue its business model successfully
• corporate headquarters staff: team of top executives and their staff that are responsible for:
• overseeing a company’s long-term multibusiness model
• providing guidance to increase value created by self contained divisions