Midterm 1

Question 1

downscoping

Answer 1

identifying and eliminating under-performing business units

Question 2

hostile takeover

Answer 2

takes control of another company without the approval or consent of the target company’s board of directors

Question 3

reason why mergers fail

Answer 3

increase of shares, not a lot of thought put into it, no control, no stakeholder involvement

Question 4

resources vs capabilities

Answer 4

resources can be acquired, capabilities are developed and use resources

Question 5

above average return

Answer 5

good investment

Question 6

vertical integration

Answer 6

when a firm becomes its own supplier or distributor

Question 7

horizontal integration

Answer 7

increasing production at the same level

Question 8

G7

Answer 8

canada, france, germany, italy, japan, uk, us; high-profile venue for discussing and coordinating solutions to major global issues

Question 9

Brics

Answer 9

Brazil, russia, india, china, south africa

Question 10

conglomerate

Answer 10

a company that owns multiple different businesses in different industries

Question 11

economies of scope

Answer 11

savings from capitalizing on core competencies and sharing activities

Question 12

economies of scale

Answer 12

spreading the costs of production over the
number of units produced

Question 13

switching costs

Answer 13

costs when buyer/supplier switches to another buyer/supplier

Question 14

threat of new entrants

Answer 14

possibility that the profits will be destroyed by new competitors

Question 15

bargaining power of buyers

Answer 15

threat that buyers may force down prices, bargain for better quality or more services, and play competitors against each other

Question 16

bargaining power of suppliers

Answer 16

threat that suppliers may raise prices or reduce quality

Question 17

threat of substitutes

Answer 17

companies that produce goods/services with little substitutes have higher power to raise prices

Question 18

industry rivalry

Answer 18

threat that customers will go to the competition

Question 19

industry analysis

Answer 19

helps company evaluate the profit potential and also to consider various ways to strengthen its position
in regards to the five forces.

Question 20

value chain analysis primary activities

Answer 20

inbound logistics, operations, outbound logistics, marketing/sales, service

Question 21

support activities

Answer 21

procurement, technology development, HR management, general admission

Question 22

diversification

Answer 22

the process of firms expanding their operations by entering new businesses.

Question 23

related diversification

Answer 23

benefits derived from sharing resources

Question 24

unrelated diversification

Answer 24

benefits from value that is created from the corporate office

Question 25

opposite of outsourcing

Answer 25

integrating

Question 26

triple bottom line

Answer 26

an assessment of environmental, social, and financial performance

Question 26

strategic groups

Answer 26

help identify mobility barriers, marginal competitive position, the firms’ strategies, industry trends

Question 27

when to outsource

Answer 27

if the activity is not a core competency of the business