Strategic Management & Business Policy, 14e (Wheelen) Chapter 7 Strategy Formulation: Corporate Strategy
1) Corporate strategy deals primarily with the choice of direction for the firm as a whole and the management of its business or product portfolio. Answer: TRUE 2) Corporate parenting is the coordination of cash flow among units. Answer: FALSE 3) The most most widely widely pursue pursued d corpor corporate ate direct direction ional al strate strategie giess are those those design designed ed to achiev achievee growth. Answer: TRUE ) A merger is a transaction involving two or more corporations in which stoc! is e"changed# but from which only one corporation survives. Answer: TRUE $) The two basic growth strategies are concentration and strategic alliances. Answer: FALSE %) &ertical &ertical integration is going bac!ward ba c!ward on an industry's value chain. Answer: FALSE () &ertical &ertical integration is the degree d egree to which a firm operates vertically in multiple locations on an industry's value chain from e"tracting raw materials to manufacturing to retailing. Answer: TRUE ) *orward integration is often more profitable than bac!ward integration. Answer: FALSE +) ,- Amoco Amoco and oyal /utch /utch 0hell 0hell are e"amples e"amples of fully fully integr integrate ated d firms firms because because they internally ma!e 1 of their !ey supplies supp lies and completely control their distributors. Answer: TRUE 1) ith taper integration# a firm internally ma!es 1 of its !ey supplies and completely control its distributors. Answer: FALSE
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11) An e"ample of forward 8uasi9integration would be a large pharmaceutical firm that ac8uires part interest in a drugstore chain in order to guarantee that its drugs have access to the distribution channel. Answer: TRUE 12) A long9term contract is considered vertical integration. Answer: FALSE 13) ori;ontal growth can be achieved by e"panding the firm's products into other geographic locations and
reenfield development. Answer: FALSE 1() Turn!ey operations are typically contracts for the construction of operating facilities in e"change for a fee. Answer: TRUE 1) ?anagement contracts are common when a host government e"propriates part or all of a foreign9owned company's holdings in its country. Answer: TRUE 1+) 0ynergy is the concept that two businesses will generate more profits together than they could separately. Answer: TRUE 2) Concentric diversification is growth into unrelated businesses. Answer: FALSE 21) Conglomerate diversification is diversifying into an industry unrelated to its current one. Answer: TRUE
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22) 7n terms of diversification strategies# research suggests that the relationship between relatedness and performance is curvilinear in the shape of an inverted @9shaped curve. Answer: TRUE 23) The stability strategies are really a lac! of any strategy. Answer: FALSE 2) 0tability strategies can be very useful in the short run# but they can be dangerous if followed for too long. Answer: TRUE 2$) hen 0ony's C6# oward 0tringer# eliminated 1# =obs and closed 11 plants# he was addressing the consolidation phase of the turnaround strategy. Answer: FALSE 2%) According to the ,C> >rowth 0hare ?atri"# cash cows are mar!et leaders typically at the pea! of their product life cycle and are usually able to generate enough cash to maintain their high share of the mar!et. Answer: FALSE 2() According to the ,C> >rowth 0hare ?atri"# dogs should be either sold off or managed carefully for the small amounts of cash they can generate. Answer: TRUE 2) The >6 ,usiness 0creen is based on long9term industry attractiveness and business strength6 ,usiness 0creen# the competitive strength of a product is based only on its mar!et share. Answer: FALSE 3) ne disadvantage of portfolio analysis is that it provides an illusion of scientific rigor. Answer: TRUE 31) Corporate parenting views the corporation in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units. Answer: TRUE 32) 7n multipoint competition# large multi9business corporations compete against other large multi9business firms in a number of mar!ets. 3 Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
Answer: TRUE 33) hich strategy specifies the firm's overall direction in terms of its general orientation toward growth# the industries or mar!ets in which it competes# and the manner in which it coordinates activities and transfers resources among business unitsB A) orporate ,) functional C) divisional /) organi;ational 6) business 3) hich !ind of corporate strategy deals with the firm's overall orientation toward growthB A) portfolio strategy !) "iretional #trategy C) parenting strategy /) cooperative strategy 6) functional strategy 3$) hich !ind of corporate strategy deals with the manner in which the firm coordinates activities and transfers resources and cultivates capabilities among product lines and business unitsB A) portfolio strategy ,) directional strategy C) parenting #trategy /) cooperative strategy 6) functional strategy 3%) hich one of the following directional strategies is most fre8uently used in corporationsB A) stability !) gro$th C) consolidation /) retrenchment 6) e"pansion 3() hich e"ternal growth strategy involves two or more corporations =oining in a stoc! e"change and from which only one corporation survivesB A) merger# ,) strategic alliances C) diversification /) ac8uisitions 6) concentration Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
3) hich of the following strategies was being used when Allied Corporation and 0ignal Companies formed Allied 0ignalB A) merger# ,) strategic alliances C) diversification /) ac8uisitions 6) concentration 3+) hich e"ternal growth strategy was demonstrated when -rocter 5 >amble completely absorbed >illetteB A) mergers ,) strategic alliances C) diversification %) a&ui#ition# 6) concentration ) hich of the following is T a reason why the growth strategy is so seductiveB A) There are more opportunities for advancement and promotion. ,) A corporation that e"periences successful growth is thought of positively by the mar!etplace and potential investors. C) A large and growth9oriented corporation has more clout and influence. /) A growing firm can cover up mista!es and inefficiencies because of the increase in cash flow revenue. E) A large an" gro$ing 'irm attrat# more a&ui#ition o''er# 1) The most logical growth strategy for a corporation having a strong competitive position possessing a high mar!et share in a highly attractive industry is A) onentration ,) conglomerate integration. C) concentric diversification. /) stability. 6) retrenchment. 2) *ord ?otor Company's use of company resources to build its iver ouge -lant outside of /etroit so that iron ore could enter into one end of the plant and a finished automobile could e"it out of the other end is called A) ertial gro$th ,) tapered integration. C) hori;ontal integration. /) e"ternal vertical integration. 6) 8uasi9integration. $ Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
3) The purpose of vertical growth is to A) ta!e over a function previously supplied by a former employer. !) ta*e oer a 'untion preiou#ly proi"e" +y a #upplier or +y a "i#tri+utor C) ac8uire a company of similar ob=ective. /) sell a company encumbered with debt. 6) e"pand to countries with strong trade alliances. ) The purchase of Carroll's *oods for its hog9growing facilities by 0mithfield *oods# the world's largest por! processor# is an e"ample o f A) forward integration. ,) hori;ontal integration. C) +a*$ar" integration /) transferred integration. 6) mass integration. $) The ability for i!e to manufacture its own shoes and then build stores for distribution is an e"ample of A) 'or$ar" integration ,) hori;ontal integration. C) bac!ward integration. /) transferred integration. %) A disadvantage of vertical integration is that it A) reate# e,it +arrier# ,) improves coordination of activities. C) increases the cost of improvement of coordination and control. /) creates entry barriers. 6) avoids time consuming tas!s. () An attempt to e"plain that vertical integration is more efficient than contracting for goods and services in the mar!etplace when the transaction costs of buying goods on the open mar!et becomes too great has been proposed by A) population theory. ,) institution theory. C) tran#ation o#t eonomi# /) tric!le down economics. 6) transaction growth theory. ) 7n many cases# DDDDDDDD integration is more profitable than DDDDDDDD integration. A) forward# bac!ward ,) vertical# bac!ward % Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
C) bac!ward# vertical %) +a*$ar"- 'or$ar" +) hen a firm internally ma!es 1 of its !ey supplies and completely controls its distributors# this is !nown as A) 'ull integration ,) vertical integration. C) mass integration. /) economical integration. 6) strategic integration. $) hen ,ristol9?yers 08uibb purchased 1( of 7mClone's common stoc! to gain access to a new drug# it was using which type of integrationB A) full integration ,) long9term contracts C) bac!wards integration /) taper integration E) &ua#i integration $1) A firm's e"pansion into other geographic locations and
6) that two functional areas of a corporation can coordinate their wor! as a team. $) Adding a related or complementary product to a corporation's business units is called A) concentration. ,) hori;ontal growth. C) onentri "ier#i'iation /) vertical growth. 6) conglomerate diversification. $$) >rowth through diversification out of an industry into an unrelated industry is called A) concentration. ,) hori;ontal growth. C) concentric diversification. /) vertical growth. E) onglomerate "ier#i'iation $%) hich strategy might be the most li!ely when management reali;es that the current industry is unattractive and that the firm lac!s outstanding s!ills that it could easily transfer to related products or services in other industriesB A) concentration ,) hori;ontal growth C) concentric diversification /) vertical growth E) onglomerate "ier#i'iation $() ith conglomerate diversification# the focus is on A) product9mar!et synergy. !) 'inanial on#i"eration# C) employee satisfaction. /) similar product offerings. 6) mar!et demand. $) An ?C uses which international strategy for entering a foreign mar!et by simply shipping goods produced in the company's home country to other countries for mar!eting to minimi;e ris! and to e"periment with a specific productB A) licensing ,) =oint ventures C) production sharing %) e,porting 6) ac8uisitions
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$+) An ?C uses which international strategy for entering a foreign mar!et by associating itself with a firm in the host country or a government agency in that country to combine resources and e"pertise needed for the development of a new product or technologiesB A) licensing !) /oint enture# C) production sharing /) e"porting 6) ac8uisitions %) ne benefit of a @.0. company entering a =oint venture with an international firm is that it A) re"ue# the ri#*# o' e,propriation ,) enhances the policy of the host country's ta!eover of the firm. C) promotes s!epticism among other countries not involved in the merger. /) encourages competitors to wor! with the company. 6) increases revenues by 2. %1) An ?C uses which international strategy for entering a foreign mar!et by purchasing another company already operating in the area developing synergistic benefits gained from ac8uiring strong complementary product lines and a good distribution networ!B A) licensing ,) =oint ventures C) production sharing /) e"porting E) a&ui#ition# %2) 7n international dealings# green9field development is A) a way in which an ?C may contract with a foreign government or local firm to trade raw materials for certain resources belonging to the ?C. ,) a way in which an ?C can ta!e total control of operations by ac8uiring a firm already established in the host country. C) $hen a orporation hoo#e# to +uil" a 'aility 'rom #rath allo$ing it the 'ree"om to "e#ign the plant- hoo#e #upplier#- an" hire it# $or* 'ore /) when an ?C has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specified fee and period of time. 6) contracting for construction of operating facilities in e"change for a fee. %3) An ?C uses which international strategy for entering a foreign mar!et by combining the higher labor s!ills and technology available in the developed countries with the lower cost labor available in the developing countriesB A) licensing ,) =oint ventures + Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
C) pro"ution #haring /) e"porting 6) ac8uisitions
%) 7n international dealings# turn!ey operations are A) a way in which an ?C may contract with a foreign government or local firm to trade raw materials for certain resources belonging to the ?C. ,) a way in which an ?C can ta!e total control of operations by either starting a business from scratch or ac8uiring a firm already established in the host country. C) when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant# choose suppliers# and hire a wor! force. /) when an ?C has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specified fee and period of time. E) ontrating 'or on#trution o' operating 'ailitie# in e,hange 'or a 'ee %$) ?anagement contracts are used in international dealings A) as a way in which an ?C may contract with a foreign government or local firm to trade raw materials for certain resources belonging to the ?C. ,) as a way in which an ?C can ta!e total control of operations by either starting a business from scratch or ac8uiring a firm already established in the host country. C) when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant# choose suppliers# and hire a wor! force. %) $hen an 0C ha# a large amount o' management talent aaila+le an" hoo#e# to u#e it# per#onnel to a##i#t a 'irm in a ho#t ountry 'or a #pei'ie" 'ee an" perio" o' time 6) when an ?C typically contracts for construction of op erating facilities in e"change for a fee. %%) esearch comparing concentric with conglomerate diversification concludes that A) conglomerate diversification is always less profitable than concentric diversification. ,) concentric diversification is always less profitable than conglomerate diversification. C) the relation#hip +et$een relate"ne## an" per'ormane i# urilinear /) neither concentric nor conglomerate diversification are ever profitable. 6) for optimum effectiveness both conglomerate and concentric diversification should be utili;ed in tandem. %() The controversy surrounding e"ternal versus internal growth finds A) e"ternal growth appears to be superior financially to internal growth. !) internal gro$th appear# to +e #uperior 'inanially to e,ternal gro$th . C) there appears to be no financial advantage to either. /) ac8uisitions have a lower survival rate than new internally generated business ventures. 6) strategic alliances are superior to both.
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%) The stability strategy is appropriate for all of the following circumstances 6EC6-T A) useful in the short9run but can be dangerous if followed too long. ,) most appropriate for reasonably successful corporations in a reasonably predictable environment. C) appropriate when the industry is facing modest o r no9growth potential. %) appropriate $hen the in"u#try i# in "eline 6) popular with small business owners who have found a niche and are happy with their success. %+) hich strategy is most appropriate as a temporary strategy to enable a corporation to consolidate its resources after prolonged rapid growth in an industry now facing an uncertain futureB A) hori;ontal integration strategy ,) no change strategy C) retrenchment strategy %) pau#e2proee" $ith aution #trategy 6) profit strategy () hich strategy is most appropriate for a company in an industry in which the future is e"pected to continue as an e"tension of the presentB A) hori;ontal integration strategy !) no hange #trategy C) retrenchment strategy /) pause
(3) hich one of the following is T a characteristic of a firm that has chosen a captive company strategyB A) ro+a+ly mo#t appropriate 'or a ompany $ith a #trong ompetitie po#ition in a gro$ing in"u#try ,) The firm reduces its functional activities to reduce costs. C) The firm gains a certainty of sales and production in return for becoming heavily dependent upon another firm for at least ($ of its sales. /) ne of its customers ma!es up a large percentage of the company's sales and wants the company to !eep operating as its supplier. 6) ?anagement desperately see!s an FangelF to guarantee the company's continued e"istence. () 7n which strategy does management hope that another company will have the necessary resources and determination to return the company to profitabilityB A) #ell out ,) captive company C) li8uidation /) ban!ruptcy 6) all of the above ($) hich strategy involves giving up management of the firm to the courts in return for some settlement of the corporation's obligationsB A) li8uidation !) +an*rupty C) diversification /) divestment 6) consolidation (%) hich strategy did Circuit City use in 2 when it converted its retail stores to cashB A) li&ui"ation ,) ban!ruptcy C) diversification /) divestment 6) consolidation (() ne of the most popular aids to developing corporate strategy in multi9business corporations that views business units in terms of the cash they generate is called A) -7?0. ,) segmentation analysis C) port'olio analy#i# /) industry analysis. 6) diversification study. 12 Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
() 7n the ,oston Consulting >roup's >rowth90hare ?atri"# the relative competitive position of a product# division# or corporation is defined as A) its mar!et share. ,) its gross sales divided by its mar!et share. C) its mar!et share multiplied by that of its nearest competitor. /) its mar!et share divided by that of the smallest other competitor. E) it# mar*et #hare "ii"e" +y that o' the large#t other ompetitor (+) The growth9share matri" of the ,oston Consulting >roup suggests that the e"cess cash being generated by Fcash cowsF should be used to fund A) Fdogs.F !) 5&ue#tion mar*#5 C) Fstars.F /) Fwhite !nights.F 6) Ffish.F ) According to the ,C> >rowth90hare ?atri"# mar!et leaders that typically are at the pea! of their product life cycle and are usually able to generate enough cash to maintain their high share of the mar!et are called A) cash cows. ,) lost leaders. C) dogs. /) 8uestion mar!s. E) #tar# 1) -roducts that typically bring in far more money than is needed for maintenance of their mar!et share are called A) a#h o$# ,) lost leaders. C) dogs. /) 8uestion mar!s. 6) stars. 2) According to the ,C> >rowth 0hare ?atri"# those products with low mar!et share that do T have the potential to bring in much cash are called A) cash cows. ,) lost leaders. C) "og# /) 8uestion mar!s. 6) stars.
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3) According to the ,C> >rowth90hare ?atri"# the !ey to success is A) effective management. ,) competitive positioning. C) innovative initiative. /) industry leadership. E) mar*et #hare ) hich of the following is T one of the limitations of the ,C> >rowth 0hare ?atri"B A) 7t is too simplistic. ,) The lin! between mar!et share and profitability is 8uestionable. C) >rowth rate is only one aspect of industry attractiveness. %) There are too many a#pet# o' oerall ompetitie po#ition inlu"e" 6) 0mall competitors with fast9growing mar!et share are ignored. $) hich of the following is T defined by >6 as one of the variables forming industry attractivenessB A) mar*et #hare ,) mar!et si;e C) mar!et growth rate /) pricing practices 6) industry profitability %) The >6 ,usiness 0creen has been critici;ed because A) it is based on the product life cycle. ,) the categories are too few. C) it an get &uite ompliate" an" um+er#ome /) it is a primitive version of the ,C> >rowth 0hare ?atri". 6) it is only appropriate for new products or 0,@s in developing industries. () hich of the following is T one of the advantages of portfolio analysisB A) The graphic depiction facilitates communication. !) 6t proi"e# the +a#i# 'or impartial o+/etiity 'rom $hih to ma*e "ei#ion# C) 7t encourages top management to evaluate each of the corporation's businesses individually. /) 7t raises the issue of cash flow availability for use in e"pansion and growth. 6) 7t stimulates the use of e"ternally oriented data to supp lement management's =udgment. ) hich of the following is T one of the limitations of portfolio analysisB A) 7t contains value9laden terminology that can lead to self9fulfilling prophecies. ,) 7t is not easy to define product
opportunities. 6) 7t provides an illusion of scientific rigor. +) Corporate parenting generates corporate strategy by focusing on A) the ore ompetenie# o' the parent orporation an" on the alue reate" 'rom the relation#hip +et$een the parent an" it# unit# ,) the cash flow among its business units. C) whether a business unit should be growing# stabili;ing# or retrenching. /) ac8uiring distinctive competencies in the mar!etplace. 6) differentiating its activities into separate units and integrating these activities through comple" integrating mechanisms. +) According to the te"t# ($ of a company's mar!et value is derived from its A) employees. !) intangi+le a##et# C) plant assets. /) =oint ventures. 6) licensing agreements. +1) According to Campbell# >oold# and Ale"ander in their parenting9fit matri" when parent companies create more value than any of their rivals would if they owned the same businesses# they have A) multi9point competition. !) parenting a"antage C) corporate parenting. /) portfolio analysis. 6) no real advantage. +2) A corporate strategy that cuts across divisional boundaries to build synergy across business units to improve the competitive position of one or more business units is called A) vertical strategy. !) hori.ontal #trategy C) hierarchical strategy. /) portfolio strategy. 6) pyramid strategy. +3) hen - 5 ># Gimberly9Clar!# and 0cott -aper compete with each other in varying combinations of consumer paper products# they are said to be engaging in A) oligopolistic competition. ,) strategic competition. C) multipoint ompetition 1$ Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
/) laisse;9faire competition. 6) hori;ontal competition. +) hat are the three !ey issues that corporate strategy deals withB Corporate #trategy "eal# $ith three *ey i##ue#: 1 the 'irm3# oerall orientation to$ar" gro$th- #ta+ility- an" retrenhment ("iretional #trategy) the in"u#trie# or mar*et# in $hih the 'irm ompete# through it# pro"ut# an" +u#ine## unit# (port'olio #trategy) 8 the manner in $hih management oor"inate# atiitie# an" tran#'er# re#oure# an" ultiate# apa+ilitie# among pro"ut line# an" +u#ine## unit# (parenting #trategy)
+$) /iscuss the three general orientations comprising directional strategyB The three general orientation# ompri#ing "iretional #trategy are gro$th- #ta+ility an" retrenhment 9ro$th #trategie# e,pan" the ompany3# atiitie# Sta+ility #trategie# ma*e no hange to the ompany3# urrent atiitie# Retrenhment #trategie# re"ue the ompany3# leel o' atiitie#
+%) hy is growth a very attractive strategyB 9ro$th i# a ery attratie #trategy 'or t$o *ey rea#on# Fir#t- gro$th +a#e" on inrea#ing mar*et "eman" may ma#* 'la$# in a ompany Seon"- a gro$ing 'irm o''er# more opportunitie# 'or a"anement- promotion- an" intere#ting /o+# 9ro$th it#el' i# e,iting an" egoenhaning 'or CE;#
+() /iscuss the two basic growth strategies. The t$o +a#i gro$th #trategie# are onentration on the urrent pro"ut line in one in"u#try an" "ier#i'iation into other pro"ut line# in other in"u#trie# 6' a ompany3# pro"ut line# hae real gro$th potential- onentration o' re#oure# on tho#e pro"ut line# ma*e# #en#e a# a #trategy 'or gro$th Companie# +egin thin*ing a+out "ier#i'iation $hen their gro$th ha# plateaue" an" opportunitie# 'or gro$th in the original +u#ine## hae +een "eplete"
+) hat are the more popular options for international entryB There are #eeral popular option# 'or international entry E,porting i# a goo" $ay to minimi.e ri#* an" e,periment $ith a #pei'i pro"ut E,porting inole# #hipping goo"# pro"ue" in the ompany3# home ountry to other ountrie# 'or mar*eting Un"er a 1% Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
lien#ing agreement- the lien#ing 'irm grant# right# to another 'irm in the ho#t ountry to pro"ue an"2or #ell a pro"ut The lien#ee pay# ompen#ation to the lien#ing 'irm in return 'or tehnial e,perti#e Un"er a 'ranhi#ing agreement- the 'ranhi#er grant# right# to another ompany to open a retail #tore u#ing the 'ranhi#er3# name an" operating #y#tem 6n e,hange- the 'ranhi#ee pay# the 'ranhi#er a perentage o' it# #ale# a# a royalty Forming a /oint enture +et$een a 'oreign orporation an" a "ome#ti ompany i# the mo#t popular #trategy u#e" to enter a ne$ ountry Companie# o'ten 'orm /oint enture# to om+ine the re#oure# an" e,perti#e nee"e" to "eelop ne$ pro"ut# or tehnologie# A relatiely &ui* $ay to moe into an international area i# through a&ui#ition# purha#ing another ompany alrea"y operating in that area 6' a ompany "oe#n3t $ant to purha#e another ompany3# pro+lem# along $ith it# a##et#- it may hoo#e green'iel" "eelopment +uil"ing it# o$n manu'aturing plant an" "i#tri+ution #y#tem ro"ution #haring i# the proe## o' om+ining the higher la+or #*ill# an" tehnology aaila+le in the "eelope" ountrie# $ith the lo$ero#t la+or aaila+le in "eeloping ountrie# Turn*ey operation# are typially ontrat# 'or the on#trution o' operating 'ailitie# in e,hange 'or a 'ee The !;T (!uil"- ;perate- Tran#'er) onept i# a ariation o' the turn*ey operation 6n#tea" o' turning the 'aility oer to the ho#t ountry $hen omplete"- the ompany operate# the 'aility 'or a 'i,e" perio" o' time "uring $hih it earn# +a* it# ine#tment- plu# a pro'it 0anagement ontrat# o''er a mean# through $hih a orporation may u#e #ome o' it# per#onnel to a##i#t a 'irm in a ho#t ountry 'or a #pei'ie" 'ee an" perio" o' time
++) /iscuss the more popular stability strategies. The more popular #ta+ility #trategie# inlu"e the pau#eproee" $ith aution- no hangean" pro'it #trategie# A pau#e proee" $ith aution #trategy i#- in e''et- a timeout an opportunity to re#t +e'ore ontinuing a gro$th or retrenhment #trategy A no hange #trategy i# a "ei#ion to "o nothing ne$ a hoie to ontinue urrent operation# an" poliie# 'or the 'ore#eea+le 'uture A pro'it #trategy i# a "ei#ion to "o nothing ne$ in a $or#ening #ituation +ut in#tea" to at a# though the ompany3# pro+lem# are only temporary
1) /efine a retrenchment strategy. /iscuss the more popular options. A retrenhment #trategy may +e u#e" $hen a ompany ha# a $ea* ompetitie po#ition in #ome or all o' it# pro"ut line# re#ulting in poor per'ormane #ale# are "o$n an" pro'it# are +eoming lo##e# The more popular option# are turnaroun"- +eoming a aptie ompany- #elling out- +an*rupty- an" li&ui"ation Turnaroun" #trategy empha#i.e# the improement o' operational e''iieny an" i# pro+a+ly mo#t appropriate $hen a orporation3# pro+lem# are pera#ie- +ut not yet ritial The t$o +a#i pha#e# o' a turnaroun" #trategy are ontration an" on#oli"ation A aptie ompany #trategy i# the 1( Copyright 4 21$ 5 21% -earson 6ducation# 7nc.
giing up o' in"epen"ene in e,hange 'or #eurity 6' a orporation $ith a $ea* ompetitie po#ition in thi# in"u#try i# una+le either to pull it#el' up +y it# +oot#trap# or to 'in" a u#tomer to $hih it an +eome a aptie ompany- it may hae no hoie +ut to #ell out !an*rupty inole# giing up management o' the 'irm to the ourt# in return 'or #ome #ettlement o' the orporation3# o+ligation# Li&ui"ation i# the termination o' the 'irm
11) hat is portfolio analysisB 6n port'olio analy#i#- top management ie$# it# pro"ut line# an" +u#ine## unit# a# a #erie# o' ine#tment# 'rom $hih it e,pet# a pro'ita+le return The pro"ut line#2+u#ine## unit# 'rom a port'olio o' ine#tment# that top management mu#t on#tantly /uggle to en#ure the +e#t return o' the orporation3# ine#te" money
12) /escribe the four categories of the ,C> >rowth 0hare ?atri". The 'our ategorie# o' the !C9 9ro$th Share 0atri, are &ue#tion mar*#- #tar#- a#h o$#an" "og#
13) /efine corporate parenting. Corporate parenting ie$# the orporation in term# o' re#oure# an" apa+ilitie# that an +e u#e" to +uil" +u#ine## unit alue a# $ell a# generate #ynergie# aro## +u#ine## unit# Corporate parenting generate# orporate #trategy +y 'ou#ing on the ore ompetenie# o' the parent orporation an" on the alue reate" 'rom the relation#hip +et$een the parent an" it# +u#ine##e#
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