ORGANIZATION Behaviour Chapter 10 Testbank

Chapter 09 - Multi-business Multi-business Strategy

Chapter 09 Multi-business Multi-business Strategy Multiple Choice Questions

1. (p. 241) The _______ approach was one of the early approaches for charting strategy and allocating resources in multi-business companies. t was particularly popular in the 19!0s and 19"0s. #. Case #. Case $. Matri%-management $. Matri%-management C. &ortfolio '. &atching '. &atching

Difficulty: Easy Learning Objective: 1

(. (p. 243) n the past ________ years) we ha*e seen a *irtual e%plosion in the e%tent to which single-business companies see+ to ac,uire ac ,uire other businesses to grow and di*ersify. #.  #.  $. 0 $. 0 C. 0 '. 100 '. 100

Difficulty: Meiu! Learning Objective: 1

. (p. 243) /hich of the following is T a reason for the emergence of multi-business companies2 #. Companies #. Companies can enter businesses with greater growth po tential $. Companies $. Companies can enter businesses with different cyclical considerations C. Companies C. Companies can di*ersify inherent ris+s D. Companies can slow their internal growth


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Chapter 09 - Multi-business Multi-business Strategy

3. (p. 243) /hich of the following firms pioneered the portfolio p ortfolio approach to strategic analysis and choice2 #. $ain #. $ain Consulting B. $oston Consulting 4roup C. $oo5 C. $oo5 #llen 6amilton '. Mc7insey '. Mc7insey 8 Company


. (p. 243) ________ attempt to help managers balance the flow of cash resources among their *arious businesses while also identifying the o*erall strategic purpose within the group of businesses. #. 4rowth #. 4rowth techni,ues $. Mar+et $. Mar+et share techni,ues C. &ortfolio techni,ues '. :n*ironment '. :n*ironment techni,ues


!. (p. 244) The ________ is the pro;ected rate of sales growth for the mar+et being ser*ed by a particular business. #. Mar+et #. Mar+et share $. Mar+et $. Mar+et pro;ection C. Mar+et growth rate '.

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Chapter 09 - Multi-business Strategy

". (p. 244) __________ usually is e%pressed as mar+et share of a business di*ided by the mar+et share of its largest competitor. A.

=. (p. 244) n the $C4 growth-share matri%) the ________ are businesses in rapidly growing mar+ets with large mar+et shares. #. Cash cows $. >uestion mar+s C. Stars '. 'ogs


9. (p. 244) $usinesses with high mar+et share in low-growth industries are called? #. Stars B. Cash cows C. >uestion mar+s '. 'ogs


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10. (p. 244) @eon &lus Company re,uires substantial in*estment to maintain an d e%pand their dominant position in the growing electronic 5eonites mar+et. n fact) this in*estment is often in e%cess of the funds that the firm can generate internally. 6owe*er) @eon &lus does ha*e a *ery large mar+et share. /hat type of company is this) according to the $C4 growth-share matri%2 #. Cash cow $. 'og C. >uestion mar+ D. Star


11. (p. 244) /hen using the $C4 growth-share matri%) the di*iding p oint for the growth rate of an industry in constant dollars is typically? #. The mar+etAs growth rate $. The consumer price inde% C. The growth rate of the gross domestic product B4'& D. The growth rate of the gross national product B4&

Difficulty: "ar Learning Objective: 2

1(. (p. 244) ________ is the current foundation of corporate portfoliosDthey sustain corporate o*erhead) di*idends and pro*ide debt capacity. A. Cash cows $. 'ogs C. Stars '. >uestion mar+s


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1. (p. 244) Eow mar+et share businesses in low mar+et growth industries are called? #. Stars $. Cash cows C. 'ogs '. >uestion mar+s


13. (p. 244) Crabtree Soup has been facing intense competition and suffering low profit margins for a year now. The mar+et for their specialty soups has matured and the firm is being managed for short-term cash flow to supplement SwissCoAs corporate-le*el resource needs. /hich type of firm is Crabtree Soup2 #. Star B. 'og C. Cash cow '. >uestion mar+


1. (p. 244) _______ are businesses whose high growth rate gi*es them considerable appeal) but whose low mar+et share ma+es their profit potential uncertain. #. 'ogs $. Stars C. >uestion mar+s '. Cash cows


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1!. (p. 24#) The _________ matri% was de*eloped by Mc7insey 8 Company at 4eneral :lectric. #. ndustry awareness $. 4rowth-share C. ndustry attracti*eness-business strength '. Strategic en*ironments


1". (p. 24#) Corporate strategists found the growth-share matri%As singular a%es A. Eimiting in their ability to reflect the comple%ity of a businessAs situation $. # good way to simplify the comple%ity of a businessAs situation C. # good reflection of the simplistic nature of most corporate-le*el decisions '. To difficult to manipulate


1=. (p. 24#) 6ow many cells are in the industry attracti*eness-business strength matri%2 #. 3 B. 9 C. 1( '. 1!


19. (p. 24#) /hich matri% ma+es fine distinctions among business portfolio positions with the inclusion of highFmediumFlow a%es2 #. ndustry strength matri% $. 4rowth-share matri% C. Strategic en*ironments matri% D. ndustry attracti*eness-business strength matri%


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(0. (p. 24#) n the industry attracti*eness-business strength matri%) the position of a business is calculated by _______ its rating along the two dimensions of the matri%. #. Sub;ecti*ely ,ualifying $. b;ecti*ely ,ualifying C. Sub;ecti*ely ,uantifying '. b;ecti*ely ,uantifying


(1. (p. 24$) /hich of the following is T a strategic approach suggested by the industry attracti*eness-business strength matri%2 A. utsource management $. n*est to grow C. n*est selecti*ely and manage for earnings '. 6ar*est or di*est for resources


((. (p. 24#) The ______ decisions of the industry attracti*eness-business strength matri% remain ,uite similar to those of the $C4 growth-share matri%. #. Management approach B.

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(. (p. 24#) The industry attracti*eness-business strength matri% impro*es on the $C4 matri% in some fundamental ways. /hich of the following is T one of these2 #. The terminology associated with the industry attracti*eness-business strength matri% is preferable because it is less offensi*e B. The terminology associated with the industry attracti*eness-business strength matri% can be much more complicated than the $C4 matri% C. The multiple measures associated with each di*ision of the industry attracti*eness-business strength matri% tap many factors rele*ant to business strength and mar+et attracti*eness besides mar+et share and mar+et growth '. There is broader assessment during the planning process of the industry attracti*eness business strength matri%


(3. (p. 24%) /hich of the following factors is T considered in determining industry attracti*eness2 #. ature of competiti*e ri*alry $. $argaining power of suppliersFcustomers C. GirmAs le*el of differentiation '. Ginancial norms


(. (p. 24%) /hich of the following factors is considered in determining a businessAs strength for the industry attracti*eness-business strength matri%2 #. Threat of substitute products $. :conomic factors C. Sociopolitical considerations D.

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(!. (p. 24%) /hich of the following is a factor in the cost position that helps determine business strength2 #. 'eli*ery times $. Manufacturing fle%ibility C. $rand awareness D. :conomies of scale


(". (p. 24#) /hich matri% in*ol*es a framewor+ that can help ensure that businessesA strategies are consistent with strategies appropriate to their strategic en*ironment2 #. Strategic choice matri% $. 4rowth-share matri% C. ndustry attracti*eness-business strength matri% D. Strategic en*ironments matri%


(=. (p. 24#) /hich matri% allows one way for multi-business companies to rationali5e what businesses they are in--businesses that share core competencies and associated competiti*e ad*antages. #. 4rowth-share matri% $. &ortfolio attracti*eness matri% C. Strategic en*ironments matri% '. $usiness strength matri%


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(9. (p. 24%) _________ are those that ha*e few sources of ad*antage) but the si5e is large-typically the result of scale economies. A. Holume businesses $. Stalemate businesses C. Speciali5ation businesses '. Gragmented businesses


0. (p. 24&) _________ has few sources of ad*antage) with most of them small. This results in *ery competiti*e situations. #. Gragmented businesses $. Holume businesses C. Stalemate businesses '. Speciali5ation businesses


1. (p. 24&) _________ has many sources of ad*antage. 6owe*er) these are all small. #. Stalemate businesses B. Gragmented businesses C. Speciali5ation businesses '. Holume businesses


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(. (p. 24&) /hich type of business in*ol*es differentiated products with low brand loyalty) easily replicated technology and minimal scale economies2 A. Gragmented businesses $. Speciali5ation businesses C. Holume businesses '. Stalemate businesses


. (p. 24&) S+ills in achie*ing differentiation in product design) branding e%pertise) inno* ation) first-mo*er and sometimes scale characteri5e winners in? #. Stalemate businesses B. Speciali5ation businesses C. Holume businesses '. Gragmented businesses


3. (p. 24&) _________ has many sources of ad*antage and fined those ad*antages potentially si5able. A. Speciali5ation businesses $. Stalemate businesses C. Gragmented businesses '. Holume businesses


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. (p. 24&) The only relationship between business units with the portfolio matri% is? #. Creation of competiti*e ad*antage $. nternally synergies C. Cash '. Core competencies

Difficulty: Difficult Learning Objective: 2

!. (p. 24&) /hich of the following is T a limitation of the portfolio approaches2 #. dentifying indi*idual businesses or distinct mar+ets was not often as precise as the underlying assumptions re,uired $. The underlying assumption about the relationship between C. The approach did not emphasi5e that mar+et share and profitability are the same across different industries and mar+et segments '. The portfolio approach limited strategic options) which were seen mostly as basic strategic missions rather than descriptions of the flow of resources in a company


". (p. 24&) The ______ portrays the notion that firms need to be self-sufficient in capital. #. :n*ironmental approach $. &arenting approach C. &ortfolio approach '. &atching approach


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=. (p. 24') pportunities to build *alue *ia di*ersification) integration or ;oint *enture strategies are usually T found in which of the following2 #. Mar+et-related acti*ities $. perations-related acti*ities C. Management acti*ities D. on-*alue chain acti*ities


9. (p. 2#1) __________ is concerned with whether or not the potential competiti*e ad*antages e%pected to arise from each *alue opportunity ha*e materiali5ed. #. Strategic choice B. Strategic analysis C. Strategic e*aluation '. Strategic growth


30. (p. 2#) :nhanced bargaining power with distributors and retailers to gain shelf space) shelf positioning) stronger push) more dealer attention and better profit margins represents which of the following sources of *alue building in multi-business companies2 #. Mar+et-related opportunities $. Gunctional-related opportunities C. &otential competiti*e ad*antage '. perating opportunities


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31. (p. 2#1) /hich of the following represents an operating o pportunity to build *alue or sharing2 A. Shared inbound or outbound shipping and materials handling $. Shared management +now-how C. Shared after-sales ser*ice '. Shared brand name


3(. (p. 2#2) The most compelling reason companies should di*ersify can be found in situations when? #. Core competencies are not similar B. Core competencies can be le*eraged with other products or into other mar+ets C. Management is similar in *arious businesses '. Cash resources can be le*eraged


3. (p. 2#3) The core competency must represent a ma;or source of *alue to be a basis for competiti*e ad*antage. Gurthermore) the core competence? #. Must be negotiable $. Must be financial C. Must be di*ersified D. Must be transferable


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33. (p. 2#4) _______ is those that rely on the same or similar capabilities to be successful and attain competiti*e ad*antage in their respecti*e product mar+ets. #. Ee*eraged businesses $. etwor+ed businesses C.

3. (p. 2#4) Situations that in*ol*e _______ occur when no real o*erlapping capabilities or products e%ist other than financial resources. #. Ginancial di*ersification B. Inrelated di*ersification C.

3!. (p. 2#4) The least profitable firms are? A. $roadly di*ersified firms whose strategies are build around *ery general resources such as money $. nes that in*ol*e combining resources into competiti*e ad*antage C.

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3". (p. 2#4) Gor competiti*e ad*antage to be sustainable) any combination of competencies must be? #. :%pensi*e $. :asily imitated C. Ini,ue '. Sustainable themsel*es


3=. (p. 2##) The _________ perspecti*e sees multi-business companies as creating *alue by influencing the businesses they own. #. Strategic en*ironment $. 4rowth-share matri% C. &atching D. &arenting

Difficulty: Meiu! Learning Objective: #

39. (p. 2##) :nsuring that certain issues are addressed) ob;ecti*ely assessed and assisting in any resolution may be a parenting opportunity that could add *alue. These issues--li+e attracting and +eeping people with speciali5ed s+ills--are? #. Mar+eting-based B. Management-based C. #ge-based '. &art of the business definition


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0. (p. 2##) Consider Hepco) a company that began as a roc+et propulsion de*elopment firm and grew through *ertical integration. The firm is trying to figure out how to +eep pace with the accelerated trends toward outsourcing that has de*eloped in the last 10 years. /hich type of parenting opportunity does this represent2 A. $usiness definitionFredefinition $. Management C. Speciali5ed e%pertise '. &redictable errors


1. (p. 2#%) Eengthy product life cycles can lead to o*er reliance on old products. This is an e%ample of? #. :%ternal relations $. Ein+age C. &redictable error '. Speciali5ed e%pertise


(. (p. 2#%) /hether apparent or not) _______ among business units within or outside the parent company may be comple% or difficult to establish without parent company help. #. Capabilities $. :%pertise C. Sales D. Ein+ages


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. (p. 2#%) 4o*ernments) regulators) unions and suppliers represent ________ who potentially could be managed more effecti*ely by the parent) than by the indi*idual business units. #. Speciali5ed e%pertise $. &redictable errors C. :%ternal sta+eholders '. nternal sta+eholders

Difficulty: Easy Learning Objective: #

3. (p. 2#$) The fact that ______ may e%ist in classifying sources of parenting opportunity is a minor consideration) relati*e to the *alue of the parenting framewor+ for strategic analysis in multi-business companies. A. *erlap or redundancy $. Turbulent mar+ets C. Ma;or changes '. Common capabilities


. (p. 2#&) The duration of an ad*antage in patching is? A. Inpredictable $. Sustained C. Short-term '. 'ependent on resources


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!. (p. 2#&) _______ is the process by which corporate e%ecuti*es routinely remap businesses to match rapidly changing mar+et opportunities. #. &arenting B. &atching C. &ortfolio matching '. :n*ironmental strategy


". (p. 2#&) /hen mar+ets are turbulent and rapidly changing) _______ is seen as critical to the creation of economic *alue in a multi-business company. #. &ositioning $. Ee*eraging resources C. &atching '. &arenting


=. (p. 2#&) The strategic logic of patching is to? #. &ursue more resources $. Ee*erage resources C. :stablish a defensible position D. &ursue opportunities


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9. (p. 2#') Inder the ________ approach) establishing a *ision) building resources and le*eraging across mar+ets are all strategic steps to be ta+en by the firm. #. &atching $. &arenting C.

!0. (p. 2#&) #ccording to the patching approach) strategic analysis should? #. Gocus on strategic processes alone B. Gocus on strategic processes more than strategic positioning C. Gocus on strategic positioning more than strategic planning '. Gocus on strategic positioning more than strategic processes


!1. (p. 2#&) :isenhardt and Sull suggest that managers should fle%ibly sei5e opportunities? A. #s long as that fle%ibility is disciplined $. #s long as the opportunities has positi*e net present *alue C. #s long as the capital raised in capital mar+ets can finance the opportunities '. #s long as the managers +eep a corporate strategic focus on profitability

Difficulty: "ar Learning Objective: #

!(. (p. 2#') The position-based approach to strategy wor+s be st in? #. Moderately changing) well-structured mar+ets $.

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!. (p. 2%) /hich type of simple rules help managers ran+ the accepted opportunities2 #. 6ow-to rules $. Ginancial rules C. &riority rules '. $oundary rules


!3. (p. 2%) _________ focus on which opportunities can be pursued and which ones are beyond pursuing. #. Timing rules B. $oundary rules C. Ginancial rules '. &ro;ect rules


!. (p. 2%) Girms should use _______ to help managers decide when to pull out of old opportunities that are no longer promising. A. :%it rules $. $oundary rules C. #bandonment rules '. &riority rules


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!!. (p. 2%) 4i5mo Co. has rules for product de*elopment. ts pro;ect teams must +now when a product has to be deli*ered to the customer and total product de*elopment time must be less than 1 year. This represents an e%ample of? #. :%it rules B. Timing rules C. $oundary rules '. &riority rules


!". (p. 2%) Spelling out +ey features of how a process is e%ecuted is the purpose of which type of simple rules2 #. $oundary rules $. &riority rules C. 6ow-to

!=. (p. 2#') Simple rules need to? #. &ro*ide ;ust enough structure to limit managersA fle%ibility to a safe amount $. Capture opportunities that may not always be consistent with corporate intent C. &ro*ide enough structure to allow managers to mo*e ,uic+ly to capture opportunities that are consistent with corporate intent '. 'efine the sources of competiti*e ad*antage within a firmAs industry


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!9. (p. 2#') _______ need to be brief) be a%iomatic and con*ey fundamental guidelines to decisions or actions. #. 7ey rules $. Gundamental rules C. Competiti*e ad*antages D. Simple rules


"0. (p. 2#') The fundamental argument of the _______ approach is that no one can predict how long a competiti*e ad*antage will last) particularly in turbulent mar+ets. A. &atching $. &arenting C. &ortfolio '. Strategic en*ironment


Essay Questions

"1. 'escribe the elements of the $C4 growth-share matri%. &lease refer to the discussion titled The $C4 4rowth-Share Matri%) on pages (33-(3.

Learning Objective: 2

"(. /hat is the industry attracti*eness-business strength matri%2 6ow does this impro*e upon the $C4 matri%2 &lease refer to the discussion titled The ndustry #ttracti*eness-$usiness Strength Matri% on page (3.


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". dentify and describe the four industry en*ironments defined by the two dimensions of $C4As strategic en*ironments matri%. &lease refer to the discussion titled $C4As Strategic :n*ironments Matri%) on pages (3(3=.


"3. dentify some critical limitations and shortcomings of the portfolio approach to strategic analysis. &lease refer to the discussion titled Eimitations of &ortfolio #nalysis) on pages (3=-(39.


". /hat two elements are critical in meaningful shared opportunities2 dentify each and gi*e an e%ample. &lease refer to the discussion titled The Synergy #pproach? Ee*eraging Core Competencies) on pages (39-((.


"!. /hy must each core competency pro*ide a rele*ant competiti*e ad*antage to the intended businesses when pursuing a synergy approach2 &lease refer to the discussion titled :ach Core Competency Should &ro*ide a

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"". /hat does it mean to le*erage core competencies2 &lease refer to the discussion titled $usinesses in the &ortfolio S hould $e

"=. /hat is the parenting framewor+2 $riefly describe this perspecti*e. &lease refer to the discussion titled The &arenting Gramewor+) on pages (-(=.

Learning Objective: #

"9. 'escribe si5e) age) management) business definition) lin+ages and other factors as the focus of strategic analysis and choice across multiple businesses and their interface with a parent company. &lease refer to the discussion titled The &arenting Gramewor+) on pages (-(=.


=0. /hat is patching2 'escribe patching and its corporate focus. &lease refer to the discussion titled The &atching #pproach) on pages (=-(!0.


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ORGANIZATION Behaviour Chapter 10 Testbank

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