Chapter 7Corporate Strategy1 Corporate Strategy Is
Chapter 7
Corporate Strategy
1. Corporate strategy is concerned with ’where’ a firm competes (in which industries it competes), while business strategy is concerned with ‘how’ a firm competes in a specific industry.
@Pages and References: Pages 308-310
*a. T
b. F
2. Product scope, international scope, and vertical scope are part of corporate level strategy decisions.
@Pages and References: Pages 308-310
*a. T
b. F
3. "How profitable do we want to be?" is the starting-point of corporate strategy.
@Pages and References: Pages 313-315
a. T
*b. F
4. The most sensible corporate strategy is to expand the scope of activities the company is involved in over time.
@Pages and References: Pages 313-315
a. T
*b. F
5. Fifty years ago, vertical integration was a fashionable strategy, whereas nowadays the trend is towards de-integration.
@Pages and References: Pages 313-315
*a. T
b. F
6. The scope of which activities a firm chooses to conduct is largely a matter of transaction costs, economies of scope and the cost of corporate complexity.
@Pages and References: Pages 313-315
*a. T
b. F
7. "Economies of scope" is a more modern expression to replace the old-fashioned term "economies of scale"
@Pages and References: Pages 315-319
a. T
*b. F
8. An "economy of scope" is where a firm can spread the fixed cost of a common resource or a shared service across multiple products or activities.
@Pages and References: Pages 315-319
*a. T
b. F
9. "Brand extension" is also a way to achieve an "economy of scope", by using a good reputation built around one product to help sell a different product or service.
@Pages and References: Pages 315-319
*a. T
b. F
10. If the transaction costs associated with buying in a product or service from the market costs more than the firm providing this internally, then the firm will outsource.
@Pages and References: Pages 315-319
a. T
*b. F
11. "The cost of corporate complexity" refers to the fact that firms have to pay managers of complex businesses
Corporate Strategy
1. Corporate strategy is concerned with ’where’ a firm competes (in which industries it competes), while business strategy is concerned with ‘how’ a firm competes in a specific industry.
@Pages and References: Pages 308-310
*a. T
b. F
2. Product scope, international scope, and vertical scope are part of corporate level strategy decisions.
@Pages and References: Pages 308-310
*a. T
b. F
3. "How profitable do we want to be?" is the starting-point of corporate strategy.
@Pages and References: Pages 313-315
a. T
*b. F
4. The most sensible corporate strategy is to expand the scope of activities the company is involved in over time.
@Pages and References: Pages 313-315
a. T
*b. F
5. Fifty years ago, vertical integration was a fashionable strategy, whereas nowadays the trend is towards de-integration.
@Pages and References: Pages 313-315
*a. T
b. F
6. The scope of which activities a firm chooses to conduct is largely a matter of transaction costs, economies of scope and the cost of corporate complexity.
@Pages and References: Pages 313-315
*a. T
b. F
7. "Economies of scope" is a more modern expression to replace the old-fashioned term "economies of scale"
@Pages and References: Pages 315-319
a. T
*b. F
8. An "economy of scope" is where a firm can spread the fixed cost of a common resource or a shared service across multiple products or activities.
@Pages and References: Pages 315-319
*a. T
b. F
9. "Brand extension" is also a way to achieve an "economy of scope", by using a good reputation built around one product to help sell a different product or service.
@Pages and References: Pages 315-319
*a. T
b. F
10. If the transaction costs associated with buying in a product or service from the market costs more than the firm providing this internally, then the firm will outsource.
@Pages and References: Pages 315-319
a. T
*b. F
11. "The cost of corporate complexity" refers to the fact that firms have to pay managers of complex businesses
References: Pages 348-350 a. Always very risky, so should only be attempted when there 's no other option *b. Inherently risky, but at some stage necessary – so should be based on sound analysis c. Well-known to be primarily about empire building – so is to be discouraged d. Only works in emerging economies nowadays