MGT 409 Exam 2

What is a corporate-level strategy concerned with?

What business to compete in and how to create synergy

What is synergy?

When combined, businesses are worth more together than separately

Why do diversification efforts often fail?

Overpaying

Poor integration

Easy imitation

What is related diversification?

Diversifying into business with shared value-chain activities

What is unrelated diversification?

Diversifying into businesses with no operational relationship

What creates value in related diversification>

Economies of scope

Shared resources

Market power

What are economies of scope?

Cost savings from sharing resources across business

What is market power?

Increased bargaining power with suppliers or customers

What is vertical integration?

Becoming your own supplier or distributor

What is backward integration?

Controlling suppliers

What is forward integration?

Controlling distribution or retail

What creates value in unrelated diversification?

Parenting advantage and restructuring

What is the parenting advantage?

Corporate office adds value through management expertise

What are the three types of restructuring?

Asset

Capital

Management

What is the BCG growth-share matrix used for?

Portfolio management and resource allocation

Why isn’t diversification mainly about reducing risk?

Shareholders can diversify cheaper on their own

What are the main ways firms diversify?

M&A

Alliances

Joint Ventures

Internal Development

Difference between a merger and an acquisition?

Merger = combine equals

Acquisition = one buys another

Why do firms divest business?

Refocus on core, free resources, raise cash

What managerial behavior can destroy value?

Growth for growth’s sake

What is globalization?

Increasing global integration of markets and economies.

What does Porter’s Diamond explain?

Why some nations are more competitive than others

What are the four elements of Porter’s Diamond?

Factor endowments

Demand

Related industries

Rivalry

Why do demanding consumers matter?

They drive innovation and quality improvements

Why do firms expand internationally?

Larger markets

Scale

Lower costs

Learning

What is political risk?

Risk from government instability or unrest

What is economic risk?

Risk from piracy and counterfeiting

What opposing pressures shape international strategy?

Cost reduction vs local responsiveness

What is a multidomestic strategy?

High local adaptation

Decentralized decisions

What is a transnational strategy?

High cost efficiency and high local adaptation

What are the three interdependent activities of strategic leadership?

Setting direction

Designing the organization

Nurturing culture

What does "setting a direction” involve?

Scanning environment and creating a clear strategic vision

What does “designing the organization” mean?

Aligning structure, systems, and rewards with strategy

What is the leader’s role in ethical culture?

Modeling and reinforcing ethical behavior

What is emotional intelligence (EI)?

Ability to manage self and relationships

Name two components of emotional inelligence

Self-awareness

Empathy

What is a learning organization?

An organization that adapts, questions assumptions, and improves

What is the key difference between compliance-based and integrity-based ethics?

Compliance follows rules
Integrity emphasizes values

What ethical failure did Theranos leadership show?

Misleading investors and ignoring ethical responsibility

Why is the Theranos case important for strategic leadership?

Shows how unethical leadership destroys trust and value