Chapter 10 Flashcards

Question

What are the several ways to improve the performance of an acquired company

Answer 1

1. Sr managers of the acquired company are replaced with a more aggressive top management team 2. New team sells off expensive assets 3. New team devises new strategies to improve the performance of the operations`

Answer 2

A corporate level strategy based on goal of establishing a business unit in a new industry that is related to a company's existing business units by some form of commonality to link between value chain functions of the existing and new business units `

Answer 3

Corporate level strategy where a company owns unrelated businesses and attempts to increase their value through internal capital market, use of general organizational competencies

Answer 4

Refers to a situation where head office assess the performance of business units and allocates money across them

Answer 5

1. Changes in the industry or inside a company that occur over time 2. Diversification pursued for the wrong reasons 3. Excessive diversification that results in increasing bureaucratic costs

Answer 6

1. Senior management often decides to leave, retire or step down and make visions with them 2. New technology can destroy the source of a company's competitive advantage and saddled it with business that poor performers bc they are not based on the new technology

Answer 7

When obtaining risk pooling

Answer 8

Risk pooling is the idea that the company could reduce the risk of its revenues and profits rising and falling sharply by acquiring and operating companies in several industries

Answer 9

1. Costs associated with solving the transition difficulties that rise between a company's business units and corporate head quarters 2. Include costs of with general organizational competencies t solve managerial and functional inefficiencies

Answer 10

Depends upon the comparison of the benefits of each strategy against the bureaucratic costs

Answer 11

1. Companys competencies can be applied greater in a number of industries 2. Companies have superior strategic capabilities that allow bureaucratic costs under control

Answer 12

1. Companys top managers are skilled at raising the profitability of poorly run business 2. Companys managers use their strategic management competencies 1. Improve competitive advantages 2. Keep bureaucratic costs under control

Answer 13

1. Internal Joint Ventures 2. Acquisitions 3. Joint Ventures

Answer 14

Process of transferring resources to business units in a new related market or industry

Answer 15

1. Market entry on too small a scale 2. Poor commercialization of the new ventures 3. Poor corporate management of the new ventures

Answer 16

Substantial capital investment must be made but there is a risk of major loss fails

Answer 17

May find itself handicapped by high costs due to the lack of scale economies and a lack of market presence

Answer 18

Products under development must be tailored to meet the needs of customers

Answer 19

1. Management attempts to spread the risks of failure by having many divisions which place a large demand upon a company's cash flow 2. Reduce funding to keep the entire company profitable 3. Failure to do the extensive advanced planning necessary

Answer 20

1. Place the funding for research in the hands of the unit managers 2. Executives must work with R&D scientists to advance competencies 3. Foster close links between R&D and marketing to increase success 4. Think big manufacturing facilities and large budgets

Answer 21

1. Increases company's knowledge about a potential takeover target and lessens the risk of purchasing a company 2. Leads to more realistic assessment

Answer 22

A company uses its financials resources to purchases an established company that have distinctive competencies

Answer 23

1. Able to move fast to establish a presence in an industry 2. Able to purchase a leading company with strong competitive positions 3. Less risky because it involves less commercial uncertainty 4. Attractive way to enter an industry protected by high barriers

Answer 24

1. Company experiences management problems when it tries to integrate the companys structure and culture into its own 2. Company often overestimates the potential economic benefits 3. Can be expensive that it does not increase future profitability 4. Company can be negligent in screening its acquisitions, targets and fail to recognize problems with their business models

Answer 25

1. Target identification and pre-acquisition screening 2. Bidding strategy 3. Integration 4. Learning from experience

Answer 26

Detailed assessment of the strategic rationale for making the acquisition

Answer 27

1. Financial position 2. Distinctive competencies and competitive advantage 3. Changing industry boundaries 4. Management capabilities 5. Corporate culture

Answer 28

Reduces the price that a company must pay for the target company

Answer 29

This satisfies the needs of both companies and prevents speculators from bidding stock prices

Answer 30

Company possess the essential organizational design skill to integrate the acquired company into its operations and quickly develop a viable multi-business model

Answer 31

2 or more companies agree to pool their resources to create a new business to enter an embryonic or growth industry

Answer 32

1. Risks and costs shared 2. Complementary skills or distinctive competencies 3. Profits

Answer 33

To refocus a company's core business and rebuild its distinctive competencies

Answer 34

1. Stock market has valued their stock at a diversification discount; investors see highly diversified companies as less attractive investments 2. Companies are perceived as more risky 3. Diversification discount is leads to investors having learned from experience that managers often have a tendency to pursue too more diversification 4. Not actually taking advantage of vertical integration or diversification

Chapter 10 Flashcards

(58 cards)