MGM101H5 Lecture Notes - Strategic Business Unit, Strategic Management, Swot Analysis

The two biggest drawbacks or disadvantages of unrelated diversification are

 

A)underemphasizing the importance of resource fit and the strong likelihood of diversifying into businesses that top management does not know all that much about. 

B)insufficient cash flows to finance so many different lines of business and a lack of uniformity among the strategies of the businesses it has diversified into. 

C)volatile sales and profits and making the mistake of diversifying into too many cash cow businesses.

D)the difficulties of competently managing many different businesses and being without the added source of competitive advantage that cross-business strategic fit provides. 

E)over-investing in the achievement of economies of scope and the difficulties of achieving a good mix of cash cow and cash hog businesses.

Checking the competitive advantage potential of cross-business strategic fit involves:

 

A) evaluating a diversified company's profitability relative to competitors.

 

B) examining a company's costs relative to the costs of its chief rivals in the industry.

 

C) determining if there are opportunities to exploit outsourcing opportunities by a diversified company's lineup of businesses.

 

D) considering what competitive value can be generated from a strategic fit.

 

E) evaluating how much benefit a diversified company can gain from cross-business value chain matchups and resource sharing.

Which of the following is not true about strategy and/or strategic management? 

 

a. The strategic leader's perspective ought to be the holistic consideration of the business and its environment. 

b. Strategic management encompasses all the functional areas of business. 

c. In business, the strategy requires a big-picture perspective. 

d. Strategies sometimes emerge from bottom-up processes. 

e. A good leader can afford to devise a strategy in isolation from the lower-level leaders who are responsible for executing it