The Most Important Strategy-Making Guidance That Comes from Drawing a Nine-Cell

question 23

Multiple Choice

The most important strategy-making guidance that comes from drawing a Nine-Cell Industry Attractiveness-Competitive Strength Matrix is

• A)which businesses in the portfolio have the most potential for strategic fit and resource fit.
• B)why cash cow businesses are more valuable than cash hog businesses.
• C)that corporate resources should be concentrated on those businesses enjoying both a higher degree of industry attractiveness and competitive strength and that businesses having low competitive strength in relatively unattractive industries should be looked at for possible divestiture.
• D)which businesses have the biggest competitive advantages and which ones confront serious competitive disadvantages.
• E)which businesses are in industries with profitable value chains and which are in industries with money-losing value chains.

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Definitions:

Hedge Ratio

The proportion of a position which is hedged, representing a strategy to minimize the risk of adverse price movements in an asset.

Binomial Option Model

A numerical method used in finance to price options by breaking down the option’s life into discrete time intervals.

Dynamic Hedging

A portfolio management strategy that involves continuously adjusting the hedge positions as the market conditions and prices of the underlying assets change.

Portfolio Insurance

Portfolio insurance is a strategy used by investors to hedge against market downturns by dynamically adjusting exposure to equities and typically involves the use of options or cash reserves.