Checking a Diversified Firm's Business Portfolio for the Competitive Advantage

question 15

Multiple Choice

Checking a diversified firm's business portfolio for the competitive advantage potential of cross-business strategic fits entails consideration of

• A)whether the parent company's competitive advantages are being deployed to maximum advantage in each of its business units.
• B)whether the competitive strategies employed in each business act to reinforce the competitive power of the strategies employed in the company's other businesses.
• C)whether the competitive strategies in each business possess good strategic fit with the parent company's corporate strategy.
• D)the extent to which there are competitively valuable relationships between the value chains of sister business units and what opportunities they present to reduce costs,share use of a potent brand name,or transfer skills or technology or intellectual capital from one business to another.
• E)how compatible the competitive strategies of the various sister businesses are and whether these strategies are properly aimed at achieving the same kind of competitive advantage.

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Definitions:

Disposal Of A Segment

This refers to the selling, discontinuing, or otherwise getting rid of a portion of a company's operations or divisions.

Earnings Per Share

A financial metric that divides a company's net earnings available to common shareholders by the average outstanding shares, indicating the profitability per share.

Leverage

The use of borrowed capital or debt to fund an investment, aiming to expand asset base and generate returns on risk capital.

Debt

An amount of money borrowed by one party from another, to be paid back with interest.