1. What are the components corporate strategy?

Scope, mission, intent: They indicate how the business is going to grow in the future. A mission
statement is similar to a vision statement, but includes more specific details on actions. The mission
statement will detail what your company does and it explains to people outside of your company why
your business exists.
The scope is the domain of the business- the part of the business landscape in which the company
will operate.

Objectives: Objective Setting involves developing the visioning aspects created and turning them into
a series of high-level objectives for the company, it should be realistic measurable and include a time
frame.

Source of competitive advantage: It is the essence of the strategy. It determines what the company
will do differently or better than the competition to achieve the objective

Development strategy: It is the process of researching and identifying strategic options, selecting the
most promising and deciding how resources will be allocated across the organisation to achieve
objectives.

Allocation of resources: It refers to decisions which concern the most efficient allocation of human and
capital resources in the context of stated goals and aims.

Sources of synergy: Synergistic benefits generally result from four potential sources:

revenue enhancement, cost reduction, practice improvement, financial economy

2. Identify those issues addressed by company ethics statements.

Ethical issues in business encompass a wide array of areas within an organization’s ethical
standards. 2.1 Every business needs to be aware of the anti-discrimination laws and regulations that
exist to protect employees from unjust treatment.
2.2 The employees have a right to safe working conditions.
2.3 Any organization must maintain accurate bookkeeping practices.
2.4 Companies may put in place mandatory nondisclosure agreements, stipulating strict financial
penalties in case of violation, in order to discourage these types of ethics violations.
2.5 In order to ensure employee surveillance does not turn into an ethical issue for your business,
both employees and employers should remain conscious of the actual benefits of being monitored,
and whether it is a useful way of developing a record of their job performance.

3. List common performance criteria and measures that specify corporate, business-unit and
marketing objectives.

The most common metrics used to determine a company's value include economic value added(EVA)
and market value added(MVA). It is typically used for listed companies that are larger and publicly-
traded.
EVA is useful as a way to measure a company's economic success, or lack thereof, over a specific
period of time.

MVA is useful as a wealth measure, assessing the level of value that a company has built up over a
period of time. MVA is the amount of wealth that a company is able to create for its stakeholders since
its foundation. In simple terms, it's the difference between the current market value of the company's
stock and the initial capital that was invested in the company by both bondholders and stockholders, it
does not incorporate the opportunity cost of alternative investments.

4. Explain four alternative corporate growth strategies.

Market Penetration

Growth through market penetration does not involve moving into new markets or creating new
products; it's an attempt to increase market share using your current products or services. Carry out
this strategy by lowering the price of a product or service, or by increasing marketing efforts to lure
customers away from competitors.

Product Development

Product development means creating new products to serve the same market. For example, a
company that produces ice cream for institutional buyers expands its line to include gelato and sorbet.
The company can sell these new products to existing customers and grow its business without
tapping new markets.

Market Development

Market development involves introducing your products or services to new markets. You may want to
enter a new city, state or even country. Or you can target a market segment. For instance, a bakery
that produces breads for the consumer market could enter into the commercial market by baking
breads for restaurants and retailers.

Diversification

Diversification is the most radical form of growth. It involves creating a totally new product for a
completely new market. This is the riskiest growth strategy because it's the most uncertain. Failure is
a distinct possibility, although the potential of a high payoff may be worth the risk for companies with
sufficient financial means.

5. What are major limitation of the growth-share matrix?

BCG matrix classifies businesses as low and high, but generally businesses can be medium also.
Thus, the true nature of business may not be reflected.

Market is not clearly defined in this model.

High market share does not always leads to high profits. There are high costs also involved with high
market share.
Growth rate and relative market share are not the only indicators of profitability. This model ignores
and overlooks other indicators of profitability.
At times, dogs may help other businesses in gaining competitive advantage. They can earn even
more than cash cows sometimes.
This four-celled approach is considered as to be too simplistic.

6. Describe four sources of synergy.

Revenue enhancements can be achieved when the combined company offers a broader line of
products or services, often by leveraging the distribution system of the new entity. The expanded or
improved product line also may qualify the combined company to compete for business that was not
available to either the acquirer or the target operating as stand-alone businesses.

Estimates of the second synergy source, cost reductions, tend to be more predictable and reliable
than revenue improvements. Through consolidation of functions, positions and related fixed assets
and overhead are eliminated. The magnitude of this benefit tends to be larger when the target is
similar to the acquirer in operations and markets served.

Process improvements occur when the combined entity adopts the most efficient or effective practices
employed by the target or acquirer. These enhancements frequently result from technological or
process improvements that can be leveraged over the broader base of the combined entity. The
improvements can create enhanced revenues or cost reductions as well as more efficient operations
or more effective marketing and distribution.
The fourth synergy source, financial economies, is the target’s cost of capital can be reduced through
acquisition by a larger company that eliminates many of the risks that exist in the target as a stand-
alone business. These financial economies raise the investment value of the target but not its fair
market value. The combination also may lower the combined entity’s financing costs and may allow
for efficiencies in lease terms, cash management, and management of working capital.