OAM 331 Exam 2 ) UPDATED Actual Exam Questions and CORRECT Answers
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OAM 331 Exam 2 ) UPDATED Actual
Exam Questions and CORRECT Answers
Blue Ocean Strategy Key Takeaways (C12) - CORRECT ANSWER- -Red oceans are
existing industries, blue ocean means doing business where there is no competition.
-Blue ocean strategy is not about technology innovation.
-Incumbent...
OAM 331 Exam 2 ) UPDATED Actual
Exam Questions and CORRECT Answers
Blue Ocean Strategy Key Takeaways (C12) - CORRECT ANSWER- ✔✔-Red oceans are
existing industries, blue ocean means doing business where there is no competition.
-Blue ocean strategy is not about technology innovation.
-Incumbents often create blue oceans within their core business.
-The most appropriate unit of analysis is not an industry or company, but the managerial
actions and decisions to create a market (aka strategic move).
-Never use competition as the benchmark.
-Rejects the productivity trade-off; blue oceans mean increasing value AND reducing costs.
-This is a business model → only achieved when the system of company's utility, price, and
cost are properly aligned!!
-Creating a new market provides immediate barriers to imitation
Corporate Strategy answers the question ______________________ (C15) - CORRECT
ANSWER- ✔✔"where to compete".
Corporate strategy == the overall plan for a diversified company -- is both the darling and the
stepchild of contemporary management practice.
The darling ⇒ because CEOs have been obsessed with diversification since the early 1960s.
The stepchild ⇒ because almost no consensus exists about what corporate strategy is, much
less about how a company should formulate it.
They work better together than they do separately.
Business Unit (Competitive) Strategy (C15) - CORRECT ANSWER- ✔✔Single product
market.
How to create competitive advantage.
How to compete.
,Competition Occurs at the Business Unit Level.
Diversified companies do not compete, Only their business units do
Corporate (Company-wide) Strategy (C15) - CORRECT ANSWER- ✔✔Multiple
industries/markets concurrently.
What businesses to be in and how corporate should manage.
Where to compete:
-Vertical integration (value chain).
-Diversification (product, services).
-Geography.
Unless a corporate strategy places primary attention on nurturing the success of each unit, the
strategy will fail, no matter how elegantly constructed.
GE Corporate strategy (C15)
What is the General Electric situation, complication, key question? - CORRECT ANSWER-
✔✔Question: Look at this presentation from GE: How does this relate to corporate strategy?
(ON EXAM)
They do lots of business in different areas.
GE using "Best Practices" to be more operational efficient with mergers.
GE bought Oil-Services with a huge amount of money, Turnout: BAD
Three corporate strategy premises (C15) - CORRECT ANSWER- ✔✔Premise #1:
Competition occurs at the business level; diversified companies do not compete.
Premise #2: Diversification inevitably adds costs and constraints to business units.
1 company runs a weekly executive meeting ⇒ pass it on the employee ranking.
Point ⇒ meeting all the time.
Takeaway ⇒ lose focus as you diversify.
,Premise #3: Shareholders can readily diversify themselves.
The attractiveness test
==> the industries chosen for diversification must be structurally attractive or capable of
being made attractive.
The cost-of-entry test
==> the cost of entry must not capitalize all the future profits.
The better-off test
==> either the new unit must gain competitive advantage from its link with the corporation or
vice versa.
Attractiveness Common Fails (C15) - CORRECT ANSWER- ✔✔-Falsely believe the target
industry is *similar*.
-Low cost of entry = "why not."
-Falsely believe fast growth = *profitability*
Cost of entry Common Fails (C15) - CORRECT ANSWER- ✔✔-*overpaying* for
acquisition ⇒ buyers remorse.
-*underestimating* the cost to ramp up start-up
Better-off test Common Fails (C15) - CORRECT ANSWER- ✔✔-Does the corporation bring
significant advantage to the new unit (or vice versa)?
-Is the benefit "one time" or long-term
, 2) restructuring,
3) transfer skill,
4) share activities
portfolio management prereqs (C15) - CORRECT ANSWER- ✔✔-Superior insight to
identify *winners*; sell off losers.
-Private company or underdeveloped markets
restructuring prereqs (C15) - CORRECT ANSWER- ✔✔-Willingness to *intervene*.
-Willingness to *sell* units when complete
transferring skills prereqs (C15) - CORRECT ANSWER- ✔✔-Proprietary skills, which can
be transferred.
-Beachhead for new market and opportunities.
Portfolio management is less compelling proposition because of ____________________ (2
things) (C15) - CORRECT ANSWER- ✔✔cheap $, free markets.
The idea that corporations acquire sound businesses and let them run autonomously seems
less relevant than in the past.
-Unprecedented 20+ years of inexpensive capital.
-Free-flow of information and managerial talent.
-Large pool venture capital, and private equity investors.
Two notable exceptions to the criticism of portfolio management (C15) - CORRECT
ANSWER- ✔✔Berkshire Hathaway.
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