Use your understanding of corporate-level strategy to answer the questions that follow this short scenario.
Imagine that you own a small coffee shop and you are considering expanding your business through one or more options. One option is to merge with the gift shop next door. Another option is to purchase the bakery from which you buy pastries to sell to your customers along with their coffee and tea. Yet another option is to open another coffee shop in a different neighborhood.
1) If you decide to reduce your risk from competition from other coffee shops, you will __________ of businesses by merging with the gift shop and purchasing the bakery.
a) build a portfolio
b) divest yourself
c) become a corporate raider
2) You decide to purchase the bakery and continue to allow the current manager to run that business. However, you will order supplies and handle accounting for both the coffee shop and bakery in a central office. What type of corporate-level decision is this?
a) Scope of business
b) Organizational design
c) Ownership
3) Diversification is a corporate-level strategy. Which of the following questions would not be considered during corporate-level strategy design?
a) How should our company be structured to coordinate activities across business groups?
b) Does it make sense to buy a new business, or should we form the new business as a joint venture with another company?
c) What businesses should we acquire?
d) What is the bargaining power of the customers for our products?