Company Resources Overview
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Questions and Answers

What does 'capital intellectual' include within a company?

  • The knowledge, patents, and ideas the company possesses (correct)
  • The physical assets and infrastructure of the company
  • The daily operational procedures of the business
  • The financial investments made by shareholders

    • Which of the following is considered a factor organizativo in a company?

  • The sales and marketing team
  • The product development tools used
  • The company’s organizational structure and culture (correct)
  • The financial statements produced monthly

    • What role do gerentes or administrators play in a company?

  • They handle customer service and support
  • They contribute to strategic planning and decision making (correct)
  • They oversee the financial investments of shareholders
  • They manage the daily production of goods

    • Which type of company has capital ownership that is managed independently?

    <p>Private companies owned by individuals or private entities</p> Signup and view all the answers

    What is primarily focused on human interactions and behaviors within a company?

    <p>Elements of behavior</p> Signup and view all the answers

    In terms of active factors, who contributes to the daily operations of a company?

    <p>The employees or workers</p> Signup and view all the answers

    Which of the following is not classified as a material or good for production?

    <p>Software programs</p> Signup and view all the answers

    What do accionistas with control interest in a company primarily influence?

    <p>Strategic decision-making processes</p> Signup and view all the answers

    What characterizes a Mixed Company?

    <p>It has shared capital between the private and public sectors.</p> Signup and view all the answers

    Which classification fits a company with 30 employees and 8 million euros in assets?

    <p>Small enterprise</p> Signup and view all the answers

    What defines Industrial Companies?

    <p>They engage in the extraction of natural resources.</p> Signup and view all the answers

    What is an example of a Final Consumer Product?

    <p>Clothing for personal use</p> Signup and view all the answers

    Which type of company is primarily engaged in wholesale activities?

    <p>Wholesale companies</p> Signup and view all the answers

    How are Transnational Companies defined?

    <p>They operate in multiple countries.</p> Signup and view all the answers

    Which of the following best describes a Large Company?

    <p>More than 250 employees and more than 50 million euros in assets.</p> Signup and view all the answers

    What is a characteristic of Service Companies?

    <p>They offer intangible services across various sectors.</p> Signup and view all the answers

    What is one of the primary advantages of vertical integration?

    <p>Easier coordination and planning</p> Signup and view all the answers

    Which of the following is considered a disadvantage of vertical integration?

    <p>Increased administrative costs</p> Signup and view all the answers

    What is a primary feature of a multinational corporation (MNC)?

    <p>Handling a significant volume of activity in multiple countries</p> Signup and view all the answers

    Which benefit is associated with internationalization?

    <p>Economies of scale</p> Signup and view all the answers

    What is one disadvantage faced by companies when they expand internationally?

    <p>Higher risks</p> Signup and view all the answers

    What characterizes an international company?

    <p>Maintaining most functions in the parent country</p> Signup and view all the answers

    Which of the following is a common challenge associated with cultural diversity in multinational corporations?

    <p>Difficulty in managing diverse teams</p> Signup and view all the answers

    Which of the following strategies is NOT an advantage of internationalization?

    <p>Higher bureaucratic costs</p> Signup and view all the answers

    What does the ecological dimension of the environment primarily relate to?

    <p>Society's awareness and political organizations regarding the environment</p> Signup and view all the answers

    Which model is primarily used to analyze the structure and attractiveness of a sector?

    <p>Porter's Five Competitive Forces</p> Signup and view all the answers

    What is the main function of an entrepreneur in a business context?

    <p>To develop new services or products amidst uncertainty</p> Signup and view all the answers

    How does corporate governance relate to the difference in interests between owners and management?

    <p>It provides methods for owners to control top management's performance</p> Signup and view all the answers

    What role does the board of directors play in a company?

    <p>They oversee the performance of senior management</p> Signup and view all the answers

    Which statement accurately reflects the relationship between owners and managers in large companies?

    <p>The difference between ownership and management is more pronounced in larger organizations</p> Signup and view all the answers

    In what way can owners influence management decisions?

    <p>Through corporate governance tools to monitor performance</p> Signup and view all the answers

    What distinguishes a manager from an entrepreneur?

    <p>A manager oversees processes, while an entrepreneur creates resources</p> Signup and view all the answers

    What is the primary motivation behind ideas generated by necessity?

    <p>Reacting to critical situations</p> Signup and view all the answers

    What best describes business process mapping?

    <p>A visual representation of business processes</p> Signup and view all the answers

    What is the function of a business plan?

    <p>To monitor the development of the business activity</p> Signup and view all the answers

    Which step is necessary for incorporating a company?

    <p>Choosing the legal form and completing legal formalities</p> Signup and view all the answers

    What is one of the traditional functions of management?

    <p>Planning future actions and necessary means</p> Signup and view all the answers

    How does management contribute to a company's success?

    <p>By coordinating and integrating productive factors</p> Signup and view all the answers

    Which of the following elements is NOT typically included in a business plan?

    <p>Employee personal backgrounds</p> Signup and view all the answers

    What role does organization play in management?

    <p>To establish patterns of relationships among company members</p> Signup and view all the answers

    What is a disadvantage of business specialization?

    <p>It can create challenges in adapting products for uniform customer needs.</p> Signup and view all the answers

    Which statement accurately describes unrelated diversification?

    <p>It often leads to unprofitability due to resource differences.</p> Signup and view all the answers

    What is a key characteristic of vertical integration?

    <p>It controls multiple stages of the production or supply chain internally.</p> Signup and view all the answers

    Which of the following is an advantage of related diversification?

    <p>It allows entry into favorable market conditions by leveraging existing resources.</p> Signup and view all the answers

    Why has there been a trend towards less business specialization recently?

    <p>The difficulty in launching new products has increased.</p> Signup and view all the answers

    What is the main focus of the contractual approach in a business context?

    <p>Examining economic agreements between independent parties</p> Signup and view all the answers

    Which of the following describes a key characteristic of open systems in the systemic approach to business?

    <p>They interact and adapt to their external environment</p> Signup and view all the answers

    What is one of the difficulties within the contractual approach related to productivity?

    <p>Measuring productivity consistently across departments</p> Signup and view all the answers

    In the systemic approach, what are passive factors primarily responsible for?

    <p>Providing resources for the company's operations</p> Signup and view all the answers

    Which of the following types of capital is categorized as tangible capital within the organizational structure?

    <p>Machinery and tools used in production</p> Signup and view all the answers

    What is a significant advantage of applying the systemic approach to understanding a company’s behavior?

    <p>It simplifies the complexity of organizational processes</p> Signup and view all the answers

    How does the contractual approach contribute to transaction costs within a company?

    <p>By allowing for better coordination of activities</p> Signup and view all the answers

    In what way does the systemic approach categorize the elements of a company?

    <p>Into active and passive factors based on functionality</p> Signup and view all the answers

    What aspect does 'capital intelectual' primarily encompass within a company?

    <p>Knowledge, patents, and ideas</p> Signup and view all the answers

    Which statement best describes the function of 'factores activos' in a company?

    <p>They encompass human and organizational resources driving the company.</p> Signup and view all the answers

    Which of the following best illustrates 'elementos estructurales' in an organization?

    <p>Hierarchy, departments, and communication systems</p> Signup and view all the answers

    What does the term 'factor organizativo' specifically include?

    <p>Integration and coordination of all business elements</p> Signup and view all the answers

    How do 'elementos de comportamiento' within a company influence operations?

    <p>They govern employee interactions and organizational culture.</p> Signup and view all the answers

    What distinguishes 'empresas privadas' from other types of companies?

    <p>Their capital is controlled by individual or private entities.</p> Signup and view all the answers

    Which of the following accurately describes the role of gerentes or managers in an organization?

    <p>They take decisions to direct and manage the organization effectively.</p> Signup and view all the answers

    Which statement reflects the importance of a well-defined 'estructura organizativa'?

    <p>It promotes efficient workflows and clear communication channels.</p> Signup and view all the answers

    What is a key characteristic of 'capital humano' within a company?

    <p>It accounts for employee skills, experiences, and contributions.</p> Signup and view all the answers

    Which element plays a crucial role in integrating all factors within a business?

    <p>The organizational structure and procedures in place</p> Signup and view all the answers

    Which aspect is essential for the success of a strategy within a company?

    <p>Alignment of internal capabilities and goals</p> Signup and view all the answers

    What is a potential outcome when objectives require developing new internal strengths?

    <p>The company may face resistance to change</p> Signup and view all the answers

    Which level of managerial strategy is primarily concerned with overall direction and growth opportunities?

    <p>Corporate strategy</p> Signup and view all the answers

    Which of the following statements is true regarding the levels of managerial strategy?

    <p>Smaller companies may consolidate strategy levels</p> Signup and view all the answers

    What is crucial when assessing internal strengths as part of strategic formulation?

    <p>Understanding competitive threats</p> Signup and view all the answers

    When developing a strategy, why is knowledge of the competitive environment crucial?

    <p>It helps in identifying potential opportunities and hazards</p> Signup and view all the answers

    Which of the following defines how strategies should be executed effectively within a company?

    <p>Via established systems of control and feedback</p> Signup and view all the answers

    What role do long-term coherent objectives play in the overall strategy of a company?

    <p>They guide decision-making aligned with company capabilities</p> Signup and view all the answers

    Why might companies with diverse activities require multiple strategies?

    <p>Different markets require tailored approaches</p> Signup and view all the answers

    What is the primary purpose of the corporate strategy within a company?

    <p>To identify potential businesses for entry and growth</p> Signup and view all the answers

    What is the primary focus of the Board of Directors in a company?

    <p>To guide and promote the company's policies</p> Signup and view all the answers

    Which of the following describes the risk-entrepreneur approach?

    <p>The entrepreneur takes calculated risks as part of their economic function</p> Signup and view all the answers

    What is NOT a key part of the entrepreneur's profile?

    <p>Financial investment capability</p> Signup and view all the answers

    Which statement best explains the relationship between an entrepreneur and market opportunities?

    <p>Entrepreneurs have the ability to discover and seize market opportunities.</p> Signup and view all the answers

    What is one of the initial steps in creating a company?

    <p>Drafting a business plan</p> Signup and view all the answers

    Which of the following best represents a failure in the entrepreneur's role?

    <p>Excessive risk-taking without strategy</p> Signup and view all the answers

    Which function of the Board of Directors involves interaction with investors?

    <p>Liaison with shareholders</p> Signup and view all the answers

    Which approach suggests that the entrepreneur and capitalist are the same person?

    <p>Capitalist-entrepreneur approach</p> Signup and view all the answers

    What does the response capacity of an entrepreneur entail?

    <p>Skill in taking quick decisions and solving problems</p> Signup and view all the answers

    Which aspect is crucial for determining a business opportunity?

    <p>The initial idea and its market viability</p> Signup and view all the answers

    Study Notes

    Company Resources

    • Materials and Goods: These are the raw materials, finished products, and components required for the production process.
    • Intangible: This includes intellectual property such as patents, technology like software programs, and the company's knowledge and experience.
    • Active Factors: These are the human and organizational resources that drive and manage the company's activities.
      • Labor Force (Human Capital):
        • Employees or Workers: Individuals who perform daily tasks and contribute to the production of goods or services.
        • Managers or Administrators: Individuals who make decisions, lead, and manage the company to ensure its success and efficient operation.
      • Company Capital Owners:
        • Controlling Shareholders: Owners who have sufficient stock to influence or control company decisions.
        • Simple Financial Investors: Individuals who own company shares but do not actively participate in its management.
    • Organizational Factor: This integrates and coordinates all the previous elements. It refers to the organizational structure, rules, procedures, and culture that allow the company to function effectively and efficiently.

    Company Types

    • According to Ownership:
      • Private Companies: Capital is held by private individuals or entities, ensuring independent control and management.
      • Public Companies: Capital belongs to the public sector, with government control and a focus on public interest.
      • Mixed Companies: Capital is shared between the private and public sectors, combining the interests and management of both.
    • According to Size:
      • Microenterprises: Less than 10 employees and less than €2 million in turnover or assets.
      • Small Businesses: Between 10 and 49 employees, and less than €10 million in turnover or assets.
      • Medium Businesses: Between 50 and 249 employees, and less than €50 million in turnover or assets.
      • Large Businesses: More than 250 employees and more than €50 million in turnover or assets.
    • According to the Nature of the Economic Activity:
      • Industrial Companies: Dedicate themselves to the production of goods, further categorized into:
        • Extractive: Focus on extracting natural resources (e.g., mining, oil companies).
        • Transforming: Transform raw materials into finished products.
          • Consumer Goods: Produce goods directly used by consumers (clothing, food).
          • Production Goods: Produce goods used by other companies to manufacture their products (machinery, construction materials).
      • Commercial Companies: Focus on buying and selling goods, further categorized into:
        • Wholesalers: Purchase large quantities of goods from manufacturers and sell them in smaller amounts to retailers or businesses.
        • Retailers: Sell products directly to end consumers.
        • Trading Agents: Act as intermediaries in buying and selling, connecting buyers and sellers.
      • Service Companies: Offer intangible services instead of physical products, covering a wide range of sectors.
    • According to the Field of Action:
      • Local: Operates in a specific region.
      • National: Operates throughout a country.
      • Multinational: Operates in multiple countries.

    Specific Environment

    • Analysis of the specific or competitive environment: This complements the study of external factors that affect or can affect the activity and results of a company.
    • Attractiveness: Determines how profitable a company can be in its current sector, influenced by the opportunities and threats faced by businesses operating in that environment.
    • Porter's Five Forces Framework: A widely used tool for analyzing the structure of a sector and its attractiveness.

    Entrepreneurship

    • Entrepreneur: An individual who identifies and creates a business opportunity. They develop new services or products in the face of uncertainty.
    • Owner: An individual who possesses the necessary resources to start a new company. This role may be filled by someone else, as entrepreneurs do not always have the necessary means.
    • Manager: An individual, or group of individuals, who hold the authority to set company objectives and make decisions to achieve them.
    • Entrepreneur vs. Manager: Entrepreneurs are considered agents of change, creating resources, while managers oversee the process and control the staff.

    Company Management

    • Management: Responsible for coordinating and integrating the productive factors of the company, especially human resources.
    • Managerial Functions:
      • Planning: Deciding future actions and establishing the necessary means to achieve them.
      • Organizing: Designing a stable set of relationships between company members to ensure everyone understands their role in achieving objectives.

    Vertical Integration

    • Vertical Integration: When a company controls multiple stages of the supply chain, from raw materials to distribution.
      • Advantages:
        • Easier Coordination and Planning: Reduces inefficiencies and delays.
        • Reduced Dependency: Minimizes reliance on third parties.
        • Improved Competitive Positioning: Adds value to products, leading to a competitive advantage.
        • Protection of Information: Protects knowledge about technology or new products.
        • Greater Control over the End Market: Allows the company to directly influence the final market offering.
      • Disadvantages:
        • Increased Risk: Makes companies more vulnerable to changes.
        • Reduced Flexibility: Makes companies more difficult to adapt to market changes.
        • Higher Administrative Costs: Increases the cost of managing multiple stages of the supply chain.

    Internationalization

    • Internationalization: Expansion of a company's operations to other countries to access new markets.
    • Multinational Corporation (MNC): Operates in multiple countries with a large volume of activity in each.
    • Factors Influencing Internationalization: The factors that influence a company to expand outside of its home country.
    • Entry Strategy: Determining how a company will enter a new market.
      • Advantages:
        • Economies of Scale: Lowering production costs by increasing volume.
        • Economies of Scope: Producing different products using the same resources.
        • Market Expansion: Increased reach and potential customers.
        • Location Economies: Utilizing cheaper labor or resources in other regions.
        • Access to Resources: Obtaining resources unavailable in the home country.
      • Disadvantages:
        • Higher Risk: Exposure to new market conditions and regulations.
        • Cultural Diversity: Challenges in managing different cultures and workstyles.
        • Bureaucracy: Challenges in navigating international laws and regulations.
        • Distribution Costs: Increased costs associated with transportation and logistics.
        • Trade Barriers: Restrictions on international trade that hinder business operations.

    Internationalization Process

    • Process:
      • Export: Initial entry by selling products or services to foreign markets.
      • Foreign Direct Investment (FDI): Investing directly in foreign companies or establishing new operations abroad.
      • Joint Venture: Sharing resources, risks, and profits with a foreign partner.
      • Acquisition: Purchasing an existing foreign company to gain market access and resources.
      • Greenfield Investment: Establishing completely new operations in a foreign country.

    Multinational Companies

    • Main Features:
      • Efficiency: Operational excellence and cost control.
      • Strong Investment in R&D: Focus on innovation and technological advancements.
      • Environmental Adaptation: Adjusting operations to local market conditions.
      • Operating in Multiple Markets: Presence in various countries.
      • Tendency to Grow Indefinitely: Continuous expansion and development.

    Types of Multinational Companies

    • International Company: Most decision-making and technological development remains within the parent company.
    • Multinational Company: More decentralized operations with greater autonomy for subsidiaries in different regions.
    • Global Company: Standardized products and services with a global focus on efficiency.
    • Transnational Company: Seamless integration of operations across global locations with decentralized decision-making and shared resources.

    Contractual Approach

    • Defines a company as a collection of contracts, where a transaction is an exchange of a good or service between two independent units.
    • Focuses on relationships: companies are formed by contracts that can involve relationships of authority or agencies.
    • It doesn't focus solely on internal authority, but on economic agreements between the parties involved in production.
    • It considers the difficulties that arise when measuring productivity and setting prices and rewards within the company.
    • The company is viewed as a "nexus of contracts" that allows for coordination of activities and reduces transaction costs.

    Systemic Approach

    • Views the company as a system, a set of interrelated elements that transform inputs into products or services (outputs).
    • Companies are open systems, interacting with and adapting to their environment, using the principles of general systems theory to explain how the company relates to and adapts to external change.
    • It simplifies the company's composition to understand its behavior and facilitates control and adaptation processes to its environment.
    • It divides the elements of a company into passive factors and active factors, both of which play a fundamental role in its operation and development.

    Passive Factors

    • These are the resources that the company possesses and uses to operate, but they do not act autonomously.
    • Classical Economic Resources include land and capital.
      • Land includes the physical space where the company operates (offices, factories, land, etc.).
      • Capital includes the financial and technical resources that the company uses to carry out its activities.

    Types of Capital

    • Financial Capital includes liquid financial resources, such as cash, bank accounts, investments, etc.
    • Technical Capital includes tangible and intangible assets.
      • Tangible technical capital includes:
        • Investment technology or capital equipment: Machinery, tools, IT equipment, and anything the company uses to produce.
        • Materials and goods: raw materials, finished products, and components necessary for production.
      • Intangible technical capital includes:
        • Technology and software: Computer programs and technology used in the company's operations.
        • Intellectual Capital: Includes knowledge, patents, ideas, experience, and intellectual property that the company possesses.

    Active Factors

    • These are the human and organizational resources that drive and manage the company's activities.
    • Labor Force (human capital) includes:
      • Employees or workers: The people who perform daily work and contribute to the production of goods or services.
      • Managers or administrators: Those who make decisions, lead, and manage the company to ensure its success and efficient operation.

    Owners of the Company's Capital

    • Controlling Shareholders: Owners who have enough shares to influence or control the company's decisions.
    • Simple Financial Investors: Those who own shares in the company but do not have a direct role in its management.

    Organizational Factor

    • This factor integrates and coordinates all the previous elements.
    • It refers to the organizational structure, rules, procedures, and culture that allow the company to operate effectively and efficiently.

    Structural Elements

    • Refer to the physical and hierarchical organization of the company, including the organizational structure, departments, chain of command, and information systems.

    Behavioral Elements

    • Focus on human interactions and behavior within the company, including organizational culture, motivation, communication, teamwork, and professional development.

    Types of Companies

    • According to Ownership or Ownership of Capital:
      • Private Companies: Capital is in the hands of individuals or private entities, with independent control and management.
      • Public Companies: Capital is in the hands of the government or public entities.

    The Entrepreneur

    • Is the central productive factor, as they negotiate with the other factors and establish relationships with the environment.
    • The figure is not theoretically studied as a central point, and the people who have studied it haven't concluded their role in the firm.
    • There are 4 approaches to their figure and functions:

    Risk-Entrepreneur

    • Refers to the idea that the entrepreneur takes risks as part of their role in the economy.
    • Ideas of three important economists:
      • Knight: Entrepreneur is a risk-taking individual who faces uncertainty and has a higher level of risk tolerance than other economic actors.
      • Schumpeter: Entrepreneurs are innovators who create change and disruption in the economy by introducing new products, processes, and business models.
      • Hayek: Entrepreneurs are information brokers who gather and coordinate dispersed knowledge in the economy.

    Control-Entrepreneur

    • Refers to the role of the entrepreneur as a figure of control and direction within the company.
    • Ideas of three economists:
      • Coase: Entrepreneurs play a central role in reducing transaction costs and coordinating activities within the economy.
      • Chandler: Entrepreneurs are the driving force behind the growth and development of large corporations.
      • Nelson: Entrepreneurs are innovators who create new knowledge and intellectual property.

    Capitalist-Entrepreneur

    • A vision in which the entrepreneur and the capitalist are the same person.
    • Ideas of several economists:
      • Marx: The capitalist is the owner of the means of production, and the entrepreneur is the one who takes risks and manages the business.
      • Veblen: Entrepreneurs are agents of the capitalist system who seek to maximize profits.
      • Galbraith: Entrepreneurs are no longer independent operators, but are subject to the constraints of large corporations and the market.

    Opportunity-Entrepreneur

    • An entrepreneur characterized by their ability to discover and take advantage of opportunities in the market.
    • Ideas of three economists:
      • Kirzner: Entrepreneurial alertness is the ability to identify and seize opportunities that others have missed.
      • Baumol: Entrepreneurs can be either productive or unproductive, depending on whether they create wealth or simply seek to redistribute it.
      • Rumelt: Entrepreneurial skills are important for creating and sustaining competitive advantage in a dynamic environment.

    Entrepreneur Profile

    • In three key parts:
      • Technical Knowledge: Requires specific training and technical knowledge to create and manage a company.
      • Personal Skills: The entrepreneur must have personal skills that allow them to excel in their activity, such as leadership.
      • Response Capacity: Ability to take advantage of opportunities, solve problems, and make decisions quickly and effectively, adapting to challenges in the market.

    Company Creation

    • Involves addressing the following issues:
      • Having an idea.
      • Drawing up a business plan.
      • Incorporating the company.
      • Idea and Opportunity
        • Having an idea, but it must be a business opportunity,
        • Seeking business opportunities and then refining the idea.

    Elements to Consider

    • Simple, coherent, and long-term objectives: Strategy is a decision that affects the company for a long time.
    • Knowledge of the competitive environment: It is necessary to identify opportunities to take advantage of, and also take into account dangers to avoid.
    • Assessment of internal strengths: Each company has internal qualities that differentiate it which can be the basis of success.
    • Effective implementation: The strategies must be translated into a concrete action plan. It is also necessary to establish control systems that identify problems in its implementation and allow changes to be introduced.

    Implementation of the Strategy

    • The 4 elements mentioned form the definition of strategy and the success of the strategy depends on the compatibility and alignment of all of them.
    • It is necessary to know which of the internal elements are the most appropriate (to compete in their specific environment) in the competitive environment where they are found, and at the same time reflect this in the objectives.
      • Objectives must be designed to fit the capabilities and environment of the company.
    • There are times when the objectives set imply developing new internal strengths, as the company lacks them.
    • There are objectives that require a change in the competitive environment.
    • Companies with greater internal diversity of activities and businesses cannot just have one strategy for all.
    • There are three levels of strategy:

    Levels of Managerial Strategy

    • These three different levels of strategy generally have a hierarchy that corresponds to that of the organization (Top management, middle management, first-line management, in that same order).
    • However, the division of the company into these three levels does not always occur.
    • In companies that develop related activities around the same product or market, the first two levels overlap.
    • In small companies it is possible to find only one level of strategy that addresses the decision of all three.

    Corporate

    • Sets the basic orientation of the entire company.
    • The strategy is oriented towards decision-making related to the identification of the businesses in which the company wants to enter, and the growth forms that the company can have.
    • The horizontal scope of the company is determined by the variety of products, by the heterogeneity of products offered, with anoption:
      • Specialization
      • Diversification

    Specialization

    • Some companies focus on one type of product, offering multiple items that meet similar customer needs.
    • By staying in a familiar area, they aim to strengthen their market position and grow sales.
    • This can be done by increasing the use of current products, attracting new customers or those from competitors, and replacing older products with newer ones
    • It's a low-risk strategy since the company can continue using the same sales channels, raw materials, and production processes.
    • However, it doesn't work in all sectors. In industries with strong competition or where launching new products is difficult, increasing sales is challenging. Similarly, in markets with uniform customer needs, adapting products to increase sales is harder.
    • Recently, there has been a trend toward less business specialization

    Diversification

    • Involves companies offering a wide range of products.
    • It doesn't always require new resources, as it can create synergies by using underutilized resources and capabilities.
    • Related Diversification occurs when a company expands using existing resources and capabilities.
    • Unrelated Diversification happens when the new products are very different, and the company can't leverage existing resources.
    • Improves competitive positioning by sharing costs across businesses.
    • Allows entry into attractive sectors with favorable market conditions.

    Disadvantages of Diversification

    • It doesn't always boost profitability.
    • Synergies require strong coordination and effort.
    • Can lead to less flexibility.
    • Unrelated diversification is often unprofitable due to large differences in resource and capability needs across businesses.

    Vertical Integration

    • Refers to a business strategy where a company controls multiple stages of the production or supply chain.
    • These stages can range from sourcing raw materials to manufacturing and delivering the finished product to consumers.
    • When a company engages in multiple stages of this process internally, without relying on external suppliers or buyers, it is considered vertically integrated.

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    Description

    This quiz covers the essential resources a company utilizes for its operations, including materials, intangible assets, and human capital. It delves into the roles of employees, managers, and capital owners within the corporate structure. Test your understanding of how these elements contribute to a company's success.

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