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 Question 1 Complete the following sentence When developing corporate strategy you are looking at the firm for the perspective of _____________ a. Society b. Gaining competitive advantage c. Customers d. Shareholders Question 2 Managers often claim that growth and risk reduction result from diversification. However such moves are often not in the interests of shareholders. What are the reasons for this? a. In a developed capital market shareholders can more effectively diversify their portfolio themselves to reduce risk b. In a less developed capital market, ownership by a group is needed to gain transparency on performance and exert control c. Unless growth is achieved at a level of profitability above that in the firm’s current activities then it dilutes the performance of the firm’s stock. Shareholders would have been better off investing directly in the acquired business. d. While diversification can lead to more consistent firm performance this often comes at the expense of above average performance. This reduces the returns across shareholder’s own investment portfolios Question 3 A Synergy Manager adds value through which of the following activities? a. Realising the cost savings in an acquisition by the removal of duplicate activities and departments b. Using the parent’s centrally held competencies and expertise to enhance the performance of individual business units (for example subsidiaries of Virgin using its brand) c. Managing the financial flows between individual subsidiaries. For example balancing the cash needs of mature businesses with those of businesses in growing markets d. Spotting opportunities and facilitating the sharing/transfer of resources and expertise between different subsidiaries to grasp those opportunities Question 4 A parent firm imposes cost on to any business unit under its ownership. The reasons for this include: a. The are business unit administration costs resulting from control, reporting and other governance processes required by the parent b. There are opportunity costs for business units resulting from it’s managers having less focus on its performance c. It needs to allocate headquarters expenses d. There are opportunity costs for the business unit as a result of reduced flexibility and a lower speed of reaction to market events Question 5 Given the group’s origin, which business unit most clearly fits into the heartland zone of a Parenting Matrix for Esquel? a. The cotton farms the group own b. The accessory manufacturing business c. The retailing business (Pye) d. Garment Manufacture Question 6 Match the area on Porter and Kramer’s CSV framework with its definition Social Dimensions of Competitive Context Value Chain Impacts Generic Social Issues a. Social issues in the external environment that most significantly affect a company’s current or future competitiveness and strategy b. Social issues that are not significantly affected by the company’s operations and do not materially affect its long term competitiveness c. Social issues that are significantly affected by a company’s everyday activities in its business operations   Question 7 In Porter and Kramer’s CSV matrix, strategic CSR includes which of the following social issues? a. Value Chain Impacts where action will create economic value as well as social value b. The small number of significant social issues mapped into the ‘Social Dimensions of Competitive Context’ box c. Generic Social Issues d. All Value Chain Impacts Question 8 Porter and Kramer suggest actions for each social issue depending on where it maps in the CSV framework. Match the action to each part of the framework. Act as a good citizen by responding to local requirements but minimising effort. CSR spend can have more impact if invested elsewhere Mitigate any harm to social value being caused by the day-to-day activities of the firm. Fix and then focus CSR investment elsewhere Invest to change the day-to-day activities of the firm to benefit society where the investments also creating economic value Invest and leverage the firm’s capabilities to have a major impact on improving key areas of the firms current and future competitive landscape as well as significantly benefiting society a. Value Chain Impacts where action creates shared value (social value and economic value) b. Social Dimensions of Competitive Context c. Generic Social Issues d. Value Chain Impacts where actions do not create economic value Question 9 Which of the following are criticisms of Porter and Kramer’s concept of share value? a. It reflects a shallow conception of what the role of a firm in society actually is b. It ignore deep tensions between social and economic goals in the firm and society c. It is naive about the challenges of business compliance (what is right and wrong is not clear cut) d. It brings a strategic perspective to the social responsibility of a firm   Question 10 In to which categories on Porter and Kramer’s CSV framework would the following social initiatives pursued by Esquel be placed? Donations to areas struck by a natural disaster Improving waste water treatment in its dying operations in Gaoming Installation of a thermo-power plant in Gaoming that cuts emmisions and cost of electricity Working with farmers on organic approaches to growing of cotton in response to growing concern from end customers and major clothing brands. Providing employment to people in the Gaoming province of China a. Generic Social Issues b. This is part of Esquel’s standard business practices and therefore not a voluntary social responsibility initiative c. Value Chain Impacts (mitigating harm to social value) d. Value Chain Impacts (creating shared value) e. Social Dimensions of Competitive Context

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