Which of the following does not necessarily create corporate value? Managing the

Question

Which of the following does not necessarily create corporate value?

Managing the value chain

Maintaining a good fit between the company’s specialized resources and the portfolio of businesses in which the company is operating.

Good allocation of decision rights between the headquarters office and the business units to realize all the potential economies of scope.

Having internal measurement, information, and incentive systems to reduce agency costs.

Investing significant resources to product advertising and marketing activities.

Explanation / Answer

The correct answer is -

Good allocation of decision rights between the headquarters office and the business units to realize all the potential economies of scope.

Following are the key factors that a firm should eamine:

The key success factors and risk associated with the firm's chosen competitive strategy.

The resources and capabilities, current and potential, of the firm to deal with the key success factors and risks.

The compatibility between the competitive strategy chosen by the firm and the manner in which it has structured its activities ( R&D, design, manufacturing, marketing and sitribution etc)

The sustainability of the firm's competitive advantage

the potential changes in the industry structure and the adaptability of the firm to address thses changes.

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