Question

Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules: a. compete with one another in Olympia's internal capital markets. b. are network member firms while Olympia is the strategic center firm. c. are not necessarily related to one another in terms of products or markets. d. use integrative mechanisms to share core competencies.

Answer 1

Answer:

A) compete with one another in Olympia's internal capital markets.

B) are network member firms while Olympia is the strategic center firm.

C) are not necessarily related to one another in terms of products or markets.

Explanation:

A) An internal capital market refers to the way a corporation assigns capital resources to its different business units or subsidiaries in order to maximize its profits. The headquarter will always allocate more resources to its most profitable business units. Therefore, all the business units within a corporation compete against each other in order to get the most resources assigned to them.

B) When a corporation has different business units that are not necessarily working together but all must follow the same business strategy, the headquarters (Olympia Industries) acts as the strategic center and decides what strategies the whole corporation will follow. While the different business units act as network partners that operate separately but under the umbrella and guidance of the strategic center and its corporate strategy.

C) The fact that they all are part of a bigger corporation doesn't mean that they produce similar goods or services, or that they even compete in the same markets. For example, Amazon's profits proceed mostly from its cloud service unit AWS (B2B) and not the retail unit (B2C).

D) If the different business units don't work together, then it is probable that they don't share the same core competencies.