Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
41 Cards in this Set
- Front
- Back
|
Corporate-level strategy |
the way a company seeks to create value through the configuration and coordination of multi-market activities
|
|
|
Corporate advantage |
occurs when a firm maximizes its resources to build a competitive advantage across its business units |
|
|
Scope |
the markets and businesses the firm will compete in |
|
|
Organizational design |
the manner in which activities of that the firm will be coordinated |
|
|
Ownership |
the relationship between business units |
|
|
Diversification strategy |
a strategy in which a firm engages in several different businesses that may or may not be related in an attempt to create more value than if the businesses existed as stand-alone entities |
|
|
Single-product strategy |
a strategy in which a firm focuses on one specific product, typically in one market |
|
|
Related diversification |
a firm that owns more than one business that uses a similar set of tangible and intangible resources (horizontal diversification) |
|
|
Unrelated diversification |
a firm that manages several businesses with no reasonable connection |
|
|
Economies of scope |
the potential for sharing resources or transferring skills and core competencies between business units
|
|
|
Synergy |
Created when a firm generates sustainable cost savings by combining duplicate activities or deploying underutilized assets across multiple businesses |
|
|
Diversification Test |
a way for managers to identify conditions under which diversification will create a shareholder value -attractiveness test -cost of entry test -better off test |
|
|
Attractiveness test |
is the industry profitable or capable of being profitable? |
|
|
Cost of entry test |
how costly is it to enter the new industry? |
|
|
Better off test |
will the new industry provide the firm with a competitive advantage? |
|
|
Related diversification sharing... |
-sharing sales forces, ad expenses, and distribution channels -exploiting closely related technologies or research and development -transferring operational knowledge -using a firm's strong brand name across other products |
|
|
Market power |
achieved when a firm attempts to increase the price at which it sells products to levels above the normal price seen in the market |
|
|
Successful Related diversification |
-the activities involved in the business are similar enough that sharing expertise id meaningful -the transfer of skills involves activities important to competitive advantage -the skills transferred represent a significant source of competitive advantage for the receiving unit |
|
|
Financial economies |
cost savings that a firm achieves through the distribution of capital among business units -effectively allocating capital among units -purchasing a new business and restructuring its assets within the goal of selling it back into the market at higher value |
|
|
Reasons for Unrelated diversification |
-reduce the overall risk of a business with distribution of capital between businesses -to use capital from a successful unit to a failing one -try to raise the value of undervalued assets |
|
|
International strategy |
a strategy a firm uses to conduct operations outside its home market by selling products and services or conducting activities through the use of international resources to create a value chain
|
|
|
Reasons for international strategy |
-finding new markets -achieving economies of sale -taking advantage of certain local factors |
|
|
Multidomestic strategy |
a strategy a firm uses to tailor its products and services to local markets by granting autonomy to the local international unit |
|
|
Global strategy |
a strategy marked by standardization by products or services across international boundaries |
|
|
International scope test |
-better off test -ownership test |
|
|
Better off test |
-offers the firm "factor cost differences" -economies of sale in its production -selling an existing product in a different country |
|
|
Factor cost differences |
cost savings achieved by access to raw materials or other factors such as low cost labor
|
|
|
Ownership test |
why can't a firm license or sell its resources to a foreign firm? |
|
|
Vertical integration |
occurs when one corporation owns business unit that make inputs for other business units in the same corporation |
|
|
Administrative costs |
the costs of coordinating activities between business units |
|
|
Transaction costs |
costs associated with obtaining a product or service from a contractor or supplier |
|
|
Backward integration |
occurs when a firm owns or controls the inputs it uses |
|
|
Forward integration |
occurs when a firm owns or controls the customers or distribution channels for its main products |
|
|
Vertical integration test |
-better off test -ownership test |
|
|
Spot contracts |
contracts that allows a buyer to purchase a commodity at a specific price -short term |
|
|
Outsourcing |
contracting with a firm outside the corporation to perform certain tasks or functions that the corporation used to do on its own -usually long term |
|
|
Alliances |
agreements in which a firm develops a relationship with a specific supplier that allows for maximum coordination between the two units |
|
|
Franchises |
a firm contracts with individual owners to operate its retail units |
|
|
Offshoring |
outsourcing a business activity to a contractor in a foreign country |
|
|
Outsourcing advantages |
-reduces the cost of the firms noncore value chain activities -allows a firm to focus more on core functions in its value chain |
|
|
Outsourcing disadvantages |
-outsourcing of too many activities may damage the firms internal core competencies and capabilities -outsourcing may isolate a firm from its external market |
