Mqm 385 Ch 9 Test 2

Front 1

corporate level strategy used to identify

Back 1

businesses or industries

value creation activities

methods to enter or leave businesses or industries

Front 2

a multi business company must construct its business model at two levels

Back 2

business models and strategies

higher level multibusiness model justifies its entry into different businesses and industries

Front 3

corporate level strategies are

Back 3

primarily directed toward improving a company's competitive advantage and profitability in its present business

Front 4

horizontal integration

Back 4

the process of acquiring or merging with industry competitors

Front 5

vertical integration

Back 5

expanding operations backward into an industry that produces inputs for the company or forward into and industry that distributes the company's products

Front 6

strategic outsourcing

Back 6

letting some value creation activities within a business be performed by an independent entity

Front 7

staying inside a single industry allows a company to

Back 7

focus resources

stick to the knitting - stay focused on what it does best

Front 8

benefits of horizontal integration 5

Back 8

lowers the cost structure
increase product differentiation
replicates the business model
reduces industry rivalry
increases bargaining power

Front 9

problems with horizontal integration

Back 9

the majority of merges do not create value and that many actually destroy value

Front 10

implementing a horizontal integration is not easy

Back 10

different culture
management turnover creates hostility
overestimate benefits
underestimate problems

Front 11

merger may be blocked

Back 11

create a dominant competitor
too much industry consolidation
future abuse of market power

Front 12

full integration

Back 12

company produces all of a particular input from its own operations

disposes of all of its completed products through its own outlets

Front 13

taper integration

Back 13

in addition to company owned suppliers, the company will also use other suppliers for inputs or independent outlets in addition to company owned outlets

Front 14

increasing profitability through vertical integration

Back 14

facilitates investments in efficiency enhancing specialized assets

enhances or protects product quality

results in improved scheduling

Front 15

problems with vertical integration

Back 15

increased cost structure

fast changing technology

unpredictable demand

risk in investments

Front 16

strategic alliances and long term contracting

Back 16

enables creation of a stable long term relationship

becomes a substitute for vertical integration

avoids the problems of having to manage a company located in adjacent industry

Front 17

building long term cooperative relationships

Back 17

hostage taking - mutual dependency
credible commitments - promise or pledge
maintaining market discipline power to discipline

Front 18

strategic outsourcing

Back 18

one or more of a company's value chain activities or functions to be performed by independent specialized companies that focus all their skills and knowledge on just one kind of activity

Front 19

virtual corporation

Back 19

describes companies that have pursued extensive strategic outsourcing

Front 20

benefits of outsourcing

Back 20

lower cost structure
enhanced differentiation
focus on the core business

Front 21

strategic outsourcing may be detrimental when there is

Back 21

holdup - company becomes too dependent

loss of information - company loses important customer contact or competitive information