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11 Cards in this Set

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What is corporate-level strategy?

This is the strategy that focuses on gaining long-term revenue, profits, and market value through managing operations in multiple businesses. It’s about obtaining a sustainable competitive advantage for the company as a whole.

What issues does a corporate-level strategy address?

It addresses the issues of what businesses the company should compete in and how should the businesses be managed to jointly create more value than if they were freestanding units.

How can managers create value for their firms through related diversification?

Managers create values through synergies.

Value is created through economies of scope (leveraging core competencies or sharing activities) revenue enhancement and pooled negotiating power.

How can managers create value for their firms through unrelated diversification?

Managers create values through synergies.

Value is created through financial synergies and parenting. Also, they can add value by viewing the entire corporation as a portfolio.

What are some of the various means that firms can use to diversify?

- Mergers and Acquisitions

- Strategic alliance and joint venture

- Internal Development

What are the pros and cons mergers and acquisitions?

- (growth and speed, expand product offering, provide three bases of synergy, enter new markets, lead to consolidation within industry forcing others to merge)

- (failure of integration, high takeover premium, imitate advantages realized, managers ego and credibility can get in the way)

What are the pros and cons strategic alliance and joint ventures?

- Enter new markets, reduce cost in value chain, developing and diffusing new tech

- Bad partner, not a win-win situation, trust and compatible issues

What are the pros and cons Internal development?

- Don’t have to share any wealth, develop new products at low cost

- Time consuming, need capabilities to allow them to move quickly into market

How can companies benefit from related diversification? Unrelated diversification?


What are some of the ways that a firm can restructure its business?

Asset restructuring, capital restructuring (change the debt-equity mix), and management restructuring

Given the evidence that shareholders of many acquiring firms gain little or nothing from acquisitions, why do so many firms follow an acquisition strategy?

To gain a competitive advantage for the entire company. The shareholders have potential for larger gains than if the firms did not attempt an acquisition.