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Business Policy and Strategy Quiz

Terms in this set (17)

Related Diversification
a firm entering a different business in which it can benefit from leveraging core competencies, sharing activities, or building market power
Economies of Scope (related diversification)
cost savings from leveraging core competencies or sharing related activities among businesses in a corporation
Core Competencies
a firm's strategic resources that reflect the collective learning in the organization
Sharing Related Activities
having activities of two or more businesses' value chains done by one of the businesses
Market Power (related diversification)
abilities to profit through restricting or controlling supply to a market or coordinating with other firms to reduce investment
What falls under the "market of power" scope?
pooled negotiating power and vertical integration
Pooled Negotiating Power
the improvement in bargaining position relative to suppliers and customers
Vertical Integration
an expansion or extension of the firm by integrating, preceding, or successive production processes
What is a benefit of vertical integration?
protection of and control over valuable assets
What is a risk of vertical integration?
loss of flexibility resulting from large investments
How do you analyze vertical integration?
transaction cost perspective
Transaction Cost Perspective
a perspective that the choice of a transaction's governance structure, such as vertical integration or market transaction, is influenced by transaction costs, including search, negotiating, and enforcement costs associated with each choice
Unrelated Diversification
a firm entering a different business that has little horizontal interaction with other businesses of a firm
What falls under the "parenting, restructuring, and financial synergies" scope?
corporate restructuring & parenting and portfolio management
Parenting Advantage
the positive contributions of the corporate office to a new business as a result of expertise and support provided and not as a result of substantial changes in assets, capital structure, or management
Restructuring
the intervention of the corporate office in a new business that substantially changes the assets, capital structure, and / or management, including selling off parts of the business, changing the management, reducing payroll & unnecessary sources of expenses, changing strategies, and infusing the new business with new technologies, processes, and reward systems
Portfolio Management
a method of a) assessing the competitive position of a portfolio of businesses within a corporation, b) suggesting strategic alternatives for each business, and c) identifying priorities for the allocation of resources across the businesses
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