Chapter 6 - MGMT 6850

Term
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corporate level strategy
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Terms in this set (27)
corporate level strategy
a strategy that focuses on gaining long-term revenue, profits, and market value through managing operations in multiple businesses
Diversification
the process of firms expanding their operations by entering new businesses
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
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 activities
having activities of two or more businesses' value chains done by one of the businesses
market power
firms' abilities to profit through restricting or controlling supply to a market or coordinating with other firms to reduce investment
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
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, contracting, monitoring, and enforcement costs, associated with each choice
unrelated diversificationa firm entering a different business that has little horizontal interaction with other businesses of a firmparenting advantagethe 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 managementrestructuringthe 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 and unnecessary sources of expenses, changing strategies, and infusing the new business with new technologies, processes, and reward systemsportfolio managementa 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.acquisitionsthe incorporation of one firm into another through purchasemergersthe combining of two or more firms into one new legal entitydivestmentthe exit of a business from a firm's portfoliostrategic alliancesa cooperative relationship between two or more firmsjoint venturesnew entities formed within a strategic alliance in which two or more firms, the parents, contribute equity to form the new legal entityinternal developmententering a new business through investment in new facilities, often called corporate entrepreneurship and new venture developmentmanagerial motivesmanagers acting in their own self-interest rather than to maximize long-term shareholder valuegrowth for growth's sakemanagers' actions to grow the size of their firms not to increase long-term profitability but to serve managerial self-interestegotismmanagers' actions to shape their firms' strategies to serve their selfish interests rather than to maximize long-term shareholder valueantitakeover tacticsmanagers' actions to avoid losing wealth or power as a result of a hostile takeovergreenmaila payment by a firm to a hostile party for the firm's stock at a premium, made when the firm's management feels that the hostile party is about to make a tender offergolden parachutea prearranged contract with managers specifying that, in the event of a hostile takeover, the target firm's managers will be paid a significant severance packagepoison pillused by a company to give shareholders certain rights in the event of takeover by another firm