1/2 of chap 8

Transaction-specific investments

an advantage of a firm in organizing economic activity

diversification

an increase in the variety of products and services a firm offers or markets and the geographic regions in which it competes

unrelated diversification

a conglomerate fits which type of corporate diversification model

Transaction cost economies

a theoretical framework that helps explain and predict the boundaries of the firm

Corporate

strategy involves the decision that senior management makes and the goal direction actions it takes to gain and sustain competitive advantage in several industries and markets simultaneously

Boston Consulting Group (BCG) growth-share matrix

the _______ is a corporate planning tool in which the corporation is viewed as a portfolio of business units

Vertical Integration

the firm's ownership of its production of needed inputs or of the channels by which it distributes its outputs

unrelated diversification and single business

the types of diversification that tend to have the lowest performance

the purpose of the core competencies-market matrix

to provide guidance regarding how to diversify in order to grow the company

stages 4 and 5 of the industry value chain involve:

marketing, sales, after-sales service and support

related linked diversification strategy

one in which executives pursue various businesses opportunities that share only a limited number of linkages

coordination and influence costs

what are the costs associated with related-diversification strategies

moderate

what level of diversification leads to the highest level of performance

what is the fundamental corporate-level strategic decision

what products and services should the firm offer?

1. economies of scale 2. transaction costs 3. economies of scope 4. core competencies

which of the following are the 4 underlying strategic management concepts that determine the scope of a firm

What are the main types of corporate diversification

1. unrelated diversification 2. dominant business 3. related diversification 4. single business

In a fully vertically integrated organization

all stages of the industry value chain are conducted within the firm

According to BCG matrix, cash cows are SBUd that do which of the following

compete in a low-growth market but have high market share

what are the costs associated with the related-diversification strategies

coordination costs and influence costs

Industry value chain

depiction of the transformation of raw materials into finished goods and services along distinct vertical stages, each of which typically represents a distinct industry in which a number of different firms are competing

corporate strategy needs to be dynamic over time in order to:

diversify to capture growth opportunities, keep and maintain a competitive advantage, respond to the ever-changing external enviornment

diversification discount

firms that pursue an unrelated diversification strategy and are unable to create additional value tend to experience:

advantages of organizing economic activity at the market level include:

high-powered incentives and increased flexibility

dogs

in the BCG matrix _______ hold the small market share in low-growth market

in general, related diversification leads to high levels of performance because

it accesses numerous areas of value creation, such as economies of scale and scope

When a multi-business firm pools and shares resources and leverages competencies across different business lines it is following a

related diversification strategy

related or unrelated

to figure out if a firm's type of diversification is ______, one can ask questions about the degree to which the corporation's business units share core competencies