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