BUS 496 - Strategic Management - Ch. 5
friendly merger
If the merger/acquisition is desired by both firms.
hostile takeover
If the merger/acquisition is not desired by both firms.
takeover
If the merger/acquisition is not desired by both firms.
financial objectives
Include desired results growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, and so on.
integration strategies
Includes forward integration, backward integration, and horizontal integration (sometimes collectively referred to as vertical integration strategies).
cooperative arrangements
Includes joint ventures, research and development partnerships, cross-distribution agreements, cross-licensing agreements, cross-manufacturing agreements, and joint-bidding consortia.
intensive strategies
Includes market development, market penetration, and product development.
product development
Increased sales by improving or modifying present products or services.
market penetration
Increasing market share for present products or services in present markets through greater marketing efforts.
turbulent, high-velocity markets
Industries that are changing very fast, such as telecommunications, medical, biotechnology, pharmaceuticals, computer hardware, software, and virtually all Internet-based industries).
market development
Introducing present products or services into new geographic areas.
generic strategies
Michael Porter's strategy breakdown; consists of three strategies: cost leadership, differentiation, and focus.
differentiation
One of Michael Porter's strategy dimensions that involves a firm producing products and services considered unique industry-wide and directed at consumers who are relatively price-insensitive.
focus
One of Michael Porter's strategy dimensions that involves a firm producing products and services that fulfill the needs of small groups of consumers.
cost-leadership
One of Michael Porter's strategy dimensions that involves a firm producing standardized products at a very low per-unit cost for consumers who are price sensitive.
de-integration
Reducing the pursuit of backward integration; instead of owning suppliers, companies negotiate with several outside suppliers.
reshoring
Refers to American companies planning to move some of their manufacturing back to the USA.
divestiture
Selling a division or part of an organization.
liquidation
Selling all of a company's assets, in parts, for their tangible worth.
long-term objectives
Specific results that an organization seeks to achieve (in more than one year) in pursuing its basic vision/mission/strategy.
first mover advantages
The benefits a firm may achieve by entering a new market or developing a new product or service before rival firms.
combination strategy
The pursuit of a combination of two or more strategies simultaneously.
related diversification
When a firm acquires a new business whose value chain possesses competitively valuable cross business strategic fits.
unrelated diversification
When a firm acquires a new business whose value chains are so dissimilar that no competitively valuable cross-business relationships exist.
white knight
When a firm agrees to acquire another firm at a point in time when that other firm is facing a hostile takeover by some company.
business-process outsourcing (BPO)
When a firm contracts with an outside firm(s) to take over some of their functional operations, such as human resources, information systems, payroll, accounting, or customer service.
diversification strategies
When a firm enters a new business/ industry, either related and unrelated to their existing business/industry. Related diversification is when the old vs. new business value chains possesses competitively valuable cross-business strategic fits; unrelated diversification is when the old vs. new business value chains are so dissimilar that no competitively valuable cross-business relationships exist.
acquisition
When a large organization purchases (acquires) a smaller firm; a merger.
retrenchment
When an organization regroups through cost and asset reduction to reverse declining sales and profits.
secondary buyouts
When private-equity firms buying companies from other private-equity firms.
dividend recapitalizations
When private-equity firms especially, but other firms also, borrow money to fund dividend payouts to themselves.
leveraged buyout
When the outstanding shares of a corporation are bought by the company's management and other private investors using borrowed funds.
merger
When two organizations of about equal size unite to form one enterprise; an acquisition.
vertical integration
A combination of three strategies: backward, forward, and horizontal integration, allowing a firm to gain control over distributors, suppliers, and/or competitors respectively.
bankruptcy
A legal document that allows a firm to avoid major debt obligations and void union contracts in order to survive and regroup as a firm. There are five major types: Chapter 2, Chapter 10, and Chapter 11.
backward integration
A strategy seeking ownership or increased control of a firm's suppliers, such as a manufacturer acquiring its raw material source firms.
forward integration
A strategy that involves gaining ownership or increased control over distributors or retailers, such as a manufacturer opening its own chain of stores.
joint venture
A strategy that occurs when two or more companies form a temporary partnership/consortium/business for the purpose of capitalizing on some opportunity.
horizontal integration
Acquiring a rival firm.
franchising
An effective means of implementing forward integration whereby a franchisee purchases the right to own one or more stores/restaurants of a chain firm.
strategic objectives
Desired results such as a larger market share, quicker on-time delivery than rivals, shorter design to market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improved products to market ahead of rivals.