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.