Chapter 9: Corporate Strategy

alliance management capability

a firm's ability to effectively manage three alliance-related tasks concurrently: 1. partner selection and alliance formation 2. alliance design and governance 3. post-formation alliance management

managerial hubris

a form of self-delusion in which managers convince themselves of their superior skills in the face of clear evidence to the contrary

joint venture

a standalone organization created and jointly owned by two or more parent companies

strategic alliance

a voluntary arrangement between firms that involves the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services

hostile takeover

acquisition in which the target company does not wish to be acquired

real-options perspective

approach to strategic decision making that breaks down a larger investment decision into a set of smaller decisions that are staged sequentially over time. This approach allows the firm to obtain additional information in pre-determined stages

build-borrow-or-buy framework

conceptual model that aids strategists in deciding whether to pursue internal development (build), enter a contract arrangement or strategic alliance (borrow), or acquire new resources, capabilities and competencies (buy)

co-opetition

cooperation by competitors to achieve a strategic objective

corporate venture capital (CVC)

equity investments by established firms in entrepreneurial ventures; CVC falls under the broader rubric of equity alliances

explicit knowledge

knowledge that can be codified (info, facts, instructions, recipes); concerns knowing about a process or product

tacit knowledge

knowledge that cannot be codified; concerns knowing how to do a certain task and can be acquired only through active participation in that task

non-equity alliance

partnership based on contracts between firms. The most frequent forms are supply agreements, distribution agreements, and licensing agreements

equity alliance

partnership in which at least one partner takes partial ownership in the other

learning races

situations in which both partners in a strategic alliance are motivated to form an alliance for learning, but the rate at which the firms learn may vary; the firm that accomplishes its goal more quickly has an incentive to exit the alliance or reduce its knowledge sharing

relational view of competitive advantage

strategic management framework that proposes that critical resources and capabilities frequently are embedded in strategic alliances that span firm boundaries

merger

the joining of two independent companies to form a combined entity

horizontal integration

the process of merging with competitors, leading to industry consolidation

acquisition

the purchase or takeover of one company by another; can be friendly or unfriendly