Mgmt 464

Why enter an alliance?

1) Strengthen competitive position 2) Enter new markets 3) Hedge against uncertainty 4) Access critical complementary assets 5) Learn new Capabilities

Benefits of first movers

1) economies of scale 2) experience and learning-curve effects 3) network effects

Characteristics of an integration Manager

1)Deep knowledge of the acquiring company 2)Flexible management style 3)Ability to work in cross-functional teams 4)Willingness to work independently 5)Sufficient emotional and cultural intelligence to work in a diverse environment

Guidelines for successful downsizing

1)Eliminate unnecessary work instead of making 2_)2)across the board cuts 3)Contract out work that others can do cheaper 4)Plan for long-run efficiencies 5)Communicate the reasons for actions 6)Invest in the remaining employees 7)Develop value added jobs to balance out job elimination

3 Main benefits to a horizontal integration

1)Reduction in competitive intensity 2) Lower costs 3) Increased differentiation

Staffing Process

1)Training and development 2)Executive types -Dynamic industry expert -Analytical portfolio manager -Cautious profit planner -Turnaround specialist -Professional liquidator

Licensing

A form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property.

Principal-agent problem

A major disadvantage of organizing economic activity within firms, as opposed to within markets. Situation in which an agent performing activities on behalf of a principal pursues his or her own interests.

Real options Perspective

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

Idea

First step of the Innovation Process: may be presented in terms of abstract concepts or as finding derived from basic research

Advantages of non-equity alliances

Flexible, fast, and easy to initiate and terminate

Draw back of short-term contracting

Is that firms responding to the RFP have non incentive to make any transaction-specific investments due to the short duration of the contract. Happened in the U.S. automotive industry

Horizontal Integration

Is the process of merging with a competitor a the same stage of the industry value chain. Is a type of corporate strategy that can improve a firm's strategic position in a single industry.

Strategic Outsourcing

Moving one or more internal value chain activities outside the firm's boundaries to other firms in the industry value chain. A firm that engages in this reduces its level of vertical integration

Non-equity Alliance

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

Invention

Second step of the Innovation Process: Transformation of an idea into a new product, process, or the modification and recombination of existing ones.

Shareholder value

The present value of the anticipated future stream of cash flows form the business plus the value of the company if liquidated

Innovation

concerns the commercialization of an invention by entrepreneurs. The commercialization of any new product or process, or the modification and recombination of existing ones. To drive growth, innovation also needs to be useful and successfully implemented.

Innovation

Third step in the Innovation Process: Concerns the commercialization of an invention by entrepreneurs

Strategic alliances

Voluntary arrangements between firms that involve the sharing of knowledge, resources, and capabilities with the intent of developing processes, products, or services to lead to competitive advantage.

Acquisition

describes the purchase of takeover of one company by another. Can be friendly or unfriendly.

Job rotation

ensures employees are gaining a mix of experience to prepare them for future responsibilities. Moving people from one job to another; used in many large corporations to ensure that employees are gaining the appropriate mix of experiences to prepare them for future responsibilities

How apple when after e-reader market

pg 285

What happens in shakeout?

pg 367

Intrapreneurs

those pursuing corporate entrepreneurship. When innovating within existing companies, change agents are often called this.

Power Distance

willingness of a culture to accept status and power distance in a culture

Methods of managing disparate cultures

• Integration- equal merger of both cultures into a new corporate culture; involves a relatively balanced give-and-take of cultural and managerial practices between the merger partners, and no strong imposition of cultural change on either company • Assimilation- acquiring firm's culture kept intact, but subservient to that of acquiring firm's corporate culture; domination of one organization over the other • Separation- conflicting cultures kept intact, but kept separate in different units • Deculturation- forced replacement of conflicting acquired firm's culture with that of the acquiring firm's culture

Activity based costing

• Recently developed accounting method for allocating indirect and fixed costs to individual products or product lines based on the value-added activities • Useful in doing a value-chain analysis of a firm's activities for making outsourcing decisions

Radical Innovation

draws on novel methods or materials, is derived either from an entirely different knowledge base or from a recombination of existing knowledge bases with a new stream of knowledge, or targets new markets by using new technologies.

Taper Integration

A way of orchestrating value activities in which a firm is backwardly integrated but also relies on outside market firms for some of its supplies, and/or is forwardly integrated but also relies on outside market firms for some of its distribution.

Diversification

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

Forward Vertical Integration

Changes in an industry value chain that involve moving ownership of activities closer to the end (customer) point of the value chain.

Co-opetition

Cooperation by competitors to achieve a strategic objective

Internal transaction costs

Costs pertaining to organizing an economic exchange within a hierarchy; also called administrative costs.

Imitation

Four step of the Innovation Process: Copying a successful innovation

Steps in the innovation process

Idea, Invention, Innovation, Imitation

Free cash flow

The amount of money a new owner can take out of the firm without harming the business; useful in evaluating the stability of an entrepreneurial venture

Benchmarking

The continual process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders

Early adopters

The customers entering the market in the growth stage. They are eager to buy in early into a new technology or product concept. Their demand is driven by their imagination and creativity.

Performance

The end result of activities, actual outcomes of a strategic management process

Patents

a form of intellectual property, and gives the inventor exclusive rights to benefit from commercializing a technology for a specified time period in exchange for public disclosure of the underlying idea.

Output Controls

specify what is to be accomplished by focusing on the end result of the behaviors through the use of objectives and performance targets or milestones