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Strat Mgmt Test 3
N/A
43
Management
Undergraduate 4
03/23/2014

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Term
Corporate-level core competencies
Definition
are complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise.
Term
corporate-level strategy
Definition
It specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.
Term
Economies of scope
Definition
are cost savings that the firm creates by successfully sharing some of its resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses.
Term
Financial economies
Definition
are cost savings realized through improved allocations of financial resources based on investments inside or outside the firm.
Term
Market power
Definition
exists when a firm is able to sell its products above the existing competitive level or to reduce the costs of its primary and support activities below the competitive level, or both.
Term
Multipoint competition
Definition
exists when two or more diversified firms simultaneously compete in the same product areas or geographical markets.
Term
synergy
Definition
exists when the value created by business units working together exceeds the value that those same units create working independently.
Term
Vertical integration
Definition
exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration).
Term
acquisition
Definition
is a strategy through which one firm buys a controlling, or 100 percent, interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio.
Term
merger
Definition
is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.
Term
restructuring
Definition
is a strategy through which a firm changes its set of businesses or its financial structure.
Term
takeover
Definition
is a special type of acquisition wherein the target firm does not solicit the acquiring firm
Term
business-level cooperative strategy
Definition
is a strategy through which firms combine some of their resources and capabilities for the purpose of creating a competitive advantage by competing in one or more product markets.
Term
Complementary strategic alliances
Definition
are business-level alliances in which firms share some of their resources and capabilities in complementary ways for the purpose of creating a competitive advantage.
Term
cooperative strategy
Definition
is a means by which firms collaborate for the purpose of working together to achieve a shared objective.
Term
corporate-level cooperative strategy
Definition
is a strategy through which a firm collaborates with one or more companies for the purpose of expanding its operations.
Term
cross-border strategic alliance
Definition
is a strategy in which firms with headquarters in different countries decide to combine some of their resources and capabilities for the purpose of creating a competitive advantage.
Term
diversifying strategic alliance
Definition
is a strategy in which firms share some of their resources and capabilities to engage in product and/or geographic diversification.
Term
equity strategic alliance
Definition
is an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities for the purpose of creating a competitive advantage.
Term
franchising
Definition
is a strategy in which a firm (the franchisor) uses a franchise as a contractual relationship to describe and control the sharing of its resources and capabilities with its partners (the franchisees).
Term
joint venture
Definition
is a strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities for the purpose of developing a competitive advantage.
Term
network cooperative strategy
Definition
is a strategy wherein several firms agree to form multiple partnerships for the purpose of achieving shared objectives.
Term
nonequity strategic alliance
Definition
is an alliance in which two or more firms develop a contractual relationship to share some of their resources and capabilities for the purpose of creating a competitive advantage.
Term
strategic alliance
Definition
is a cooperative strategy in which firms combine some of their resources and capabilities for the purpose of creating a competitive advantage.
Term
synergistic strategic alliance
Definition
is a strategy in which firms share some of their resources and capabilities to create economies of scope.
Term
1. Joint Venture
2. Equity Strategic Alliance
3. Nonequity strategic alliance (contract)
Definition
What are the 3 types of Strategic Alliances?
Term
1. actively solving problems
2. Being trustworthy
3. looking for new ways to add value
Definition
What makes strategic alliances work?
Term
Vertical
Definition
What type of arrangements have the best way to create a sustainable competitive advantage?
Term
Horizontal arrangements
Definition
What type of arrangements are difficult to maintain due to rivalry and last a shorter period of time?
Term
"Trust, but verify" -Ronald Reagan
Definition
Managing risk quote
Term
Single business, >95% of business comes from one product. Examples: Wrigley, Jet Blue airlines
Definition
Low diversification
Term
about 70-90% of revenue comes from 1 business. Example: UPS (Dominant Business)
Definition
Moderate Diversification
Term
Related Constrained. Less than 70% of revenue comes from a single businesses share products, technological and distribution linkages. Examples: Kodak, Proctor and Gamble)
Definition
Moderate-High Diversification
Term
Less than 70% of reve comes from the dominant bus, and there are only limited links between businesses. Example: United Technologies
Definition
Related Linked
Term
1. Operational relatedness in sharing activities
2. Corporate relatedness-in transferring skills or corporate core competencies Example: ESPN
Definition
how is value created from economies of scope in Related Diversification: Economies of Scope?
Term
Very high diversification. Less than 70% of rev. comes from the dominant business and there are no common links (65%, 20%, 15%)
Definition
Unrelated Diversification
Term
To Provide above avg returns
Definition
What is the 1st responsibility of the manager?
Term
1. Overcoming entry barriers
2. Help with cross-border (go in with locals)
3. Increased diversification
4. Learning and developing new capabilities
5. Reshaping the firm's competitive scope
Definition
What are the benefits of acquisitions?
Term
1. Integration difficulties
2. Too much diversification
3. Managers overly focusing on acquisitions
4. Company can be too large
5. Large debt
6. Inability to achieve synergy
Definition
What are the problems with acquisitions?
Term
Downscoping
Definition
Which has a more positive effect on a firm, downsizing or downscoping?
Term
Downsizing
Definition
A reduction in the number of a firm's employees and sometimes in the no. of its operating units.
Term
Downscoping
Definition
refers to divestiture, spin-off or some other means of eliminating businesses that are unrelated to a firm's core businesses. It causes firms to refocus on their core business.
Term
Leverage buyout
Definition
a restructuring strategy whereby a party (typically a private equity firm) buys all of a firm's assets in order to take the firm private.
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