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Corporate-level core competencies |
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are complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise. |
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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. |
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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. |
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are cost savings realized through improved allocations of financial resources based on investments inside or outside the firm. |
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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. |
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exists when two or more diversified firms simultaneously compete in the same product areas or geographical markets. |
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exists when the value created by business units working together exceeds the value that those same units create working independently. |
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exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration). |
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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. |
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is a strategy through which two firms agree to integrate their operations on a relatively coequal basis. |
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is a strategy through which a firm changes its set of businesses or its financial structure. |
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is a special type of acquisition wherein the target firm does not solicit the acquiring firm |
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business-level cooperative strategy |
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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. |
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Complementary strategic alliances |
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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. |
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is a means by which firms collaborate for the purpose of working together to achieve a shared objective. |
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corporate-level cooperative strategy |
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is a strategy through which a firm collaborates with one or more companies for the purpose of expanding its operations. |
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cross-border strategic alliance |
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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. |
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diversifying strategic alliance |
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is a strategy in which firms share some of their resources and capabilities to engage in product and/or geographic diversification. |
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equity strategic alliance |
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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. |
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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). |
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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. |
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network cooperative strategy |
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is a strategy wherein several firms agree to form multiple partnerships for the purpose of achieving shared objectives. |
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nonequity strategic alliance |
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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. |
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is a cooperative strategy in which firms combine some of their resources and capabilities for the purpose of creating a competitive advantage. |
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synergistic strategic alliance |
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is a strategy in which firms share some of their resources and capabilities to create economies of scope. |
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1. Joint Venture 2. Equity Strategic Alliance 3. Nonequity strategic alliance (contract) |
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What are the 3 types of Strategic Alliances? |
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1. actively solving problems 2. Being trustworthy 3. looking for new ways to add value |
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What makes strategic alliances work? |
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What type of arrangements have the best way to create a sustainable competitive advantage? |
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What type of arrangements are difficult to maintain due to rivalry and last a shorter period of time? |
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"Trust, but verify" -Ronald Reagan |
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Single business, >95% of business comes from one product. Examples: Wrigley, Jet Blue airlines |
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about 70-90% of revenue comes from 1 business. Example: UPS (Dominant Business) |
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Related Constrained. Less than 70% of revenue comes from a single businesses share products, technological and distribution linkages. Examples: Kodak, Proctor and Gamble) |
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Moderate-High Diversification |
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Less than 70% of reve comes from the dominant bus, and there are only limited links between businesses. Example: United Technologies |
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1. Operational relatedness in sharing activities 2. Corporate relatedness-in transferring skills or corporate core competencies Example: ESPN |
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how is value created from economies of scope in Related Diversification: Economies of Scope? |
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Very high diversification. Less than 70% of rev. comes from the dominant business and there are no common links (65%, 20%, 15%) |
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Unrelated Diversification |
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To Provide above avg returns |
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What is the 1st responsibility of the manager? |
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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 |
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What are the benefits of acquisitions? |
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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 |
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What are the problems with acquisitions? |
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Which has a more positive effect on a firm, downsizing or downscoping? |
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A reduction in the number of a firm's employees and sometimes in the no. of its operating units. |
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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. |
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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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