Term
| related constrained diversification |
|
Definition
| focuses on managing different businesses |
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|
Term
| corporate level strategies |
|
Definition
| strategies firms use to diversify their operations from a single business competing in a single market into severla product markets and, most comomnly, into several businees |
|
|
Term
|
Definition
| specifics actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product market |
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|
Term
| corporate level strategies |
|
Definition
| help companies select new strategic positions - positions that are expected to increase the firm's value |
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|
Term
|
Definition
| when firms acquire competitors |
|
|
Term
|
Definition
| when firms buy a supplier or customer |
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|
Term
|
Definition
| focus of basic corporate strategy |
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|
Term
corporate level (company wide)
busienss level (competitive) |
|
Definition
|
|
Term
|
Definition
| concerned with two key issues: in what product markets and busienss the firm should compete and how corporate headquarters should manage those businesses |
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|
Term
| in what product markets and busienss the firm should compete and how corporate headquarters should manage those businesses |
|
Definition
| two key issues that concerns corporate level strategy |
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|
Term
| the degree to which the business in the portfolio are worth more under the mgmt of the company than they would be under any other ownership |
|
Definition
| ultimately determines corporate level strategy's value |
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|
Term
|
Definition
| concerns the scope of the markets and industries in which the firm competes as well as how managers buy, create, and sell different business to match skills and strengths with opportunities to present to the firm |
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|
Term
|
Definition
| signifies a moderate to high level of diversification for the firm |
|
|
Term
| related constrained strategy |
|
Definition
|
|
Term
|
Definition
| the transferring of core competencies across the firm's different businesses |
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|
Term
| the more links among businesses, the more constrained is the relatedness of diversification |
|
Definition
|
|
Term
| single or dominant busienss corporate level diversification strategy |
|
Definition
| a firm pursuing a low level of diversification uses either a |
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|
Term
| single business diversification strategy |
|
Definition
| a corporate level strategy where in the firm generates 95 percent or more of its sales revenue from its core business area |
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|
Term
| rated constrained or related linked (mexied related and unrelated) |
|
Definition
| types of moderate to high levels of diversification |
|
|
Term
|
Definition
| very high levels of diversification |
|
|
Term
| dominant business diversification strategy |
|
Definition
| the firm generates between 70 and 95% of its total revenue within a single busienss area |
|
|
Term
| related diversification corporate level strategy |
|
Definition
| germinates more than 30% of its revenue outside a dominant business and whose businesses are related to each other in some manner |
|
|
Term
| related constrained diversification strategy |
|
Definition
| links between the diversified firm's businesses are rather direct |
|
|
Term
| related linked diversification strategy |
|
Definition
| company with a portfolio of businesses that only have a few links between them is called a mixed related and unrelated firm and is using what type of strategy? |
|
|
Term
| related constrained diversification strategy |
|
Definition
| when the links between the diversified firm's businesses are rather direct |
|
|
Term
| related linked firms share fewer resources and assets between their businesses, concentrating instead on transferring knowledge and core competencies between the business |
|
Definition
|
|
Term
| unrelated diversification strategy |
|
Definition
| a highly diversified firm that has no relationships between its businesses |
|
|
Term
|
Definition
| firms using an unrelated diversification strategy are often called |
|
|
Term
| economies of scope, market power, financial economies |
|
Definition
| value creating reasons for diversification |
|
|
Term
diversifying managerial employment risk
increasing managerial compensation |
|
Definition
| value reducing reasons for diversification |
|
|
Term
| a desire to match and thereby neutralize a competitor's market power |
|
Definition
| value neutral reasons for diversification |
|
|
Term
| increase a firm's size and thus managerial compensation |
|
Definition
| motives to diversify a firm to a level that reduces its value |
|
|
Term
operational relatedness
corporate relatedness |
|
Definition
| two ways diversification strategies can create value |
|
|
Term
| vertical sharing of assets through vertical integration |
|
Definition
| the firm with a strong capability in managing operational synergy, especially in sharing assets between its businesses |
|
|
Term
| related linked diversification |
|
Definition
| highly developed corporate capability for transferring one or more core competencies across businesses |
|
|
Term
|
Definition
| sharing actives between business |
|
|
Term
|
Definition
| transferring core competencies into businesses |
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|
Term
| related diversification strategy |
|
Definition
| used to develop and exploit economies of scope between its businesses |
|
|
Term
|
Definition
| cost savings that the firm creates by successful sharing some of this 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
1. sharing activities (operational relatedness)
2. transferring corporate level core competences (corporate relatedness) |
|
Definition
| firms seek to create value from economies of scope thru two basic kinds of operational economies: |
|
|
Term
| corporate level core competencies |
|
Definition
| complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise |
|
|
Term
| related linked diversification strategy |
|
Definition
| firms seeking to create value thru corporate relatedness use what strategy |
|
|
Term
the expense of developing a core competence has already been incurred and eliminates the need for that business to allocate resources to develop it
resource intangiblity |
|
Definition
| how does the related linked diversification strategy help firms to create value? |
|
|
Term
|
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
|
Definition
| way of creating market power; exists when two or more diversified firms simultaneously compete in the same product areas or geographic markets |
|
|
Term
|
Definition
| can be used by a related diversification strategy to gain market power; exists when a company produces its own inputs or owns its own source of output distribution |
|
|
Term
|
Definition
| when a company produces its own inputs |
|
|
Term
|
Definition
| when a company owns its own source of output destruction |
|
|
Term
| virtual integration rather than vertical integration may be a more common source of market power gains for firms today |
|
Definition
|
|
Term
| firms do NOT seek operational or corporate relatedness when using an unrelated diversification corporate level strategy |
|
Definition
|
|
Term
restructuring of acquired assets
efficient internal capital allocations |
|
Definition
| two types of financial economies that create value in an unrelated diversification strategy |
|
|
Term
|
Definition
| cost savings realized through improved allocations of financial resources based on investments inside or outside the firm |
|
|
Term
| efficient capital allocations |
|
Definition
| reduce risk among the firm's businesses |
|
|
Term
| Europe and emerging markets |
|
Definition
| where is the se of unrelated diversification strategy most common |
|
|
Term
| competitors can imitate financial economies more easily than they can replicate the value gained from the economies of scope developed thru operational and corporate relatedness |
|
Definition
| "Achilles'" heel for firms using the unrelated diversification strategy |
|
|
Term
antitrust regulations
tax laws |
|
Definition
| external incentives to diversify |
|
|
Term
low performance
uncertain future cash flows
pursuit of synergy
reduction of frisk for the firm |
|
Definition
| internal incentives to diversify |
|
|
Term
|
Definition
| liquid financial assets for which investments in current businesses are no longer economically viable |
|
|
Term
| diversification may be an important defensive strategy as a firm's product line materials or is threatened |
|
Definition
|
|
Term
|
Definition
| exists when the value created by business units working together exceeds the value that those same units create working independently |
|
|
Term
reduced managerial risk
the desire for increase compensation |
|
Definition
| two motives for managers to diversify their firm beyond value creating and value neutral levels |
|
|
Term
poison pills
golden parachute agreements |
|
Definition
| defensive tactics by managers to avoid takeovers |
|
|
Term
| financial resources (the most flexible) should have a stronger relationship to the extent of of diversification than either tangible or intangible resources |
|
Definition
|
|
Term
| tangible (the most inflexible) are useful primarily for related diversification |
|
Definition
|
|
Term
| to create additional value |
|
Definition
| what is the primary reason a firms uses a corporate level strategy to become more diversified? |
|
|
Term
economies of scope
market power |
|
Definition
| the main sources of value creation when the firm diversifies by using a corporate level strategy with moderate to high levels of diversification |
|
|
Term
| related diversification corporate level strategy |
|
Definition
| helps the firm create value by sharing activities or transferring competencies between different businesses in the company's portfolio |
|
|
Term
| related constrained diversification corporate level strategy |
|
Definition
| sharing activities is usually associated with what strategy |
|
|
Term
costly to implement and coordinate
may create unequal benefits for the divisions involved in the sharing
may lead to fewer managerial risk taking behaviors |
|
Definition
| disadvantages of activity sharing |
|
|
Term
| related linked (or mixed related and unrelated) diversification |
|
Definition
| transferring core competencies is often associated with what strategy? |
|
|
Term
| efficiently allocating resources or restructuring a target firm's assets and placing them under rigorous financial controls |
|
Definition
| two ways to accomplish successful unrelated diversification |
|
|
Term
|
Definition
| firms using the unrelated diversification strategy focus on creating _______ to generate value |
|
|
Term
incentives from tax and antitrust government policies
performance disappointments
uncertainties about future cash flow |
|
Definition
| value neutral reasons that firms may choose to become more diversified |
|
|
Term
|
Definition
| a primary means of firm growth |
|
|
Term
| cross border M&A activity |
|
Definition
| activity involving firms headquartered in different nations |
|
|
Term
| they can help firms grow rapidly in both domestic and international markets |
|
Definition
| a key advantage of mergers and acquisitions |
|
|
Term
|
Definition
| allows a firm to create value by productively using excess resources |
|
|
Term
|
Definition
| commonly used to correct or deal with the results of ineffective mergers and acquisitions |
|
|
Term
|
Definition
| a strategy through which two firms agree to integrate their operations on a relatively coequal basis |
|
|
Term
|
Definition
| a strategy through which one firms buys a controlling, or 100%, interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio |
|
|
Term
|
Definition
| a special type of acquisition wherein the target firm does not solicit the acquiring firm's bid; unfriendly acquisitions |
|
|
Term
1 increased market power
2 overcoming entry barriers
3 cost of new product devleopment/increased speech to market
4 lower risk compared to developing new products
5 increased diversification
6 reshaping the firm's competitive scope
7 learning and developing new capabilities |
|
Definition
|
|
Term
|
Definition
| exists when a firm is able to sell its goods or services above competitive levels or when the costs of its primary or support activities are lower than those of its competitors |
|
|
Term
|
Definition
| the acquisition of a company competing in the same industry as the acquiring firm |
|
|
Term
| by exploiting cost based and revenue based synergies |
|
Definition
| how do horizontal acquisitions increase a firm's market power? |
|
|
Term
|
Definition
| refers to a firm acquiring a supplier or distributor of one or more of its goods or services |
|
|
Term
|
Definition
| acquiring a firm in a highly related industry |
|
|
Term
|
Definition
| firms seek to create value through the synergy that can be generated by integrating some of their resources and capabilities |
|
|
Term
|
Definition
| factors associated with a market or with the firms currently operating in it that increase the expense and difficulty new firms encounter when trying to enter that particular market |
|
|
Term
| cross border acquisitions |
|
Definition
| acquisitions made between companies with headquarters in different countries |
|
|
Term
| acquisition strategies can be used to support use of both unrelated and related diversification strategies |
|
Definition
|
|
Term
| the more RELATED the acquired firm is to the acquiring firm, the greater the probability the acquisition will be successful |
|
Definition
|
|
Term
|
Definition
| do horizontal or vertical acquisitions tend to contribute more to the firm's strategic competitiveness? |
|
|
Term
| reshaping the firm's competitive scope |
|
Definition
| reason for acquisition that reduces a company's dependence on specific markets |
|
|
Term
| firms should seek to acquire companies with different but related and complementary capabilities in order to build their own knowledge base |
|
Definition
|
|
Term
1. integration difficulties
2. inadequate evaluation of target
3. large or extraordinary debt
4. inability to achieve synergy
5. too much diversification
6. managers overly focused on acquisitions
7. too larege |
|
Definition
| problems in achieving acquisition success |
|
|
Term
1. increased market power
2. overcoming entry barriers
3. cost of new product development and increased speed to market
4. lower risk compared to developing new products
5. increased i=diversification
6. reshaping the firm's competitive scope
7. learning and developing new capabilities |
|
Definition
|
|
Term
1. select there eighth target
2. avoid paying too high a premium (doing appropriate due diligence)
3. effectively integrate the operations of the acquiring and target firms |
|
Definition
| steps to greater acquisition success |
|
|
Term
| the post-acquisition integration phase |
|
Definition
| the single most important determinant of shareholder value creation in mergers and acquisitions |
|
|
Term
|
Definition
| a process through which a potential acquirer evaluates a target firm for acquisition |
|
|
Term
|
Definition
| a financing option through which risky acquisitions are financed with money (debt) that provides a large potential return to lenders (bondholders) |
|
|
Term
|
Definition
| working together; exists when the value created by units working together excess the value those units could create working independently |
|
|
Term
|
Definition
| a firm develops a competitive advantage through an acquisition strategy only when the transaction generates: |
|
|
Term
|
Definition
| created when combining and integrating the acquiring and acquired firms' assets yield capabilities and core competencies that could not be developed by combining and integrating either firm's assets with another company |
|
|
Term
|
Definition
| possible when when firms' assets are complementary in unique ways |
|
|
Term
|
Definition
| expenses incurred when firms use acquisition strategies to create synergy |
|
|
Term
| related diversification requires more information processing than does unrelated diversification |
|
Definition
|
|
Term
|
Definition
| formalized supervisory and behavioral rules and policies designed to ensure consistency of decisions and actions across different units of a firm |
|
|
Term
| acquired firms has assets or resources that are complementary to the acquiring firm's core business, acquisition is friendly, due diligence, has cash or a favorable debt position, merged firm maintains low to moderate debt position, sustained and consistent emphasis on innovation, manages change well, is flexible and adaptable |
|
Definition
| attributes of successful acquisitions |
|
|
Term
|
Definition
| a strategy through which a firm changes its set of businesses or its financial structure |
|
|
Term
downsizing
down scoping
leveraged buyouts |
|
Definition
| three types of restructuring strategies |
|
|
Term
|
Definition
| a reduction in the number of a firm's employees and, sometimes, in the number of this uprating units, that may or may not change the composition of businesses in the company's portfolio |
|
|
Term
|
Definition
| an intentional proactive management strategy whereas decline is an environmental phenomenon that occurs involuntarily and results in erosion of an organization's resource base |
|
|
Term
|
Definition
| refers to divestiture, spin off, or some other means of eliminating businesses that are unrelated to a firm's core businesses |
|
|
Term
|
Definition
| has a more positive effect on firm performance than does downsizing |
|
|
Term
|
Definition
| firms focus on their core business and improve their competitiveness |
|
|
Term
|
Definition
| a restructuring strategy whereby a party (typically a private equity firm) buys all of a firm's assets in order tot take the firm private |
|
|
Term
Management buyouts (MOBs)
employee buyouts (EBOs)
whole firm buyouts |
|
Definition
|
|
Term
|
Definition
| short term outcomes of downsizing |
|
|
Term
| loss of human capital and lower performance |
|
Definition
| long term outcomes of downsizing |
|
|
Term
| reduced debt costs and emphasis on strategic controls |
|
Definition
| short term outcomes of down scoping |
|
|
Term
|
Definition
| long term outcome of down scoping |
|
|
Term
| emphasis on strategic controls and high debt costs |
|
Definition
| short term outcomes of leveraged buyout |
|
|
Term
| higher risk and higher performance |
|
Definition
| long term outcomes of LBO |
|
|
Term
| globalization and deregualtion of multiple industries |
|
Definition
| two of the factors making mergers and acquisitions attractive to large corporations and small firms |
|
|
Term
1 the difficult of effectively integrating the firms involved
2 incorrectly evaluating the target firm's value
3 creating debt loads that preclude adequate long term investments
4 overestimating the potential for synergy
5 creating a firm that is too diversified
6 creating an internal environment in which managers devote increasing amounts of their time and energy to analyzing and completing the acquisition
7 developing a combined firm that is too large, necessitating extensive use of bureaucratic rather than strategic controls |
|
Definition
| problems associated with using an acquisition strategy: |
|
|
Term
|
Definition
| used to improve a firm's performance by correcting for problems created by ineffective management |
|
|
Term
| restructuring by downsizing |
|
Definition
| involved reducing the number of employees and hierarchical levels in the firm |
|
|
Term
| restricting through down scoping |
|
Definition
| reduce the firm's level of diversification |
|
|
Term
|
Definition
| when a firm is purchased so that it can become a private entity |
|
|
Term
|
Definition
| most successful of the three types of LBO's |
|
|
Term
| gaining or reestablishment effective strategic control of the firm |
|
Definition
| restructuring's primary goal |
|
|
Term
|
Definition
| a strategy through which the firm sells its goods or services outside its domestic market |
|
|
Term
| international marks yield potential new opportunities |
|
Definition
| one of the primary reasons for implementing an international strategy as opposed to a strategy focused on the domestic market |
|
|
Term
to extend a product's life cycle
secure needed resources |
|
Definition
| some reasons why firms pursue international diversification |
|
|
Term
1. increased market size
2. greater returns on major capital investment or on investments in new products and processes
3. greater economies of scale, scope, or learning
4. competitive advantage through location (eg access to low cost labor, critical resources, or customers) |
|
Definition
| four basic benefits from successful international strategies |
|
|
Term
| to generate above average returns on investments |
|
Definition
| the primary reason for investing in international markets |
|
|
Term
business level international strategy
corporate level international strategy |
|
Definition
| two basic types of international strategy |
|
|
Term
multidomestic
global
transnational(combination) |
|
Definition
| the three corporate level international strategies |
|
|
Term
|
Definition
| dimension of porter's model that refers to the inputs necessary to compete in any industry |
|
|
Term
|
Definition
| dimension of porter's model characterized by the nature and size of buyers' needs in the home market for the industyr's goods or services |
|
|
Term
factors of production
demand conditions
related and supporting industries
firm strategy, structure, and rivalry |
|
Definition
| dimension's of porters model "determinants of national advantage" |
|
|
Term
|
Definition
| emphasizes the environmental or structural attributes of a national economy that contribute to a national advantage |
|
|
Term
| international corporate level strategy |
|
Definition
| required when the firm operates in multiple industries and multiple countries or regions |
|
|
Term
| international corporate level strategy |
|
Definition
| focuses on the scope of a firm's operations through both product and geographic diversification |
|
|
Term
|
Definition
| an international strategy in which strategic and operating decisions are decentralized to the strategic business unit in each country so as to allow that unit to tailor products to the local market |
|
|
Term
|
Definition
| focuses on competition within each country |
|
|
Term
| multi domestic strategy uses a highly decentralized approach and do not allow the development of economies of scale |
|
Definition
|
|
Term
|
Definition
| high need for global integration, low need for local responsiveness |
|
|
Term
|
Definition
| high need for global integration, high need for local responsiveness |
|
|
Term
|
Definition
| low need for global integration, high need for local responsiveness |
|
|
Term
|
Definition
| offers standardized products across country markets, with competitive strategy being dictated by the home offers |
|
|
Term
|
Definition
| an international strategy through which the firm seeks to achieve both global efficiency and local responsiveness |
|
|
Term
|
Definition
| building a shared vision and individual commitment through an integrated network; necessary for transnational strategy |
|
|
Term
liability of foreignness
regionalization |
|
Definition
| two important environmental trends |
|
|
Term
exporting products
participating in licensing arrangements
forming strategic alliances
making acquisitions
establishing new wholly owned subsidiaries |
|
Definition
| How is international expansion accomplished? (list the ways of market entry) |
|
|
Term
|
Definition
| type of entry with high cost and low control |
|
|
Term
|
Definition
| type of entry with low cost, low risk, little control, and low returns |
|
|
Term
|
Definition
| type of entry with shared costs, shared resources, shared risks, but problems of integration |
|
|
Term
|
Definition
| mode of global market entry with quick access to new market, high cost, complex negotiations, problems of merging with domestic operations |
|
|
Term
| new wholly owned subsidiary |
|
Definition
| mode of global market entry that is complex, often costly, ti me consuming, high risk, max control, potential above avg returns |
|
|
Term
|
Definition
| the nature and size of buyers' needs in the home market for the industry's goods or services |
|
|
Term
|
Definition
| allows a foreign company to purchase the right to manufacture and sell the firm's products within a host country or set of countries |
|
|
Term
|
Definition
| the least costly form of international expansion |
|
|
Term
|
Definition
| allow firms to share the risks and the resources required to enter international markets |
|
|
Term
1 the initial condition of the relationship
1 the negotiation process to arrive at an agreement
3 partner interactions
4 external events |
|
Definition
| trust between partners in a strategic alliance is based on four fundamental issues: |
|
|
Term
| equity based alliances over which a firm has more control tend to produce more positive returns for strategic alliances |
|
Definition
|
|
Term
|
Definition
| provide the fastest and the largest initial international expansion of any of the alternatives |
|
|
Term
|
Definition
| the establishment of a new wholly owned subsidiary |
|
|
Term
| creating a greenfield venture (a new wholly owned subsidiary) |
|
Definition
| affords maximum control and has the most potential to provide above average returns when entering international markets |
|
|
Term
export
licensing
strategic alliance |
|
Definition
| good tactics for early market development (modes of entry into international markets) |
|
|
Term
| international diversification |
|
Definition
| a strategy through whitecap firm expands the sales of its goods or services across the borders of global regions and countries into different geographic locations or markets |
|
|
Term
international diversification and returns
international diversification and innovation
complexity of managing multinational firms |
|
Definition
| strategic competitive outcomes |
|
|
Term
political risks
economic risks |
|
Definition
| risks in an international environment: |
|
|
Term
|
Definition
| risks related to instability in national governments and to war, both civil and international |
|
|
Term
| the use of international strategies is increasing |
|
Definition
|
|
Term
extending the product life cycle
securing key resources
having access to low cost labor |
|
Definition
| traditional motives for the use of international strategies: |
|
|
Term
1. increased market size
2. earning a return on large investments
3. economies of scale/learning
4. advantages of location |
|
Definition
| an international strategy is commonly designed primarily to capitalize on four benefits: |
|
|
Term
factors of production
demand conditions
related and supporting industries
patterns of firm strategy, structure, and rivalry |
|
Definition
| porter's model emphasizes four determinants: |
|
|
Term
|
Definition
| focuses on competition within each country in which the firm competes; decentralized strategic and operating decisions to the business units operating in each country |
|
|
Term
|
Definition
| assumes more standardization of products across country boundaries; centralized and controlled by the home office |
|
|
Term
|
Definition
| seeks to integrate characteristics of both multi domestic and global strategies to emphasize both local responsiveness and global integration and coordination |
|
|
Term
| establishment of a new wholly owned subsidiary (greenfield venture) |
|
Definition
| the most expensive and risky means of entering a new international market |
|
|
Term
internal development
mergers and acquisitions
cooperation |
|
Definition
| the three means that firms use to grow and improve their performance |
|
|
Term
|
Definition
| a means by which firms work together to achieve a shared objective |
|
|
Term
|
Definition
| used more frequently than other types of cooperative relationships |
|
|
Term
|
Definition
| another type of cooperative strategy other than strategic alliances |
|
|
Term
|
Definition
| when two or more firms cooperate to increase prices above the fully competitive level |
|
|
Term
|
Definition
| a cooperative strategy in which firms combine some of their resources and capabilities to create a competitive advantage |
|
|
Term
| collaborative or relational advantage |
|
Definition
| a competitive advantage developed through a cooperative strategy |
|
|
Term
joint venture
equity strategic alliance
non equity strategic alliance |
|
Definition
| three major types of strategic alliances, classified by their ownership arrangements |
|
|
Term
|
Definition
| a strategic alliance in which tow or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage |
|
|
Term
| equity strategic alliance |
|
Definition
| 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 to create a competitive advantage |
|
|
Term
| non equity strategic alliance |
|
Definition
| an alliance in which two or more firms develop a contractual relationship to share some of their unique resources and capabilities to create a competitive advantage |
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Term
| licensing agreements, distribution agreements, supply contracts, outsourcing |
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Definition
| forms of non equity strategic alliances |
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Term
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Definition
| the purchase of a value creating primary or support activity from another firm |
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Term
reduce competition
enhance their competitive capabilities
gain access to resources
take advantage of opportunities
build strategic flexibility
innovate |
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Definition
| reasons firms develop strategic alliances |
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Term
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Definition
| markets where the firm's competitive advantages are shielded from imitation for relatively long periods of time and where imitation is costs |
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Term
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Definition
| the firm's competitive advantages are not shielded from imitation, preventing their long term sustainability |
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Term
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Definition
| when competitive advantages are moderately shielded from imitation, allowing them to be sustained for a longer period of time than fast cycle but shorter than slow cycle |
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Term
gain access to a restricted market
establish a franchise in anew market
maintain market stability |
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Definition
| reasons for a strategic alliance in slow cycle market |
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Term
speed up development of new goods
speed up new market entry
maintain market leadership
form an industry technology standard
share risky R&D expenses
overcome uncertainty |
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Definition
| reasons for a strategic alliance in fast cycle market |
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Term
gain market power
gain access to complementary resources
establish better economies of scale
overcome trade barriers
meet competitive challenges from other competitors
pool resources for very large capital projects
learn new business techniques |
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Definition
| reasons for a strategic alliance in standard cycle market |
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Term
| business level cooperative strategy |
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Definition
| used by a firm to grow and improve its performance in individual product markets |
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Term
complementary strategic alliances
competition response strategy
uncertainty reducing strategy
competition reducing strategy |
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Definition
| four business level cooperative strategies |
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Term
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Definition
| two types of complementary strategic alliances |
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Term
| complementary strategic alliances |
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Definition
| business level alliances in which firms share some of their resources and capabilities in complementary ways to develop competitive advantages |
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Term
| vertical complementary strategic alliance |
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Definition
| firms share their resources and capabilities from different stages of the value chain to create a competitive advantages |
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Term
| horizontal complementary strategic alliance |
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Definition
| an alliance in which firms share some of their resources and capabilities from the same stage of the value chain to create a competitive advantage |
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Term
| strategic alliances are primarily formed to take STRATEGIC rather than TACTICAL actions and response (bc they are difficult to reverse and expensive) |
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Definition
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Term
| uncertainty reducing strategy common in fast cycle markets, emerging economies, and where uncertainty exists |
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Definition
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Term
explicit collusion
tacit collusion |
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Definition
| two types of collusive strategies |
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Term
| explicit collusion (illegal) |
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Definition
| when two or more firms negotiate directly with the intention of jointly agreeing about the amount to produce and the price of the products that are produced |
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Term
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Definition
| competition reducing strategy: |
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Term
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Definition
| exists when several firms in an industry indirectly coordinate their production and pricing decisions by observing each others competitive actions and responses |
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Term
| tacit collusion tends to be used as a business level competition reducing strategy in highly concentrated industries |
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Definition
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Term
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Definition
| a form of tacit collusion in which firms do not take competitive actions against rivals they meet in multiple markets |
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Term
| complementary business level strategic alliances, especially vertical |
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Definition
| what kind of business level strategic alliances have the greatest probability of creating a sustainable competitive advantage |
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Term
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Definition
| of the 4 business level cooperative strategies, which has the lowest probability of creating a sustainable competitive advantage? |
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Term
| corporate level cooperative strategy |
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Definition
| used to help diversify a firm in terms of products offered or markets served or both |
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Term
diversifying alliances
synergistic alliances
franchising |
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Definition
| most commonly used corporate level cooperative strategies |
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Term
| diversifying and synergistic alliances |
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Definition
| corporate level cooperative strategies that are used to grow and improve performance by diversifying firm's operations through a means other than a merger or an acquisition |
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Term
| diversifying strategic alliance |
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Definition
| a corporate level cooperative strategy in which firms share some of their resources and capabilities to diversify into new product or market areas |
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Term
| synergistic strategic alliance |
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Definition
| a corporate level cooperative strategy in which firms share some of their resources and capabilities to create economies of scope |
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Term
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Definition
| a corporate level cooperative strategy in which a firm uses a franchise as a contractual relationship to describe and control the sharing of its resources and capabilities with partners (the franchisees) |
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Term
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Definition
| a contractual agreement between two legally independent companies whereby the franchiser grants the right to the franchisee to sell the franchiser's product or do busienss under its trademarks in a given location for a specified period of time |
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Term
| cross border strategic alliance |
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Definition
| an international cooperative strategy in which firms with headquarters in different nations decide to combine some of their resources and capabilities to create a competitive advantage |
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Term
| network cooperative strategy |
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Definition
| a cooperative strategy wherein several firms agree to from multiple partnerships to achieve shared objectives |
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Term
| important advantage of a network cooperative strategy: firms gain access to their partners' other partners |
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Definition
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Term
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Definition
| the set of strategic alliance partnerships resulting from the use of a network cooperative strategy is commonly called: |
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Term
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Definition
| formed in mature industries where demand is relatively constant and predictable |
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Term
| stable alliance networks are built primarily to exploit the economies that exist between the partners |
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Definition
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Term
| dynamic alliance networks |
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Definition
| used in industries characterized by frequent product innovations and short product life cycles (type of alliance network in a network cooperative strategy) |
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Term
inadequate contracts
misrepresentation of competencies
partners fail to use their complementary resources
holding alliance partner's specific investment hostage |
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Definition
| prominent cooperative strategy competitive risks |
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Term
| cost minimization and opportunity maximization |
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Definition
| two primary approaches used to manage cooperative strategies |
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Term
| cost minimization mgmt approach |
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Definition
| the firm develops formal contracts with its partners that specify how the cooperative strategy is to be monitored |
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Term
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Definition
| focuses on maximizing a partnership's value creation opportunities with less formal contracts and few constraints |
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Term
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Definition
| strategy such that firms work together to achieve as shared objective |
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Term
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Definition
| primary form of cooperative strategy |
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Term
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Definition
| where firms combine some of their resources and capabilities to create a competitive advantage |
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Term
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Definition
| where firms create and own equal shares of a new venture that is intended to develop competitive advantages |
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Term
| equity strategic alliances |
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Definition
| where firms own different shares of a newly created venture |
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Term
| non equity strategic alliance |
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Definition
| where firms cooperate through a contractual relationship |
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Term
| tacit collusion aka mutual forbearance |
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Definition
| cooperative strategy through which firms tacitly cooperate to reduce industry output below the potential competitive output level, thereby raising prices above the competitive level |
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Term
| to enter restricted markets |
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Definition
| reasons firms use cooperative strategy in a slow cycle market |
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Term
| to move quickly from one competitive advantage to another |
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Definition
| reasons firms use cooperative strategy in a fast cycle market |
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Term
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Definition
| reasons firms use cooperative strategy in a standard cycle market |
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Term
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Definition
| have the highest probability of yielding a sustainable competitive advantage |
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Term
| firms use corporate level cooperative strategies to engage in product and/or geographic diversification |
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Definition
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Term
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Definition
| a relationship among stakeholders that is used to determine a firm's direction and control its performance |
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Term
1. ownership concentration
2. the board of directors
3. executive compensation |
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Definition
| three internal governance mechanisms in the modern corporation: |
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Term
| the market for corporate control |
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Definition
| the single external governance mechanism influencing managers' decisions and the outcomes resulting from them |
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Term
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Definition
| based on the number of large bock shareholders and the percentage of shares they own |
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Term
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Definition
| tends to result in relatively weak monitoring and control of managerial decisions |
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Term
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Definition
| the set of mechanisms used to manage the relationship among stakeholders and to determine and control the strategic direction and performance of organizations |
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Term
| to ensure that the interest of top level managers are aligned with the interests of the shareholders |
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Definition
| primary objective of corporate governance |
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Term
1. ownership concentration
2. the board of directors
3. executive compensation
4. external - market for corporate control |
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Definition
| the three internal governance mechanisms and the one external one that are used in the modern corporation |
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Term
| market for corporate control |
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Definition
| a set of potential owners seeking to acquire undervalued firms and earn above avg returns on their investments by replacing ineffective top level mgmt teams |
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Term
| shareholders specialize in managing their investment risk |
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Definition
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Term
| firms in which families own enough equity to have influence without major control tend to make the best strategic decisions |
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Definition
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Term
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Definition
| exists when one or more persons (the principal) hire another person (the agent) as decision making specialists to perform a service |
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Term
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Definition
| exists when one party delegates decision making responsibility to a second party for compensation |
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Term
firm's owners/SH = principal
top level managers = principals' agents |
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Definition
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Term
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Definition
| the seeking of self interest with guile (cunning or deceit) |
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Term
| managers may prefer product diversification more than shareholders do |
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Definition
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Term
1. diversification increases the size of a firm, which is positively related to executive compensation and diversification increases the complexity of managing a firm, requiring more pay
2. diversification can reduce managers' employment risk |
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Definition
| what are the benefits of product diversification to managers? |
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Term
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Definition
| resources remaining after the firm has invested in all projects that have positive net present value within its current businesses |
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Term
| a position located between the dominant business and related constrained diversification strategies |
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Definition
| of the four corporate level diversification strategies, which will shareholders likely prefer? |
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Term
| mangers prefer higher levels of product diversification than do shareholders (between related linked and unrelated businesses) |
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Definition
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Term
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Definition
| who (managers or SH) prefer riskier strategies and more focused diversification? |
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Term
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Definition
| the sum of the incentive costs, monitoring costs, enforcement costs, and individual financial losses incurred by principals bc governance mechanisms cannot guarantee total compliance by the agent |
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Term
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Definition
| both the number of large block shareholders and the total percentage of shares they own |
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Term
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Definition
| typically own at least 5% of a corporation's issued shares |
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Term
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Definition
| a large number of SH with small holdings and few, if any, large block SH |
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Term
| ownership concentration is associated with lower levels of firm product diversification |
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Definition
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Term
| separation of ownership and control |
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Definition
| how is the modern corporation characterized |
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Term
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Definition
| the financial institutions such as stock mutual funds and pension funds that control large block shareholder positions |
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Term
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Definition
| group of elected individuals whose primary responsibility is to act in the owners' best interests by formally monitoring and controlling the corporation's top level managers |
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Term
insiders
related outsiders
outsiders |
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Definition
| three groups of board members |
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Term
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Definition
| active top level managers in the corporation who are elected to the board because they are a source of information about the firm's day to day operations |
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Term
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Definition
| have some relationship with the firm, contractual or otherwise, that may create questions about their independence, but are not inovled with the corporation's day to day activities |
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Term
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Definition
| provide independent counsel to the firm and may hold top level managerial positions in other companies or may have been elected to the board prior to the beginning of the current CEO's tenure |
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Term
| outsider dominated boards may emphasize the use of financial as opposed to strategic controls to gather performance information to evaluate mangers' and business units' performances |
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Definition
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Term
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Definition
| a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long term incentive compensation, such as stock awards and options |
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Term
| market for corporate control |
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Definition
| an external governance mechanism that becomes active when a firm's internal controls fail |
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Term
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Definition
| the major activity in the market for corporate control governance mechanism |
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Term
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Definition
| a CEO can receive up to 3 years salary if the firm is taken over |
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Term
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Definition
| takeover defense mechanism that allows shareholders other than the acquirer to convert shareholders' rights into a large number of common shares if anyone acquires more than a set amount of the target's stock (10-20%) |
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Term
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Definition
| defense mechanism wherein money is used to repurchase stock from a corporate raider to avoid the takeover of the firm |
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