Term
| Diversification Strategy (Def.) |
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Definition
| Pattern of action a corporation takes to own and manage a porfolio of strategic business units (SBUs) that together will create superior financial performance for corporate shareholders |
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Term
| 3 Types of Diversification Strategies |
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Definition
| Diversify into: Related businesses, Unrelated businesses, and both. |
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Term
| 4 Ways to Sustain Competitive Advantage In Oligopolistic Markets |
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Definition
1) Smaller set of relevant peers means lower competitive intensity.
2) Greater price power due to less customer choices
3) Scale cost benefits
4) Higher barriers to new entrants |
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Term
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Definition
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Term
| 3 Types of Diversifying Tests |
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Definition
1) Industry Attractiveness Test
2) Cost of Entry Test
3) Better-off Test |
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Term
| Industry Attractiveness Test (Def.) |
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Definition
| Industry to enter must yield consistently good ROI (y-axis) |
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Term
| Cost of Entry Test (Def.) |
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Definition
| Purchase/initial setup costs cannot be higher than NPV of future profits (use matrix) |
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Term
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Definition
| Businesses are stronger on KSF as parts of one corporation than they would be as independent businesses (x-axis) |
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Term
| BCG Growth-Share Matrix (4 Boxes) |
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Definition
Stars: High growth, large market
Cash Cow: Slow growth, large market
Question Mark: High growth, small market
Dog: Slow growth, small market |
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Term
| Difference between Cash Cow and Cash Hog |
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Definition
| Cash Hog cannot generate enough money, Cash Cow owns Cash Hogs |
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Term
| Relative Market Share (Def.) |
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Definition
| Ratio of market share to its largest rival’s market share measured in units. |
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Term
| Nine Cell Industry Attractiveness Matrix |
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Definition
Top left = More profitable
Bottom Right = Less profitable |
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Term
| STRATEGIC Options for Allocating Financial Resources (3) |
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Definition
1) Invest in ways to strengthen or grow existing businesses
2) Make acquisitions to establish positions in new industries or complement existing businesses
3) Fund long-rand R&D ventures aimed at opening market opportunities in new or existing businesses |
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Term
| FINANCIAL Options for Allocating Financial Resources (4) |
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Definition
1) Pay off existing debt
2) Increase dividend payments to shareholders
3) Repurchase shares of the company's common stock
4) Build cash reserves; invest in short-term securities |
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Term
| Key Success Factor (Def.) |
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Definition
| Specific capability or activity that any competing company in an industry must be good at if it is to be profitable. |
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Term
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Definition
| Quantitative target to be accomplished by a time deadline. |
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