O slideshow foi denunciado.
Utilizamos seu perfil e dados de atividades no LinkedIn para personalizar e exibir anúncios mais relevantes. Altere suas preferências de anúncios quando desejar.

Chapter 6 corporate-level strategy

  • Seja o primeiro a comentar

Chapter 6 corporate-level strategy

  1. 1. Strategic Management:Concepts and Cases 9e Part II: Strategic Actions: Strategy FormulationChapter 6: Corporate-Level Strategy ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  2. 2. Chapter 6: Corporate-Level Strategy• Overview: Seven content areas – Define and discuss corporate-level strategy – Different levels of diversification – Three primary reasons firms diversify – Value creation: related diversification strategy – Value creation: unrelated diversification strategy – Incentives and resources encouraging value-neutral diversification – Management motives encouraging firm overdiversification©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  3. 3. Introduction• Corporate-level strategy: Specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets – Expected to help firm earn above-average returns – Value ultimately determined by degree to which “the businesses in the portfolio are worth more under the management of the company then they would be under any other ownership • Product diversification (PD): primary form of corporate- level strategy©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  4. 4. Introduction GE Rolls-Royce PLC• 1st in aircraft-engine industry • 2nd in aircraft-engine industry• Involved in hundreds of businesses: • No longer makes luxury cars; operation manufacturing light bulb, medical devices; was parceled off to BMW and operating self-storage facilities; broadcasting (it Volkswagen in 1998. owns NBC) • 72% of its revenue coming from aircraft• Less than 10% of its revenue coming from engine aircraft engine Business-level: Within industry Both face the same competitive pressures: how to compete against Pratt & Whitney (3rd largest) Corporate-level GE faces strategic issues that are less relevant to Roll-Royce, in terms of managing the portfolio of business ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  5. 5. Levels of Diversification• 1. Low Levels – Single Business Strategy: firm generates 95% or more of its sales revenue from its core business area – Dominant Business Diversification Strategy: firm generates 70-95% of total sales revenue within a single business area• 2. Moderate to High Levels – Related Constrained Diversification Strategy • Less than 70% of revenue comes from the dominant business • Direct links between the firms businesses – Related Linked Diversification Strategy (Mixed related and unrelated) • Less than 70% of revenue comes from the dominant business • Mixed: Linked firms sharing fewer resources and assets among their businesses (compared with related constrained, above), concentrating on the transfer of knowledge and competencies among the businesses• 3. Very High Levels: Unrelated • Less than 70% of revenue comes from dominant business • No relationships between businesses©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  6. 6. Levels and Types of Diversification©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  7. 7. Reasons for Diversification• A number of reasons exist for diversification: – Value-creating – Value-neutral – Value-reducing©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  8. 8. Value-Creating Diversification Strategies:Operational and Corporate Relatedness©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  9. 9. Value-Creating Diversification (VCD): RelatedStrategies• Purpose: Gain market power relative to competitors• Related diversification wants to develop and exploit economies of scope between its businesses – Economies of scope: Cost savings 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• VCD: Composed of ‘related’ diversification strategies including Operational and Corporate relatedness©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  10. 10. Value-Creating Diversification (VCD): RelatedStrategies (Cont’d)• 1. Operational Relatedness: Sharing activities – Can gain economies of scope – Share primary or support activities (in value chain) – Related constrained share activities in order to create value – Not easy, often synergies not realized as planned• 2. Corporate Relatedness: Core competency transfer – Complex sets of resources and capabilities linking different businesses through managerial and technological knowledge, experience and expertise – Two sources of value creation • Expense incurred in first business and knowledge transfer reduces resource allocation for second business • Intangible resources difficult for competitors to understand and imitate – Use related-linked diversification strategy©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  11. 11. Value-Creating Diversification (VCD): RelatedStrategies (Cont’d)• Market Power – Exists when a firm is able to sell its products above the existing competitive level, to reduce costs of primary and support activities below the competitive level, or both. – Multimarket (or Multipoint) Competition • Exists when 2 or more diversified firms simultaneously compete in the same product or geographic markets. – Related diversification strategy may include • Vertical Integration • Virtual integration©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  12. 12. Value-Creating Diversification (VCD):Unrelated Strategies• Creates value through two types of financial economies – Cost savings realized through improved allocations of financial resources based on investments inside or outside firm • Efficient internal capital market allocation – Restructuring of acquired assets • Firm A buys firm B and restructures assets so it can operate more profitably, then A sells B for a profit in the external market©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  13. 13. Value-Neutral Diversification:Incentives and Resources• Incentives to Diversify – Antitrust Regulation and Tax Laws – Low Performance – Uncertain Future Cash Flows – Synergy and Firm Risk Reduction – Resources and Diversification©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  14. 14. Value-Reducing Diversification:Managerial Motives to Diversify• Top-level executives may diversify in order to diversity their own employment risk, as long as profitability does not suffer excessively – Diversification adds benefits to top-level managers but not shareholders – This strategy may be held in check by governance mechanisms or concerns for one’s reputation©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
  15. 15. Summary Model of the Relationship BetweenDiversification and Firm Performance©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

    Seja o primeiro a comentar

    Entre para ver os comentários

  • jinalkothari2

    May. 17, 2014
  • sudhindra4444

    Sep. 23, 2014
  • keshtkari

    Feb. 24, 2015
  • rm125b

    Jun. 25, 2015
  • WannaprapaRoddouyboon

    Oct. 24, 2015
  • KanyapakSongmanee

    Oct. 24, 2015
  • ssuserd8f4f3

    Nov. 18, 2015
  • crystalenelynette

    Feb. 28, 2016
  • preksha22

    May. 5, 2016
  • henokalemu2

    May. 6, 2016
  • vg20

    May. 16, 2016
  • puransahu1

    Aug. 28, 2016
  • MahiSharma16

    Oct. 22, 2016
  • TasneemAlSennawi

    Mar. 19, 2017
  • Kut30

    Mar. 23, 2017
  • ashwininaik25

    Dec. 5, 2017
  • pratiwidira

    Apr. 1, 2018
  • MonyRothSoChan

    May. 12, 2018
  • SalimYusuf5

    Apr. 26, 2019
  • Vijayvijju26

    Aug. 1, 2019

Vistos

Vistos totais

51.007

No Slideshare

0

De incorporações

0

Número de incorporações

61

Ações

Baixados

1.248

Compartilhados

0

Comentários

0

Curtir

21

×