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Definition
| Firm's overall orientation toward growth, stability, or retrenchment. |
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Definition
| The industries or markets in which the firm competes through its products and business units |
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Definition
| Manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units. |
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Definition
| primarily about the choice of direction for a firm as a whole and the management of its business or product portfolio |
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Term
| Directional Strategy 3 general orientations |
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Definition
1. Growth- expand activities
2. Stability- make no change to activities
3. Retrenchment- reduce level of activites |
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Term
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Definition
| transaction involving two or more corporations in which stock is exchanged but in which only one corporation survives |
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Term
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Definition
| purchase of a company that is completely absorbed as an operating subsidiary or division of the acquiring corporation. |
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Term
| Concentration (Growth Strategy) |
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Definition
| Concentration of resources on product lines with real growth potential. |
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Term
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Definition
Taking over a function previously provided by a supplier/distributor.
-integration: degree to which a firm operates in multiple locations on an industry's value chain
-backward: going backward on industry value chain (raw materials) more profitable, but can reduce a corporation's strategic flexibility.
-forward: forward on value chain (distributor) |
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Term
| Transaction Cost Economics |
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Definition
| Vertical integration is more efficient than contracting for goods/services in the marketplace when transaction costs of buying goods on the open market become too great. |
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Term
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Definition
| a firm internally makes 100% of its key supplies and completely controls its distributors. |
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Definition
| (concurrent sourcing), firm internally produces less than half of its own requirements and buys the rest from outside suppliers |
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Definition
| company does not make any of its key supplies but purchases most of its requirements from outside suppliers that are under its partial control (backwards quasi-integration) |
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Term
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Definition
agreements between two firms to provide agreed-upon goods and services to each other for a specified period of time.
-exclusive: specifies that the supplier or distributor cannot have a similar relationship with a competitive firm. |
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Term
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Definition
| expanding operations into other geographic locations and/or increasing the range of products and services offered to current markets. |
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Term
| Exporting (International Entry Options for Horizontal Growth) |
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Definition
| minimize risk and experiment with a specific product by shipping goods produced in home country to other countries for marketing. |
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Term
| Licensing (International Entry Options for Horizontal Growth) |
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Definition
| licensing firm grants rights to another firm in host country to produce/sell a product |
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Term
| Franchising (International Entry Options for Horizontal Growth) |
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Definition
| Franchiser grants rights to another company to open a retail store using the franchiser's name and operating system. (accounts for 40% of total US retail sales) |
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Term
| Joint Ventures (International Entry Options for Horizontal Growth) |
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Definition
| b/w foreign corp. and domestic company is most popular strat to enter new country. can be b/w company and firm or government agency in that country. reduces risks of expropriation and harrasment by host country officials. enable firm to enter country w/restrictive ownership. |
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Term
| Acquisitions (International Entry Options for Horizontal Growth) |
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Definition
| purchase another company already operating in that area. |
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Term
| Green-Field Development (International Entry Options for Horizontal Growth) |
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Definition
| Build its own manufacturing plant and distribution system. usually firms with high levels of tech, multinational experience and diverse product lines. |
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Term
| Production Sharing (International Entry Options for Horizontal Growth) |
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Definition
| Process of combining the higher labor skills and tech available in developed countries with the lower-cost labor available in developing countries (outsourcing) |
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Term
| Turnkey Operations (International Entry Options for Horizontal Growth) |
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Definition
| Contracts for the construction of operating facilities in exchange for a fee |
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Term
| BOT Concept (International Entry Options for Horizontal Growth) |
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Definition
| (Build, Operate, Transfer); variation of turnkey; firm operates the facility for a fixed period of time during which it earns back its investment plus a profit; turns it over to government at little to no cost to host country. |
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Term
| Management Contracts (International Entry Options for Horizontal Growth) |
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Definition
| Offer a means through which a corporation can use some of its personnel to assist a firm in a host country for a specified fee/period of time. |
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Term
| Concentric (related) Diversification |
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Definition
| into a related industry may be a very appropriate strategy when a firm has a strong competitive position but industry attractiveness is low. |
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Term
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Definition
| Concept that two businesses will generate more profits together than they could separately, point of commonality may be similar technology, customer usage, distribution, mgmt skills, or product similarity. |
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Term
| Conglomerate (unrelated) Diversification |
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Definition
| Diversifying into an industry unrelated to its curent one. emphasis is on sound investment and value-oriented management rather than on the product-market synergy common to concentric diversification. |
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Term
| Cisco criteria for takeover candidates |
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Definition
-Must be relatively small
-Must be comparable in organizational culture.
-Must be physically close to one of the existing affiliates. |
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Term
| Pause/Proceed-with-caution strategy |
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Definition
| A timeout-an opportunity to rest before continuing a growth or retrenchment strategy. very deliberate attempt to make only incremental improvements until a particular environmental situation changes. |
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Term
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Definition
| rarely a definitive strategy. |
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Term
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Definition
| Do nothing new in a worsening situation but instead act tas though the company's problems are only temporary. Attempt to artificially support profits when a company's sales are declining by reducing investment and short term discretionary expenditures. |
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Term
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Definition
| Emphasizes the improvement of operational efficiency and is probably most appropriate when a corporations problems are pervasive but not yet critical. |
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Term
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Definition
| Initial effort to quickly "stop the bleeding" with a general, across-the-board cutback in size and cost. |
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Term
| Consolidation (after contraction) |
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Definition
| Implements a program to stabilize the now-leander corporation |
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Term
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Definition
| Giving up independence in exchange for security. A company w/ week competitive position may not be able to engage in full-blown turnaround strategy. Offers to be a captive company to larger customers in order guarantee company existence w/ a long-term contract. |
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Term
| Sell-Out/Divestment Strategy |
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Definition
Sell-out: makes sense if mgmt can still obtain a good price for its shareholders and the employees can keep their jobs by selling to another firm
Divestment: Sell off divisions with low growth potential. Often used when corporation acquires multi-unit corporation in order to shed off units that do not fit with the corps new strategy. |
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Term
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Definition
Bankruptcy: Giving up mgmt of the firm to the courts in return for some settlement of the corporation's obligations.
Liquidation: Termination of the firm. Convert as many saleable assets as possible to cash, which is then distributed to shareholders after all obligations are paid. |
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Term
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Definition
| Top Management views its product lines and business units as a series of investments from which it expects a profitable return |
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Term
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Definition
| (Problem Children/Wildcats) New products with the potential for success, but need a lot of cash for development. Money must be taken from mature products and spend on question marks |
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Term
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Definition
| Market leaders typically at peak of product life cycle and able to generate enough cash to maintain their high share of the market and usually contribute to the company's profits |
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Term
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Definition
| Bring in far more money than is needed to maintain their market share. Declining stage of their life cycle. Milked for cash that will be invested in new question marks. |
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Term
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Definition
| Low Market share and no potential to bring in cash. |
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Term
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Definition
1. Use of highs and lows to form four categories too simplistic
2. Link between market share/profitability questionable. Low-share businesses can also be profitable.
3. Growth rate is only one aspect of industry attractiveness
4. Product lines/business units considered only in relation to one competitor: market leader. Small competitors with fast-growing market shares are ignored.
5. Marjet share is only one aspect of overal competitive position |
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Term
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Definition
| Nine cells based on long-term industry attractiveness and business strength competitive position. |
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Term
| Advantages of Portfolio Analysis |
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Definition
-Encourages top mgmt to evaluate each of the corps busnesses individually and set objective and allocate resources for each.
-Stimulate use of externally oriented data to supplement mgmt's judgment
-Raises the issue of cash-flow availability for use in expansion/growth
-Graphic depiction facilitates communication |
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Term
| Disadvantages of Portfolio Analysis |
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Definition
-Defining product/market segments is difficult
-Suggest use of standard strats that can miss opportunities or be impractical
-Provides illusion of scientific rigor when in reality positions are based on subjective judgments.
-Value-laden terms such as cash cow and dog can lead to self-fulfilling prophecies
-Not always clear what makes an industry attractive or where a product in in life-cycle
-Naively following prescriptions of a portfolio model may actual reduce corporate profits if they are used inappropriately. |
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Term
| Four Tasks of Multi-Alliance Management necessary for successful alliance port. mgmt. |
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Definition
1. Developing and implementing a port. strat. for each business unit and a corporate policy for managing all the alliances of the entire company.
2. Monitoring the alliance port. in terms of implementing business unit strategies and corporate strategy policies.
3. Coordinating the port. to obtain synergies and avoid conflicts among alliances.
4. Establishing an alliance management system to support other tasks of multi-alliance mgmt. |
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Term
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Definition
| Views a corporation in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units. |
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Term
| Horizontal Strat./Multipoint Competition |
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Definition
Horizontal Strat.- corporate strat. that cuts across business unit boundaries to build synergy across business units and to improve the competitive position of one or more business units.
Multipoint Comp.- Large multi-business corps compete against other large multi-business firms in a number of markets. |
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