Chapter 6 notes MGT 490
Chapter 6 notes MGT 490 Management 490
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This 2 page Class Notes was uploaded by Briana Notetaker on Sunday March 6, 2016. The Class Notes belongs to Management 490 at Western Illinois University taught by Yin-Chi Liao in Winter 2016. Since its upload, it has received 20 views. For similar materials see Business Strategy in Business, management at Western Illinois University.
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Date Created: 03/06/16
MGT 490 Chapter 6 Corporate Level Strategy Corporate level strategy: a strategy that focuses on gaining long-term revenue, profits, and market value through managing operations in multiple businesses, Business level operation: where competition takes place and value is created Diversification: the proess of firms expanding their operations by entering new businesses Types of diversification: Related businesses: primary potential benefits derive from sharing intangible resources (marketing) and tangible resources (distribution channels) Unrelated businesses: primary potential benefits are derived from hierarchical relationships, value creation is derived from corporate office Economies of scope: cost savings from leveraging core competencies or sharing related activities among businesses in the corporation Core competencies: firms strategic resources that reflect the collective learning in the organization In order for a core competence to create value: Must enhance competitive advantages by creating superior customer value Different businesses in the corporation must be similar in at least one important way related to the core competence Must be difficult for competitors to imitate or find substitutes Sharing activities: having activities of two or more businesses value chains done by one of the businesses Vertical Integration: occurs when a firm becomes its own supplier or distributor Benefits of vertical integration: Secure supply of raw materials or distribution channels that cannot be held hostage to external markets where costs can fluctuate over time Protection and control over assets required to produce and deliver products and services Access to new business opportunities and new forms of technologies Simplified procurement and administrative procedures since key activities are brought inside the firm, eliminating the need to deal with a wide variety of suppliers and distributors Risks: Costs and expenses associated with increased overhead and capital expenditures Loss of flexibility resulting from large investments Problems associated with unbalanced capacities along the value chain Additional administrative costs associated with managing a more complex set of activities Acquisitions: the incorporation of one firm into another through purchase Mergers: the combining of two or more firms into one new legal entity Antitakeover Tactics: managers actions to avoid losing wealth or power as a result of a hostile take over Greenmail: an effort by the target firm to prevent an impeding takeover Golden parachute: a prearranged contract with managers specifying that, in the event of a hostile takeover, the target firms managers will be paid a significant severance package Poison pill: used by a company to give shareholders certain rights in the event of a takeover by another firm
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