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Chapter 6 notes MGT 490

by: Briana Notetaker

Chapter 6 notes MGT 490 Management 490

Briana Notetaker
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These notes cover what will be on our next exam
Business Strategy
Yin-Chi Liao
Class Notes
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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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