Chapter 6 Flashcards
Acquisition
A form of a merger whereby one firm purchases another, often with a combination of cash and stock.
Backward Integration
A firm’s acquisition of its suppliers
BCG Growth-Share Matrix
A corporate portfolio framework developed by the Boston Consulting Group that categorizes a firm’s business units by the market share that they hold and the growth rate of their respective markets.
Conglomerate
A form of diversification in which a firm acquires a business to reduce cyclical fluctuations in cash flows or revenues.
Core Competencies
The firm’s key capabilities and collective learning skills that are fundamental to its strategy, performance, and long-term profitability.
Corporate Profile
Identification of the industry or industries in which a firm operates.
Corporate-Level Strategy
The strategy that top management formulates for the overall company.
Divestment
A corporate-level retrenchment strategy in which a firm sells one or more of its business units.
External Growth
A corporate-level growth strategy whereby a firm acquires other companies.
Forward Integration
A firm’s acquisition of one or more of its buyers.
Growth Strategy
A corporate-level strategy designed to increase revenues, and ultimately profits and or market share.
Horizontal Integration
A form of acquisition in which a firm expands by acquiring other companies in its same line of business.
Horizontal Related Diversification
A form of diversification in which a firm acquires a business outside its present scope of operation but with similar or related core competencies.
Internal Growth
A corporate-level growth strategy in which a firm expands by internally increasing its size and sales rather than by acquiring other companies.
International Franchising
A form of licensing in which a local franchisee pays a franchiser in another country for the right to use the franchiser’s brand names, promotions, materials, and procedures.
International Licensing
An arrangement whereby a foreign licensee purchases the rights to produce a company’s products and/or use its technology in the licensee’s country for a negotiated fee structure.
Liquidation
A corporate-level retrenchment strategy in which a firm terminates one or more of its business units by the sale of their assets.
Merger
A corporate-level growth strategy in which a firm combines with another firm through an exchange of stock.
Retrenchment Strategy
A corporate-level strategy designed to reduce the size of the firm.
Stability Strategy
A corporate-level strategy intended to maintain a firm’s present size and current lines of business.
Strategic Alliances
A corporate-level growth strategy in which two or more firms agree to share the costs, risks, and benefits associated with pursuing new business opportunities. Strategic alliances are often referred to as partnerships.
Synergy
When the combination of two firms results in higher efficiency and effectiveness than would otherwise be achieved by the two firms separately.
Turnaround
A corporate-level retrenchment strategy intended to transform the firm into a leaner and more effective business by reducing costs and rethinking the firm’s product lines and target markets.
Vertical Integration
A form of integration in which a firm expands by acquiring a company in the distribution channel.
