CHAPTER 7 Flashcards
The purchase of a company that is completely absorbed by the acquiring corporation.
acquisition
Assuming a function previously provided by a supplier.
backward integration
A retrenchment strategy that
forfeits management of the firm to the courts
in return for some settlement of the corporation’s obligations
bankruptcy
A simple way to portray a corporation’s portfolio of products or divisions in terms of growth and cash flow.
BCG (Boston Consulting Group)
Growth-Share Matrix
A type of international entry option for a company. After building a facility, the company operates the facility for a fixed period of time during which it earns back its investment, plus a profit
BOT (Build, Operate, Transfer)
concept
Dedicating a firm’s productive capacity as primary supplier to another company in exchange for a long term contract.
captive company strategy
A product that brings in far more money than is needed to maintain its market share
cash cows
A corporate growth strategy that concentrates a corporation’s resources on competing in one industry
concentration
A diversification growth strategy in which a firm uses its current strengths to diversify into related products in another industry.
concentric diversification
A diversification growth strategy that involves a move into another industry to provide products unrelated to its current products.
conglomerate diversification
A corporate strategy that evaluates the corporation’s business units in terms of resources and capabilities
that can be used to build business unit value as well as generate synergies across business units
corporate parenting
A strategy that states a company’s overall direction in terms of its general attitude toward growth and the management of its various business and product lines
corporate strategy
A plan that is composed of three general orientations: growth, stability, and retrenchment.
directional strategy
A corporate growth strategy that expands product lines by moving into another industry.
diversification
A retrenchment strategy in which a division of a corporation with low growth potential is sold.
divestment
have low market share and do not have the potential (because they are in an unattractive industry) to bring in much cash.
dogs
Shipping goods produced in a company’s home country to other countries for marketing.
exporting
Assuming a function previously provided by a distributor
forward integration
An international entry strategy in which a firm grants rights to another company/individual to open a retail store using the franchiser’s name and operating system.
franchising
a firm internally makes 100% of its key supplies and completely controls its distributors
full integration
A portfolio analysis matrix developed by General Electric, with the assistance of the McKinsey & Company consulting firm
GE business screen
An international entry option to build a company’s manufacturing plant and distribution system in another country
green-field development
A directional strategy that expands a company’s current activities.
growth strategies
A corporate growth concentration strategy that involves expanding the firm’s products into other geographic
locations and/or increasing the range of products and services offered to current markets.
horizontal growth
The degree to which a firm operates in multiple geographic locations at the same point in an industry’s value chain.
horizontal integration
A corporate parenting strategy that cuts across business unit boundaries to build synergy across business units
and to improve the competitive position of one or more business units
horizontal strategy
An independent business entity created by two or more companies in a strategic alliance
joint venture
The termination of a firm in which all its assets are sold.
liquidation
Agreements between two separate firms to provide agreed-upon goods and services to each other for a specified period of time
long-term contracts
Agreements through which a corporation uses some of its personnel to assist a firm in another country for a specified fee and period of time.
management contracts
A transaction in which two or more corporations exchange stock, but from which only one corporation survives
merger
A rivalry in which a large multibusiness corporation competes against other large multibusiness firms in a
number of markets.
multipoint competition
A decision to do nothing new; to continue current operations and policies for the foreseeable future.
no-change strategy
The manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business unit
parenting strategy
A corporate strategy in which nothing new is attempted; an opportunity to rest before continuing a growth or retrenchment strategy.
pause/proceed with caution strategy
An approach to corporate strategy in which top management views its product lines and business units as a series of investments from which it expects a profitable return.
portfolio analysis
The process of combining the higher labor skills and technology available in developed countries with the
lower-cost labor available in developing countries.
production sharing
A strategy that artificially supports profits by reducing investment and short-term discretionary expenditures
profit strategy
A type of vertical growth/ integration in which a company does not make any of its key supplies but purchases
most of its requirements from outside suppliers that are under its partial control
quasi-integration
New products that have potential for success and need a lot of cash for development
question marks
Corporate strategies to reduce a company’s level of activities and to return it to profitability.
retrenchment strategies
A retrenchment option used when a company has a weak competitive position resulting in poor performance
sell-out strategy
Corporate strategies to make no change to the company’s current direction or activities
stability strategy
are market leaders that are typically at the peak of their product life cycle and are able to generate enough cash to maintain their high share of the market and usually contribute to the company’s profits
stars
A concept that states that the whole is greater than the sum of its parts; that two units will achieve more together than they could separately
synergy
A type of vertical integration in which a firm internally produces less than half of its own requirements and buys the rest from outside suppliers.
taper integration
A theory that proposes that vertical integration is more
efficient than contracting for goods and services in the marketplace when the transaction costs of buying goods on the open market become too great.
transaction cost economics
A plan that emphasizes the improvement of operational efficiency when a corporation’s problems are pervasive but not yet critical.
turnaround strategy
are typically contracts for the construction of
operating facilities in exchange for a fee
turnkey operations
A corporate growth strategy in which a firm takes over a function previously provided by a supplier or distributor
vertical growth
The degree to which a firm operates in multiple locations on an industry’s value chain from extracting raw materials to retailing.
vertical integration
Directional strategy is composed of three general orientations (sometimes called grand strategies)
Growth Strategies
stability strategies
Retrenchment Strategies
vertical integration continuum
full integration
taper integration
quasi- integration
long-term contract
diversification strategies
Concentric (Related) Diversification
Conglomerate (Unrelated) Diversification
STABILITY STRATEGIES
Pause/Proceed with Caution Strategy
No-Change Strategy
Profit Strategy
RETRENCHMENT STRATEGIES
Turnaround Strategy
Captive Company Strategy
Sell-Out/Divestment Strategy
Bankruptcy/Liquidation Strategy
