Comp Strat Ch 10 Flashcards
What is the process of taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry.
Whereas what is the process of taking a distinctive competency developed by a business unit in one industry and using it to create a new business unit in a different industry
Transferring competencies
and using a competency to make a new business is:
Leveraging competencies
Some kind of skill or competency that when shared by two or more business units allows them to operate more effectively and create more value for customers.
Commonality
When one or more business units from a diversified company can lower costs or increase differentiation due to pooling, sharing, and utilizing expensive resources or capabilities, it is called what?
Economies of scope
What are the competencies that result from the skills of a company’s top managers that help every business unit within a company perform at a higher level than it could if it operated as a separate or independent company.
and what are the types of these?
General organizational competencies:
- Entrepreneurial capabilities
- organizational design capabilities
- strategic capabilities
What is the ability of the managers of a company to create a structure, culture, and control systems that motivate and coordinate employees to perform at a high level.
Organizational design skills
What is it when managers of a diversified company identify inefficient and poorly managed companies in other industries and then acquire and restructure them to improve their performance—and thus the profitability of the total corporation.
Turnaround Strategy
so kinda like Mitt Romney…
What are the two types of diversification and some notes on each?
Related Diversification
- So making as many linkages as possible between different functions of different business units divisions
- An advantage is that a company can use any general organizational competency it possesses to increase the overall performance of ALL its different industry divisions
Unrelated Diversification
- These are the conglomerates, such as P&G.
- benefits are internal capital markets that let company shift money to promising business units and take away from others
What is a corporate-level strategy whereby the firm’s headquarters assesses the performance of business units and allocates
money across them. Cash generated by units that are profitable but have poor investment opportunities within their business is used to cross-subsidize businesses that need cash and have strong promise for long- run profitability.
Internal capital market
What are the costs associated with solving the transaction difficulties between business units and corporate headquarters as a company obtains the benefits from transferring, sharing, and leveraging competencies.
What are the two factors that determine the level or bureaucratic costs?
Bureaucratic costs
and it is a function of two factors:
- number of businesses
- and degree to which coordination is required between these different business units to realize the advantages of diversification
What is the process of transferring resources to and creating a new business unit or division in a new industry to innovate new kinds of products.
internal new venturing
What are the 3 pitfalls of internal new ventures?
- Market entry on too small a scale
- poor commercialization of the new-venture product
- poor corporate management of the new-venture division
What are 4 acquisition pitfalls?
- Integration problems with culture and structure
- Overestimating potential economic benefits from acquisition
- Acquisition can be so expensive that profitability isn’t increased
- Companies often don’t screen their targets enough and fail to recognize problems in their target’s business
What are the 4 guidelines for successful acquisition?
- Target identification and pre-acquisition screening
- Bidding strategy
- Integration
- Learning from experience
What is the process of reorganizing and divesting business units and exiting industries to refocus upon a company’s core business and rebuild its distinctive competencies
Restructuring
When do strategic managers often pursue diversification?
When they have excess cash flow that isn’t needed for their core industry that can be used for new business ventures