Corporate Level Strategy Flashcards
What are the three ways of defining the scope of a firm?
Product scope: Range of products.
Vertical integration: Range of linked activities – supply chain.
Geographical scope: Does it compete locally or globally?
What are the types of corporate level strategies?
Diversification
Vertical Integration
Mergers and acquisitions
Strategic Alliances.
Why would you adopt a corporate level strategy?
Looking for ways to expand your business
What is diversification?
Expanding an existing firm into another product line or field of operation.
What are the 3 types of corporate diversification?
Limited diversification: Majority of sales comes from one industry or a dominate business.
Related diversification: A firm expands into a similar field of operation. eg: Honda
Unrelated diversification: New product line is different from the current business. eg: Disney or Westfarmers (Liquor-land and Officeworks).
What is vertical integration
Firms’ ownership on activities.
Bringing activities normally performed by other firms and having your company do them.
Why do some mergers fail?
May fail as they don’t consider pre merger planning or post merger integration
Describe pre-merger planning
Realistic understanding of the outcomes and knowledge of target company.
Describe post-merger integration
Knowledge of organisational and national culture.
Explain economies of scope
The cost economies that arise when a company increases their output of multiple products using the same company.
eg: Starbucks creating tea as well as coffee or Disney making multiple products from media networks to theme parks.
