Lecture 10 (Business II, Corporate strategy) Flashcards
Two types of competetive strategy
-Cost leadership
-Product differentiation
cost leadership meaning in bus. strategy
doing things more efficiently. It greatly benefits from economies of scale, so narrow-line, standardized offering
Product differentiation meaning in bus. strat.
providing something unique that is more valuable to
customers than the cost of providing it
Resources types
-Tangible
-Intangible
-Human
Tangible resources meaning
resources you can touch (financial, physical)
Intangible resources meaning
Resources you can’t touch (technology, reputation, culture)
Human resources meaning
Resources derived from humans (skills/know-how, capacity for communication and collaboration, motivation)
Factors that determine the potential of resources and capabilities to earn profit
-Ability to obtain a competetive advantage
-Ability to sustain that advantage
-Ability to realize returns from that advantage
Methods of developing new capabilities in a firm
-Develop internally
-Merging and aquisition
-Strategic alliances
Conglomerate meaning
a corporation consisting of a corporate HQ and a number of business units that are not in any way related
How can corporate HQ add value through stand-alone influence?
-attract and allocate capital
-appoint, evaluate and reward unit managers
-offer advice
-provide functions and services
-performance management
-portfolio managemnet
Stand-alone unit meaning
Business unit that operates independently and separately
Related diversification
firm starts or acquires a new business that is in some way related to the firm’s existing business
Economies of scope meaning
Reduction of average production cost by producing variety of products together
Factors that lead to economies of scope
-specialized indivisible physical assets
- technological know-how
- organizational know-how (how to respond to external events)
- brand names
