Midterm 1 Flashcards
downscoping
identifying and eliminating under-performing business units
hostile takeover
takes control of another company without the approval or consent of the target company’s board of directors
reason why mergers fail
increase of shares, not a lot of thought put into it, no control, no stakeholder involvement
resources vs capabilities
resources can be acquired, capabilities are developed and use resources
above average return
good investment
vertical integration
when a firm becomes its own supplier or distributor
horizontal integration
increasing production at the same level
G7
canada, france, germany, italy, japan, uk, us; high-profile venue for discussing and coordinating solutions to major global issues
Brics
Brazil, russia, india, china, south africa
conglomerate
a company that owns multiple different businesses in different industries
economies of scope
savings from capitalizing on core competencies and sharing activities
economies of scale
spreading the costs of production over the
number of units produced
switching costs
costs when buyer/supplier switches to another buyer/supplier
threat of new entrants
possibility that the profits will be destroyed by new competitors
bargaining power of buyers
threat that buyers may force down prices, bargain for better quality or more services, and play competitors against each other
bargaining power of suppliers
threat that suppliers may raise prices or reduce quality
threat of substitutes
companies that produce goods/services with little substitutes have higher power to raise prices
industry rivalry
threat that customers will go to the competition
industry analysis
helps company evaluate the profit potential and also to consider various ways to strengthen its position
in regards to the five forces.
value chain analysis primary activities
inbound logistics, operations, outbound logistics, marketing/sales, service
support activities
procurement, technology development, HR management, general admission
diversification
the process of firms expanding their operations by entering new businesses.
related diversification
benefits derived from sharing resources
unrelated diversification
benefits from value that is created from the corporate office
opposite of outsourcing
integrating
triple bottom line
an assessment of environmental, social, and financial performance
strategic groups
help identify mobility barriers, marginal competitive position, the firms’ strategies, industry trends
when to outsource
if the activity is not a core competency of the business
