Part 2 Flashcards
What are the four types op operational synergies?
- Consolidate
- Combine
- Customize
- Connect
Explain the operational synergy; Consolidate
- similar resources
- high modification
Eliminate redundancies
Get rid of stuff, (factory closures)
Explain the operational synergy; Combine
- similar resources
- low modification
Pooling unmodified activities
Explain the operational synergy; Customize
- dissimilar resources
- high modification
Modifying the value chain activities through specializing them to each other to increase their combined value
Joint product development
Solution selling, (sort of cross selling)
Explain the operational synergy; Connect
- dissimilar resources
- low modification
Cross selling
Product bundling
Sharing brands
Name the 4 reasons for diversifying
- Resource view
- Agency view
- Markt power view
- Risk and control view
Explain the resource view of diversifying
Resource view; to enhance capacity in productive factors and achieve economies of scale/scope + firm learning
Explain the agency view of diversifying
Agency view: to build a corporate empire and mitigate employment risks
Explain the market power view of diversifying
Market power view: to amplify negotiating power in the market
Explain the risk and control view of diversifying
Risk and control view: to ensure revenue stability and address market failures
Name the porter’s three tests of diversification
- How attractive is the industry?
- What is the cost of entry?
- Will the business be better of?
Name examples of tools for corporate strategy execution
- internal development
- corporate venture capital
- alliances
- acquisitions
- divestitures
Common mistakes made during corporate diversification;
- Overestimating Resource Transferability
- Overestimating Entry capabilities
- Generic Resource Misconception
Absorptive capacity
Absorptive capacity posits that an organization must possess existing relevant knowledge to incorporate and effectively apply new knowledge
Wat are the factors to analyse before deciding on an acquisition or an alliance?
1 Resource of Synergy
2 Market Factors
3 Collaboration Capabilities
What is absorptive capacity?
The firm’s capabilties in recognition of external knowledge, and its assimilation and application in business
What are the four main concepts of corporate strateg?
- Portfolio management
- Restructuring
- Transferring skills
- Shariny activities
What are the three conditions to transferring skills?
- Similarities are large enough
- Skills are important contributors
- Skills create competitve advantage
What are the three premises of corporate strategy?
- Competition occurs at BU level
- Diversification inevitably adds costs and constraints to BU
- Shareholders can readily diversify themselves, more easily than companies
What is Internal stickiness?
Internal stickiness refers to the difficulty of conducting knowledge transfer in a company
What are the four stages of the transfer process?
- Initation; need for knowledge
- Implementation stage; exchange of resources
- Ramp-up stage; applying the transfered knowledge
- Intergration stage; recipient exhibits statisfactory results, transfered knowledge becomes a routine
What are the three most impactful reasons for internal stickiness?
- Lack of absorptive capacity
- Causal ambiguity
- Arduous/ complex relationships
What are the 5 tests for a resource to be valuable?
- Inimitability
- Durability
- Appropraibility (who captures the value)
- Substitutability
- Competitive superiority
What are the common mistakes made during corporate diversification?
- Overestimating resource transferability
- Overestimating entry capabilities
- Generic resource misconception
What is knowledge codification?
Knowledge codification refers to the representation of knowledge to make it easily available and transferable so that it can be reused
What is meant with the trade-off?
Trade-off; balance between necessary level of organization integration, and minimizing the disruptions to the acquired firm’s resources and competencies
What are the three types of synergies?
- Modular synergy
- Sequential synergy
- Reciprocal synergy
Reasons to engage in alliances
- Sharing risks
- Combining complementary skills and assets
- Gaining access to new markets
- Learning from partnership by broadening or deepening skills
What are the two types of divesture?
1 sell off; unit is sold to another firm
2 spin off; unit becomes independent firm
What are the five reasons behind M&A?
- Overcapacity
- Geographic Roll-up
- Product Extension
- R&D
- Industry Convergence
What are the purposes of a financial synergy?
- accessing capital markets on better terms
- access a market listing
- move to low tax location
- benefit from tax abritrage
- build internal capital markets
Which types of CVA do you have?
- Portfolio management
- Restructuring
- Skill transfer
- Activity sharing
