Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Strategy and Organisation - UvA > Week 3 > Flashcards

Week 3 Flashcards

1
Q

Define corporate-level strategies

A

Corporate-level strategies are strategies firms use to diversift their operations from a signle business competing in a single market, into several product markets and into several businesses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What does the basic corporate strategy focus on?

A

Diversification

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Given that the diversified firm operates in several different and unique product markets and probably in several businesses, it forms two types of strategies. Name them.

A
  • Corporate-level strategy
  • business level strategy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the corporate-level industry concerned with?

A

It’s concerned with what product markets and business the firm should compete in and how corporate headquarters should manage those businesses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What levels of diversification exist?

A
  • Low level diversification
  • Moderate and high levels of diversification
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

A firm pursuing a low level of diversification uses either a _______

A

single- or a dominant business, corporate-level diversification strategy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Explain the Single business diversification strategy

A

Single-business diversification strategy is a corporate-level strategy wherein the firm generates 95% or more of its sales revenue from its core business area.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Explain the dominant-business diversification

A

With the dominant-business diversification, the firm generates between 70-95% of its total revenue within a single business area

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

A firm generating more than 30% of its revenue outside a dominant business and whose businesses are related to ech other in some manner uses a…

A

… related diversification corporate-level strategy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When is a related constrained diversification strategy used?

A

When the links between the diversified firms business are rather direct.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are related linked firms?

A

Related linked firms share fewer resources and assets between their businesses, concentrating instead on transferring knowledge and core competencies between the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

A highly diversified firm that has no relationships between its businesses follows an…..

A

….. unrelated diversification strategy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Firms using an unrelated diversification strategy are known as?

A

Conglomerates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are economies of scope

A

Economies of scope are cost savings that the firm creates by successfully sharing some of its resources and capabilities of transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Define Operational relatedness

A

Firms can create operational relatedness by sharing either a primary activity or a support activity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Define Corporate relatedness

A

Corporate-level core competencies are complex set of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience and expertise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What strategy do firms seeking to create value through corporate relatedness use?

A

Diversification strategy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

when does Multipoint competition exist

A

Multipoint competition exists when two or more diversified firms simultaneously compete in the same product areas or geographical markets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Define Vertical integration

A

Vertical integration exists when a company produces its own inputs (backwards integration) or owns its own sources of output distribution (forward integration)

20
Q

Whats backwards integration?

A

When a company produces its own inputs

21
Q

Whats forward integration

A

When a company owns its own sources of output distribution.

22
Q

Define unrelated diversification

A

Firms do not seek either operational relatedness or corporate relatedness when using the unrelated diversification corporate-level strategy.

23
Q

An unrelated diversification strategy can create value through two types of financial economies, name thel

A
  • Efficient internal capital market allocation
  • Restructuring of acquired assets
24
Q

Incentives to diversify come from external and internal environments. Give some examples

A
  • Anti-competition regulation and tax laws
  • Low performance
  • Uncertain future cash flows
  • Synergy and firm risk reduction
25
Q

When does synergy exist?

A

Synergy exists when the value created by business units working together exceeds the value that those same units create working independently

26
Q

The _____ the incentives and the more _____ the resources, the _____ the level or expected diversification.

A

Greater; flexible; higher

27
Q

According to BOSTON CONSULTING GROUP MATRIX:

If the market is attractive and I’m strong in the market, “…”

A

‘I’m in a good position’

28
Q

According to BOSTON CONSULTING GROUP MATRIX:

If my position in terms of market share is strong, “…”

A

‘I’m in the position to generate cash’

29
Q

When can a merger and acquisition strategy be used?

A

M&A can be used when there are uncertainties in the competitive landscape and the company wants to make a step toward growth.

30
Q

Define a merger

A

A merger is a strategy through which tow firms agree to integrate their operations on a relatively co-equal basis. (combination of two previously seperate orgs, typically more or less equal to partners)

31
Q

Define Acquisition

A

One organisation seeks to acquire another, often smaller, organisation

32
Q

Define a takeover

A

A takeover is a special type of acquisition strategy wherein the target firm does not solicit the acquiring firms bid

33
Q

What reasons exist for acquisitions?

A
  1. Increased market power
  2. Overcoming entry barriers
  3. Cost of new product development and increase speed to market
  4. Lower risk compared to developing new products
  5. Increased diversification
  6. reshaping the firm’s competitive scope
  7. Learning and developing new capabilities
34
Q

What are horizontal acquisitions?

A

Horizontal acquisitions is the acquisition of a company competing in the same industry as the acquiring firm.

35
Q

What are vertical acquisitions?

A

A vertical acquisition is an acquisition where one company buys another company in the same industry, but at a different stage of production cycle (such as a supplier or distributor)

-> A firm becomes vertically integrated through this type of acq.

36
Q

Define related acquisitions

A

A related acquisition is the acquisition of a firm in a highly related industry.

-> through this acq, firms seek to create value thro synergy that can be generated by integrating some of their resources and capabilities.

37
Q

Define barriers to entry

A

Barriers to entry are factors associated with the market or with the firms currently operating in it, which increases the expense and difficulty faced by new ventures trying to enter that particular market.

38
Q

Define cross-border acquisitions

A

Those made between companies with headquarters in a different country.

39
Q

Name some problems in achieving acquisition success

A
  1. Integration difficulties
  2. Inadequate evaluation of the target
  3. Large or extraordinary debt
  4. Inability to achieve synergy
  5. Too much diversification
  6. Managers overly focused on acquisitions
  7. Too large
40
Q

When does synergy exist?

A

Synergy exists when the value created by units working together exceeds the value those units could create working independently.

41
Q

Define Private synergy

A

Private synergy is created when the combination and integration of the acquiring and acquired firms assets produce capabilities and core competencies that could not be developed by combining and integrating either firms assets with another company.

42
Q

Name the 7 characteristics of an effective acquisition:

A
  1. The acquiring and target firms have complementary resources that can be the basis of core competencies in the new firm
  2. The acquisition is friendly
  3. The target firm is selected and purchased based on thorough duediligence
  4. The acquiring and target firms have considerable slack in the form of cash or debt capacity
  5. The merged firms maintains a low or moderate level of debt by selling off portions of the acquired firm or some of the acquiring firms poorly performing units
  6. The acquiring and acquired firms have experience in terms of adapting to change
  7. R&D and innovation are emphasized in the new firm
43
Q

Whats restructuring?

A

Restructuring is a strategy through which a firm changes its set of businesses or its financial structure.

44
Q

Firms use three types of restructuring strategies. Name them.

A
  1. Downsizing
  2. Downscoping
  3. Leveraged buyouts
45
Q

Explain downsizing

A

Downsizing is a reduction in the number of a firms employees and sometimes the number of its operating units

46
Q

Explain downscoping

A

Downscoping refers to the divestiture, spin-off, or other means of eliminating businesses that are unrelated to the company’s core business.

47
Q
A

Strategy and Organisation - UvA (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions