Chapter 6: Corporate-Level StrategyDr. Dodd-Walker

Key Vocabulary CL#1Strategy: An ______ the firm takes (exploiting core competencies) to gain/sustain a competitive advantage; it requires a ________________.

Corporate-Level Strategy: An action the firm takes (exploiting core competencies) to gain/sustain a competitive advantage in a ________ _______ __________/_________________________.

(Hitt, Ireland, Hoskisson, 2005)

Key Vocabulary CL#2Financial Economies: ______________ realized through improved allocation of financial resources based on investments inside or outside of the firm.

____________________: Exists when 2 or more diversified firms simultaneously compete in the same product areas or geographic markets. (Another approach to gaining market power through diversification.)

(Hitt, Ireland, Hoskisson, 2005)

Key Vocabulary CL#3Synergy: ___________________. (The whole is greater than the sum of its parts.)

Example: 1 + 1 = 3 or 2 + 2 = 5

___________________: Financial resources accumulated in one part of the world used to fight a competitive battle in another part of the world. It is used to undermine strong domestic market share!

IntroductionWhat? CL Strategy. It addresses 2 issues:

1. What businesses a corporation should ___________ in.2. How these businesses should be managed to create ________.

Why? They explain how firms _______________: new products, markets, or technologies.

How? Related and Unrelated Diversification

Who? n/a

Related Diversification 1 (Dess & Lumpkin, 2003)Leveraging Core Competencies:The _______________ of accumulated ____________________ across a corporations business units.

Sharing Activities:The sharing of __________________________ across a firms business units, such as common manufacturing facilities, distribution channels, and sales forces.

Related Diversification 2 (Dess & Lumpkin, 2003)Pooled Negotiating Power:Refers to _________________________________ (or a business with its parent) to strengthen the firms bargaining position.

Vertical Integration:Refers to ________________________ by integrating preceding or successive productive processes.

Unrelated Diversification (Dess & Lumpkin, 2003)Restructuring:Corporation seeks firms with unrealized potential with the goal of improving their efficiency to _______________.

Corporate Parenting:The parent company _______________ through its management expertise by improving the efficiency/effectiveness of the subsidiary.

Portfolio Management/Analysis:The corporate office seeks to _________________________ its portfolio of businesses.

Means of Diversification (Dess & Lumpkin, 2003)Mergers & Acquisitions:_______________ the assets and competencies of other firms.

Strategic Alliances & Joint Ventures:_________________________ to achieve a common end.

Internal Development:Internal ____________________ lead to new product markets.

Levels of Diversification (Hitt et al., 2005)Single Business:More than _____ of revenue from a single business.

Dominant Business:__________ of revenue from a single business.

Diversified Business:Less than _____ of revenue from a single business.

Diversification Advantages & Disadvantages (Hitt et al., 2005)(See Single vs. Diversified Comparison Chart.)

Limitations of Vertical Integration (Hitt et al., 2005)______________ may produce product at lower cost.______________ costs may occur.It may reduce the ____________________ because of the substantial investment.Demand changes may create capacity balance and ____________________ problems.