Competing for Advantage. Chapter 8 Corporate-Level Strategy. PART III CREATING COMPETITIVE ADVANTAGE. The Strategic Management Process. Corporate-Level Strategy. Key Terms Corporate-level strategy
CREATING COMPETITIVE ADVANTAGE
Specifies actions a firm takes to gain a competitive advantage by selecting and managing a portfolio of businesses that compete in different product markets or industries
Primary form of corporate-level strategy
Corporate-level strategy in which the firm generates 95% or more of its sales revenue from its core business area
Corporate-level strategy in which the firm generates between 70% and 95% of its total sales revenue within a single business area
Corporate-level strategy in which the firm generates more than 30% of its sales revenue outside a dominant business and whose businesses are related to each other in some manner
Related diversification strategy characterized by direct links between the firm's business units
Related diversification strategy characterized by only a few links between the firm’s business units
Corporate-level strategy for highly diversified firms in which there are no well-defined relationships between business units
Organizational structure which ties together several operating divisions, each representing a separate business or profit center to which responsibility for daily operations and business-unit strategy is delegated
Management tool which indicates how to compare actual results with expected results and suggests corrective actions to take when the difference between actual and expected results is unacceptable
Subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and given the company's competitive advantages
Objective criteria used to measure firm performance against previously established quantitative standards
Cost savings that the firm creates by successfully transferring some of its capabilities and competencies that were developed in one of its businesses to another of its businesses
Conditions that exist when the value created by business units working together exceeds the value those same units create working independently
Organizational structure using horizontal integration to bring about interdivisional cooperation
Complex sets of resources and capabilities that link different businesses, primarily through managerial and technological knowledge, experience, and expertise
Form of multidivisional organization structure with three levels used to support the implementation of a diversification strategy
Exists when a firm is able to price and sell its products above the existing competitive level or to reduce costs of value chain activities and support functions below the competitive level, or both
Exists when two or more diversified firms simultaneously compete in the same product or geographic markets
Exists when a company produces its own inputs or owns its own source(s) of output distribution
Exists when a firm sources inputs externally from independent suppliers as well as internally within the boundaries of the firm, or disposes of its outputs through independent outlets in addition to company-owned distribution channels
“Diseconomies” of Scope
Organizational structure in which a dual structure combines both functional specialization and business product or project specialization.
Cost savings realized through improved allocations of financial resources based on investments inside or outside the firm
Organizational structure in which the firm's divisions are completely independent
SBU & Division Performance
Assume that you overheard the following statement: “Those managing an unrelated diversified firm face far more difficult ethical challenges than do those managing a dominant business firm.” Based on your reading of this chapter, do you believe this statement true or false? Why?
Is it ethical for managers to diversify a firm rather than return excess earnings to shareholders? Provide reasoning to support your answer.
Are ethical issues associated with the use of strategic controls? With the use of financial controls? If so, what are they?
Are ethical issues involved in implementing the cooperative and competitive M-forms? If so, what are they? As a top-level manager, how would you deal with them?
What unethical practices might occur when a firm restructures the assets it has acquired through its diversification efforts? Explain.
Do you believe that ethical managers are unaffected by the managerial motives to diversify discussed in this chapter? If so, why? In addition, do you believe that ethical managers should help their peers learn how to avoid making diversification decisions on the basis of the managerial motives to diversify (e.g., increased compensation)? Why or why not?