Strategic Management Exam 2

Scope of Customers

broad vs niche

• goal to create unique value

Competitive Advantage

cost (low) vs differentiation (premium qualities)

• goal to create low cost position

4 Generic Strategies

1. cost leadership: broad total market and low cost

2. cost focus: niche market and low cost

3. broad differentiation: broad total market and high differentiation

4. differentiation focus: niche market and high differentiation

How to achieve cost leadership:

1. Economies of Scale

2. Learning and Experience

3. Use a Different Business Model

4. Lower Input Costs (primarily achieved through lowering costs throughout the entire value chain)

1. Economies of Scale

a proportionate saving in costs gained by an increased level of production

- spread cost of facilities, equipment, advertising, and R&D when they have more customers to purchase and share the cost (try to sell more!)

Ex- Factories production amounts

2. Learning and Experience

improved skills or firm routines

Ex- Maintenance Cost Reduction:

Using same aircraft, the technicians accumulate experience over time, thus reducing the maintenance cost

3. Use a Different Business Model

Eliminate activities in the value chain

Ex- Ryanair

Perform different activities altogether

Ex- Amazon

4. Lower Input Costs

Things that can be lowered:

• Raw Materials

• Supplies

• Parts

• Equipment

• Labor

• Capital

Ex- Toyota and Walmart

To Lower:

• Buy in large volume of materials from suppliers so that they can get volume discounts that no other retailers can get.

• Build collaborative relationship with suppliers to reduce costs

• Source inputs from the lowest-cost location or country

Ex- outsourcing

Does Cost Leadership Mean Lower Quality

achieve primarily through lowering its costs throughout the entire value chain

- not necessarily

How to Achieve Cost Differentiation:

1. Product features

2. Relationships

3. Linkages

1. Product Features

• A product wins because it does a better job

• A product wins because it does more jobs

  • Ex- Apple wasn't selling a better phone; it was selling a phone that could do more jobs.

• A product wins because it does unique jobs

• Quality: A product wins because it lasts longer; Built to last

  • Ex- Toyota and Honda

• Convenience: A product wins because it is convenient to purchase

  • Ex- Coca cola is easy to find

  • Ex- Amazon provides one-stop shopping experience and you can buy any items by one-click

2. Relationships

• between firms and customers including brand image, reputation, customization, service, and subpart

• Brand image:

  • Customers buy these products to feel part of an elite group or club

  • The social and emotional dimension

  • make brand image a differentiator

  • Ex- Chanel and BMW

3. Linkages

within or across firms

- product mix and distribution channels

Ex- Delta

Business Level Strategies (Internal Analysis)

Basic Considerations:

• Who are the customers?

• What should be offered to customers?

• How can we create more value than competitors?

Choice of Market:

• Broad/General

• Niche/Focus

Choice of competitive advantage:

• Perform different activities

• Perform same activities but in a different way

Corporate Level Strategy: Diversification

firm's strategy to expand its operations by entering new businesses

- purpose: Synergy- working together to create greater value

Related Diversification

A firm entering different businesses in which it can benefit from leveraging core competencies, sharing activities, or building market power

Businesses have horizontal relationship: sharing tangible (e.g., production facilities and distributional channels) and intangible resources (e.g., brand, core competencies such as marketing)

• Ex- Pepsi

Unrelated Diversification

A firm entering a different business that has little horizontal interaction with other businesses of a firm

• Benefits are from hierarchical relationships: Value creation derived from corporate office

• Asset, capital, management restructuring by corporate office

• Leveraging support activities

• Ex- HR management, technology infrastructure

Levels of Diversification

Low Levels of Diversification:

• Single business: 95% or more of revenue comes from a single business

  • Ex- grocery store

• Dominant business: Between 70% and 95% of revenue comes from a single business

  • Ex- Kellog

Moderate to High Levels of Diversification

(Synergies/Economies of Scope)

• Related constrained: Less than 70% of revenue comes from the dominant business, and all businesses share product, technological, and distribution linkages

  • Ex- Proctor and Gamble

• Related linked (mixed related and unrelated): Less than 70% of revenue comes from the dominant business, and there are only limited links between businesses

  • Ex- Nike

Very High Levels of Diversification:

• Unrelated: Less than 70% of revenue comes from the dominant business, and there are no common links between businesses

  • Ex- Samsung

Value Creation Through Related Diversification

1. Economies of Scope

2. Market Power

1. Economies of Scope

refers to cost savings from leveraging core competencies or sharing related activities among businesses in the corporation

• The cost advantages that businesses experience when they increase the variety of goods or services they offer

Leveraging core competencies: a firm's strategic resource that reflect the collective learning in the organization

• enhance competitive advantage by creating superior customer value

• different businesses within a corporate

  • must share one important element related to its core competency

• must be difficult for competitors to imitate or find substitute

  • Ex- 3М leverages its competencies in adhesives technologies to many industries, including automotive, construction, and telecommunications

Sharing activities: Having activities of two or more businesses done by one to save costs

• Common manufacturing facilities

• Distribution channels

• Sales forces

  • Ex- Polaris, a manufacturer of snowmobiles, motorcycles, and off-road vehicles, shares manufacturing operations across its businesses. It also has a corporate R&D facility and staff departments that support all of Polaris's operating divisions

2. Market Power

Firms' abilities to profit through controlling or restricting market supply or coordinating with other firms to reduce investment

Pooled negotiating power: Related diversification allows a firm to combine (pool) demand or supply across its businesses.

• This increases bargaining power against suppliers and buyers

  • Ex- ConAgra is a company that owns a wide range of food companies, including Banquet Fried Chicken, Wesson Oils, Ready Whip, Hunt's Ketchup, Orville Redenbacher's Popcorn, Healthy Choice Meals, and many other brands. ConAgra centralizes its purchasing of basic packaging materials to leverage its size in relation to its suppliers.

Vertical integration: An expansion or extension of the firm by integrating preceding or successive production processes.

• When a firm becomes its own supplier and/or distributor

  • Ex- Amazon

Benefits

• A secure source of raw materials or distribution channels.

• Protection of and control over valuable assets.

• Proprietary access to new technologies developed by the unit.

• Simplified procurement and administrative procedures

Risks

• Costs and expenses associated with increased overhead and capital expenditures.

• Loss of flexibility resulting from large investments.

• Problems associated with unbalanced capacities along the value chain. (For example, the in-house supplier has to be larger than your needs in order to benefit from economies of scale in that market.)

• Additional administrative costs associated with managing a more complex set of activities.

Value Created Through Unrelated Diversification

1. Corporate Planning and Parenting

2. Restructuring

3. Portfolio Management

1. Corporate Planning and Parenting

Parenting— creating value within business units

◦ Experience of the corporate office

◦ Support of the corporate office

Corporate Office-

• Plans

• Budgets

• Procurement

• Legal functions

• Financial functions

• Human resource management

2. Restructuring

• Assets restructure: sell unproductive assets or businesses; and acquire valuable ones

• Capital restructure: change the debt-equity mix; or mix between different debt or equity

• Management restructure: changes of top leaders, organizational structure, and reporting relationships

  • Ex- General Electric

“Buy low and sell high”

3. Portfolio Management

• Assess the competitive position of a portfolio of businesses within a corporation

• Suggest alternatives for each business

• Identify priorities for the allocation of resources across the businesses

• Ex- BCG Matrix

How to Diversify

1. Mergers 1b. Acquisitions

2. Collaborative Venture

   • a. Joint venture

   • b. Strategic alliance (Open Automotive Alliance for Android)

3. Internal development

   • New products

   • New markets

   • New technology

1. Mergers

The combining of two or more firms into one new legal identity

• There are few TRUE mergers because one firm usually dominates in terms of market share, size, or asset value

• Ex- United and Continental Merger

1b. Acquisitions

The incorporation of one firm into another through purchase

• Ex- Amazon and Wholefoods

Benefits:

1. Obtain valuable resources to expand product offerings and services

2. Enter new market segments

3. Consolidate industry

Drawbacks:

1. Takeover premium is very high (Amazon-Wholefoods: $13.7B)

2. Competitors may imitate any resulting advantages or synergies

3. Managers' credibility and ego negatively impact the value creation through M&As

4. Cultural issues after M&As

Divestiture

An opposite act to M&A

The exit of a business from a firm's portfolio

• Reverse not-so-successful M&A

• Enhance competitive position by reducing costs

• Divestiture strategy (refer to BCG principles in the textbook)

2a. Joint Ventures (collaborative ventures)

A special case of alliances where new entities formed within a strategic alliance in which two or more firms, the parents, contribute equity to form the new legal entity

• Ex Volvo Uber Joint Venture: The ratio would be 50%-50%. As per the agreement, they are doing a $300 million investment for this JV

• Ex Google GlaxoSmithKline Joint Venture: The ratio would be 45%-55%, to produce bioelectronic medicines. The two companies got committed for 7 years and Euro 540 million

2b. Strategic Alliances

a cooperative relationship between two or more firms

• Ex- Google, Amazon, IBM have a partnership on AI

Benefits of alliances

• Develop or diffuse new technologies

• Use expertise of two or more companies

• Develop products technologically beyond capability of companies acting independently

• Introduce successful product or service into a new market

• Lacks requisite marketing expertise

• Join other firms to reduce costs in the value chain

• Pool capital, value-creating activities, facilities

Downside of alliances

• Selection of wrong partner:

  • No complementary strengths

  • No unique strength for sustained competitive advantage

  • No trust among partners

3. Internal Development

Entering a new business through investment in new facilities, shown in corporate entrepreneurship and new venture development

• New Products

• New Markets

• New Technology

Advantages:

• No need to share wealth

• No need for coordinating or combining activities with other firms

Disadvantages:

• Time consuming (Time is gold in competition!)

Portfolio Management

• Assess the competitive position of a portfolio of

businesses within a corporation

• Suggest strategic alternatives for each business

• Identify priorities for the allocation of resources across the

businesses

Resource Allocation Choice - BCG Matrix

The BCG Matrix is a portfolio planning model - a company's business units can be classified into four categories based on combinations of market growth and relative market share to the largest competitors

• It is a heuristic resource allocation and cash flow analysis tool

  • market growth requires significant cash flows

  • high market share in low growth markets often produces high cash flows

Cash Cow:

Cash cows are units with high market share in a slow-growing industry

• In a "mature" market

• They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth

Stars:

Stars are units/products with a high market share in a fast-growing industry.

• Stars become next cash cows.

• Stars require high funding to fight competitions and maintain a growth rate

Question Marks:

Question marks refers to the business operating in a high

market growth, but having a low market share.

• Have a potential to gain market share and become stars, and eventually cash cows when market growth slows

• They must be analyzed carefully in order to determine whether they are worth the investment required to grow market share

Dogs:

They refer to units with low market share in a mature, slow-growing industry

• They do not generate any profit for the company

• Should be sold off/divest

Relative Market Share and Market Growth Rate

Relative Market Share = SBU Sales this year divided by leading competitors' sales this year

Market Growth Rate = Industry sales this year - Industry sales last year or some indicator of industry growth over time

Resource Allocation Choices

1. Invest: build strategy

2. Maintain: hold strategy

3. Harvest

4. Divest

1. Invest

When used:

• Stars (high growth, high share)

• Sometimes Question Marks (if promising)

What it means:

• Put more resources in

• Expand capacity, marketing, R&D

• Aim to grow or defend market leadership

Goal:

• Turn into (or keep as) a Star → future Cash Cow

2. Maintain

When used:

• Cash Cows (low growth, high share)

What it means:

• Keep the business stable

• Invest just enough to defend position

• Avoid unnecessary expansion

Goal:

• Generate steady cash flow

3. Harvest

When used:

• Weak Cash Cows or Dogs

What it means:

• Reduce investment

• Maximize short-term cash extraction

• Cut costs, limit upgrades

Goal:

• Get as much cash as possible before decline

Key difference from maintain:

• Maintain = protect long-term

• Harvest = accept decline, maximize cash now

4. Divest

When used:

• Dogs (low growth, low share)

• Poor Question Marks

What it means:

• Sell, shut down, or spin off the business

Goal:

• Stop wasting resources and reallocate elsewhere

Balanced vs Unbalanced

Balanced - same relative weight on each side of the frame

Unbalanced - more relative weight on one side

Limitations of BCG Matrix

• SBUs (single-business units) compared on only two dimensions. Market growth is not the only indicator for attractiveness of a market.

• SBUs viewed as stand-alone entities and neglects the effects of synergies between business units.

• Process becomes largely mechanical. For instance, it neglects small competitors that have fast growing market shares.

• Reliance on "strict rules" regarding resource allocation across SBUs can be detrimental.

  • For instance, at times, dogs may help other businesses in gaining competitive advantage. They can earn even more than cash cows sometimes.

How to Perform BCG Matrix

Step 1. Choose the business unit

Step 2. Define the market

Step 3. Calculate relative market share

Step 4. Find out market growth rate

Step 5. Draw the circles on a matrix

Key Takeaways from BCG Matrix

• Portfolio management help evaluate competitive position of a corporate business portfolio, propose strategies for each unit and the corporate as a whole, and prioritize resource distribution among the units.

• BCG matrix is a portfolio management tool which classifies a company's business units into four categories based on market growth and relative market share.

• BCG matrix has pros and cons

Competitive Dynamics

actions and reactions of two rivalrous firms within a market

• intense rivalry

• involve actions and responses

• Firms act → competitors respond → cycle continues offers a dyadic perspective to analyze how firms compete through actions and reactions

A Framework of Competitive Dynamics

Competitor Analysis

market commonality and resource similarity

Drivers of Competitive Behavior

Awareness: Do they notice?

• The extent to which competitors recognize the degree of their interdependence

Motivation: Do they care?

• Firm's incentive to attack or to respond to an attack

• Unmotivated firms can retain resources for other purposes

Capability: Can they respond?

• The extent of firm's ability to organization effective responses

• Target may not be able to respond to Amazon's aggressive price cut

Competitive Action Choices (action and response)

likelihood, speed, type, magnitude and scope, location tactical and strategic actions

Types of TACTICAL Competitive Actions

1. Marketing

2. Pricing

3. Distribution e.g., location of warehouse, etc.

4. Product enhancement/update

• Small changes

• Easy to implement

• Easy to reverse

• Short-term impact

.

Commitment of Resources= low

Difficulty of Implementation= low

Irreversibility= low

Time Horizon= short

Types of STRATEGIC Competitive Actions

1. New product introduction(First generation product)

2. Form alliances

3. Capacity action Open new branch, stores, factories, etc.

4. Merger and acquisition: Big commitment, Hard to implement, Hard to reverse, Long-term impact

.

Commitment of Resources= high

Difficulty of Implementation= high

Irreversibility= high

Time Horizon= long

Outcome: Market Position and Financial Performance

• Competitive actions often trigger counteractions

• Being able to predict and prepare for these counteractions is key to gaining a competitive edge

• Analyzing how companies interact and respond to each other helps in forming strategic responses

• Understanding this interplay aids in making informed strategic choices

• These insights are fundamental in developing and implementing solid, effective business strategies

Types of Innovation by Degree:

Incremental innovation (sustaining innovation): exploit existing technologies or forms

• are often safer, cheaper, and quicker in materialize input to output

• Risk of being unwanted by consumers

  • Ex- Microsoft's frequent updates of the Office application software

  • Less likely to change the rules of competitive games

  • Ex- adding an organic food section in a super-market

/

Radical innovation (disruptive innovation): new to the world and departs from existing technology or methods

• May change the basis of competition in favor of the innovator:

  • focus on long-term impact

  • may involve displacing current products, altering the relationship between customers and suppliers, and creating completely new product categories

• Radical innovation projects are resource demanding because they are risky, expensive, take long time to produce results (average 10 years)

** They go hand in hand BUT Radical innovations are less

frequent than incremental innovations

Types of innovation

1. • Product innovation

2. • Process innovation

3. • Service innovation

4. • Business model innovation

1. Product Innovation

• The introduction of a good or service that is new or significantly improved regarding its characteristics or intended uses.

• This includes improvements in technical specifications, components and materials, incorporated software, user friendliness, or other functional characteristics.

• They are key for businesses to differentiate themselves in competitive markets, meet new customer needs, or respond to technological advances and changes in market demand

  • Ex- Cannon and Beyond Meat

2. Process Innovation

Changes in the technology and equipment used in the design, development, and manufacturing of products or services.

• Product innovation and process innovation may go hand in hand.

• Ex- Ford Model T

3. Service Innovation

• Create new or improved services delivered to customers

• Changes the customer experience or functionality

Ex-

• Uber → on-demand ride service

• Mobile banking apps

• Amazon same day/overnight delivery

4. Business Model Innovation

How a company creates, delivers, and captures value

• Changes in

• Revenue model

• Cost structure

• Value chain

• Customer segments

• Ex-

  • Subscription model (Netflix, Spotify)

  • Freemium (Zoom, Dropbox)

  • Platform model (Amazon Marketplace, Airbnb)

8 Ways to Innovate

1 Internal Development

2 Internal Venturing

3 External Venturing

4 Licensing and Technology Acquisition

5 Open Innovation

6 User or Customer Innovation

7 Spinoffs or Spinins

8 Organizational Restructuring

1. Internal Development

In-house R&D, internal teams,

• Ex- Amazon developing AWS internally

Strength: control, IP ownership

Weakness: slower, path-dependent

2. Internal Venturing

• A company uses internal ideas and resources to establish a new business.

• Actions such as initiating new ventures without cooperation with external parties.

• Distinct from internal development because it is more entrepreneurial, exploratory, high-risk

• Ex- Microsoft Start ups

Skunkworks: small, autonomous teams working on advanced or secret projects

3. External Venturing

• Actions involving participation of parties outside of the company.

• These include M&As, and strategic projects started up in a joint venture and strategic alliances.

4. Licensing and Technology Acquisition

• Contract-based external innovation

• Licensing patents or technologies

• Buying intellectual property (without buying the firm)

• Technology transfer agreements: The firm accesses technology without owning the company

• Ex- Phone, TV, and laptop makers licensing Dolby Atmos or Dolby VisionBrands can offer better sound or picture by licensing Dolby technology rather than inventing their own audio/visual system.

5. Open Innovation

Ecosystem approach

• Firms intentionally use inflows and outflows of knowledge

• Crowdsourcing

• Open-source collaboration

• Innovation contests

  • Ex- LEGO Ideas platform

• Key idea: innovation is distributed

6. User or Customer Innovation

• Innovation driven by users or communities

• Firms then adopt or adapt

• Example:

  • Gaming mods by gamers → official features

  • Social media (e.g., TikTok) driven product usage innovation

  • Especially important in digital industries

7. Spin-offs or Spin-ins

• Spin-off: innovation developed inside → becomes separate firm

• Spin-in: external venture reintegrated

Useful for:

• Managing risk

• Escaping organizational constraints

8. Organizational Restructuring

• Actions such as reorganizations of organizational structure, consolidation, down-scoping, or closure of functions.

• Ex- decentralize decision making (Spotify), flat organizational structure (Zappos), cross functional teams, etc.

Strategic Initiatives

Strategic initiatives are efforts of firms to renew or expand its resources and capabilities in order to substantially impact its evolution and long- term prospects

• Adapt to environmental changes that are competence-destroying

  • Ex- cameras

• Develop ambidexterity - build future new businesses (exploration) while leveraging and upgrading existing businesses (exploitation)

  • Ex- Microsoft and Amazon

• Develop dynamic capabilities - "the capacity of a firm to purposely create, extend, or modify its resource base"

Blue Ocean Strategy Value Innovation

Rather than focusing on beating the competition, make the competition irrelevant by creating a leap in value for your customers and your company, thereby opening up new and uncontested market space

Red Ocean Strategy

A strategy which aims to fight and beat the competition.

• Red Oceans can be considered as all the existing marketplaces

• Red Oceans are crowded by competitors

Red Ocean:

• Compete in existing market space

• Beat the competition

• Attract existing customers

• Make the value-cost trade-off

• Align strategy activity system with

either low cost or differentiation

• Supply side perspective

Limitations:

• Competency Trap and Core Rigidity

•Market Evolution

Blue Ocean Strategy

Blue Ocean Strategy is where a company creates a completely new market space (or market category)

• This new market space is created by launching new offerings, with the aim being to make the competition irrelevant so that an organization can grow, uncontested, at least in the beginning.

• Blue Oceans can be thought of as markets that do not exist yet.

Blue Ocean:

• Create new uncontested market space

• Make competition irrelevant

• Attract non-customers

• Break the value-cost trade-off

• Align strategy activity system with low cost and differentiation

• Demand side perspective

Limitations:

• Exploration trap

• Organizational/Cultural Misfit

Value Innovation Breaking The Value/Cost Trade-off

1. Which factors that the industry takes for granted should be eliminated? lower cost structure

2. Which factors should be reduced well below industry standard? lower cost structure

3. Which factors should be raised well above industry standards? provide differentiation/value

4. Which factors should be created that the industry has never offered? provide differentiation/value

1. Reduce

which factors should be reduced well below the industry's standard

2. Eliminate

which factors that the industry takes for granted should be eliminated

3. Raise

which factors should be raised well above the industry standard

4. Create

which factors should be created that the industry has never been offered

Identify Executable Strategic Initiatives STEPS

1. Conduct a comprehensive analysis to identify the issues:

• SWOT Analysis: Strengths(firm, internal), weaknesses(firm, internal), opportunities(external), and threats(external)

2. Classify the issues: Which issue should I focus on?

• Imminence is defined in terms of time and asks how soon the issue will have an impact

• Importance is defined in terms a firm's objectives and impact on competitive advantage

3. From analysis to strategic initiatives: How to address the selected issue(s)?

• Tie back to the analysis

  • What strengths the company has can help address the issue?

  • What opportunities out there may facilitate problem solution?

  • How to avoid weakness or neutralize the threat?

• Tie back to firm strategic options

  • Product level choice: Generic strategy

  • Corporate level choice: Diversification strategies

  • Competitive strategies: What competitive actions should the firm take

• Innovation strategies

• Blue-Ocean strategy

4. Evaluate strategic initiatives and select one: Which strategic initiative(s) best addresses the issue?

• Identify and define criteria

• Evaluate strategic initiatives on each of the criteria

• Select your initiatives

5. Strategic initiative implementation requirements (PARTS + M&M): What will be required to execute the strategic initiative(s) you have chosen?

• People - who is involved at various stages of the initiative?

• Activities - what activities need to be performed?

• Resources - what resources are required to undertake the initiative?

• Timing - over what period of time will the initiative occur?

• Measurements - what are the key measurements that indicate success?

• Milestones - what are key points to check on progress and makeadjustments?

Reasons for Strategic Initiatives Failure

• Initiative overload

• Lack of alignment

• Conflicting initiatives

• Inability to prioritize the initiative pool

• Insufficient resources

• Poor project management

• Too much process, too little process, a lack of participation, inadequate support tools, the wrong people, etc.

• Overall lack of a structured, consistent process and standardized tools to support the initiative investment decision making process as well as ongoing initiative management

What kind of company is Amazon.com?

everything store including online retailing, cloud computing , media, entertainment, diversification, online ads, etc.

- online market place, search engine, Audible, Good Reads, Zappos, Joyo, Kiva, Whole Foods

What is Amazon's business model?

digital platformed, multi-business model, vertically integrated

- online retail sector, hybrid model (wholesale model)

- AWS= pay as you go model

- Prime= subscription model

- Prime Video= entertainment creation

- vertically integrated logistics

What are Amazon's core competencies?

strength to differentiate from competitors

- shipping

- customer data utilization strategy

- technology resources

- workplace culture

- diversity in creating value

Diversifications in Amazon (unrelated vs related)

Prime Video: vertically integrated, unrelated at first, but now Amazon is a leader in media and entertainment; improved market power, now a core competency

Kindle: related, competitive advantage and resource sharing

AWS: related, competitive advantage, market power, core competency

Alexa: related, economies of scope (using already existing technology), resource sharing (using already existing technology), competitive advantage

Wholefoods: related, market power, economies of scope

Which of competitors does Amazon need to pay the most attention to? And how should they respond strategically?

Microsoft Azure: cloud computing

Alphabets Google Advertising: search AI, ecosystems

Walmart: omni-channel retail

• Respond strategically: diversify products, lock in bundled services like (Prime, AWS, AI assistants, media), invest in logistics, double down on retail media, pursue partnerships and collaborations

AI and Strategy Case Facts

Apollo Go: autonomous driving cars

- radical innovation

- AI shifts transportation from labor driven TO technology driven (operations, decision making, cost structure)

- partially successful: dependent on user adoption and regulatory compliance

- strategic lessons: AI adoption, innovation strategy, competitive advantage

Imagine a bank developed the ability to effectively leverage Artificial Intelligence to determine if a consumer was worthy of a loan and then bought a number of other banks and implemented the AI algorithm in each of these banks. This would be an example of:

a. Leveraging a core competency

Mergers and acquisitions could help corporations to:

a. consolidate industry by reducing the number of firms in an industry

b. obtain valuable resources to expand product offerings and services

c. all of the above

Pepsi owns a wide range of snacks and drinks that are popular on the market. Pepsi can leverage its size as well popularity in relation to its distributors. In doing so, it is benefiting from:

c. pooled negotiating power

All of the following are examples of tactical actions a firm might take EXCEPT _____________.

c. partner with competitors to reduce competition

Apple’s acquisition of Darwin to develop AI is an example of _______ while Meta’s Hackathons which are held every few months and employees across the organization from different locations and teams come together to brainstorm and create something they believe will add to Meta user experience is an example of_________.

External venturing and internal venturing

One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by ____________.

A. repeating a process until a task becomes easier