Chapter 8: Selecting Corporate-Level Strategies

These flashcards cover key concepts from Chapter 8 on Corporate-Level Strategies, aiding in the understanding of corporate strategy definitions, types of diversification, implementation methods, and more.

What is corporate-level strategy?

Corporate-level strategy defines the actions a firm takes to gain a competitive advantage by managing a portfolio of different businesses in multiple industries or product markets.

How does corporate-level strategy differ from business-level strategy?

Corporate-level strategy focuses on the overall scope and direction of the organization, while business-level strategy deals with how to compete successfully in individual markets.

What are the three types of diversification?

1. Related Diversification - entering a new industry that is similar to existing industries. 2. Unrelated Diversification - entering a new industry that is not related at all. 3. Geographic Diversification - expanding into new geographic markets.

What is vertical integration?

Vertical integration is a corporate strategy where a firm expands its operations either backward into its suppliers' industry or forward into its customers' industry.

What are the benefits of vertical integration?

Benefits include reduced supply chain costs, increased control over inputs and outputs, and improved quality management.

What are the four methods for implementing corporate strategy?

1. Internal Development 2. Strategic Alliance 3. Joint Venture 4. Merger and Acquisition.

What is the purpose of portfolio planning?

Portfolio planning helps organizations assess their business units' prospects for success and decide how to allocate resources among them.

What is the BCG Matrix?

A tool that categorizes a company's business units into four quadrants (Cash Cows, Stars, Question Marks, and Dogs) based on market share and industry growth rate.

What is retrenchment?

Retrenchment is a corporate strategy that involves reducing the size or scope of a firm's operations, often through downsizing or selling off parts of the business.

How might a company achieve related diversification?

By leveraging a core competency in a related industry, such as Disney acquiring ABC to enhance content synergy in entertainment.

What is unrelated diversification?

Unrelated diversification occurs when a company expands into industries that have no significant connection to its existing business lines, often for financial stability.

What are the key risks associated with mergers and acquisitions?

Challenges include cultural integration, overpaying for acquired firms, and the potential failure to achieve expected synergies.