mgmt 352 diversification/google

two levels of strategy

business-level, corporate-level strategy

business-level strategy (competitive strategy)

how to create competitive advantages in each business in which the company competes

corporate-level strategy (co wide)

how to create value for the corporation as a whole

diversification 

leveraging a set of resources & capabilities to create advantage across multiple businesses (product markets)

alliances and M&A

leveraging external capabilities through collaboration

vertical scope

in what stages of the industry value chain to participate (vertical integration vs outsourcing)

horizontal scope

what range of products and services the firm should offer (diversification vs divestiture)

geographical scope

where in the world to compete

should be diversify?

better off test/ best alternative test

how should we diversify?

mode of change (build-borrow-buy framework)

better off test

as a combined set, do the businesses create value or reduce cost? [value (B1,B2) > Value (B1,0) + Value (0,B2)

economies of scope

cost advantages that come from producing a variety of products [Cost(B1,B2) < Cost (B1,0) + Cost (0,B2)

best alternative test

is ownership of the business required, or can an alternative arrangement provide greater value?