tailieunhanh - Lecture Strategic management - Chapter 6: Corporate-level strategy: Creating value through diversification

Chapter 6 "Corporate-level strategy: Creating value through diversification". After studying this chapter, you should have a good understanding of: The reasons for the failure of many diversification efforts, how managers can create value through diversification initiatives, how corporations can use related diversification to achieve synergistic benefits through economies of scope and market power. | Chapter Six Corporate-Level Strategy: Creating Value through Diversification After studying this chapter, you should have a good understanding of: How managers can create value through diversification initiatives The reasons for the failure of many diversification efforts How corporations can use related diversification to achieve synergistic benefits through economies of scope and market power How corporations can use unrelated diversification to attain synergistic benefits through corporate restructuring, parenting, and portfolio analysis The various means of engaging in diversification—mergers and acquisitions, joint ventures/strategic alliances, and internal development Managerial behaviors that can erode the creation of value Learning Objectives TRANSPARENCY-51 The summaries of the studies below consistently support the notion that attaining the intended payoffs from diversification efforts are very elusive: Michael Porter of Harvard University studied the diversification . | Chapter Six Corporate-Level Strategy: Creating Value through Diversification After studying this chapter, you should have a good understanding of: How managers can create value through diversification initiatives The reasons for the failure of many diversification efforts How corporations can use related diversification to achieve synergistic benefits through economies of scope and market power How corporations can use unrelated diversification to attain synergistic benefits through corporate restructuring, parenting, and portfolio analysis The various means of engaging in diversification—mergers and acquisitions, joint ventures/strategic alliances, and internal development Managerial behaviors that can erode the creation of value Learning Objectives TRANSPARENCY-51 The summaries of the studies below consistently support the notion that attaining the intended payoffs from diversification efforts are very elusive: Michael Porter of Harvard University studied the diversification records of 33 large, prestigious . companies over the 1950-1986 period and found that most of them have divested many more acquisitions than they had kept. The corporate strategies of most companies had dissipated rather than enhanced shareholder value—by taking over companies and breaking them up, corporate raiders had thrived on failed corporate strategies. Another study evaluated the stock market reaction to 600 acquisitions over a period between 1975 and 1991. The results indicate that acquiring firms suffered an average 4 percent drop in market value (after adjusting for market movements) in the three months following the acquisition announcement. Diversification and Corporate Performance: A Disappointing History Exhibit Sources: Lipin, S. & Deogun, N. 2000. Big merges of the 90’s prove disappointing to shareholders. Wall Street Journal, October 30: C1; A study by Dr. G. William Schwert, University of Rochester, cited in Pare, T. P. 1994. The new merger boom. Fortune, November .