tailieunhanh - Chapter 7 - Developing Corporate Strategy

Understand the roles of economies of scope and revenue-enhancement synergy in corporate strategy. Explain the different forms of diversification Understand when it makes sense for a firm to own a particular business | Chapter 7 Developing Corporate Strategy OBJECTIVES Define corporate strategy 1 Understand the roles of economies of scope and revenue-enhancement synergy in corporate strategy 2 Explain the different forms of diversification 3 Understand when it makes sense for a firm to own a particular business 4 Explain the corporate strategy implications of the stable and dynamic perspectives 5 6 Explain the corporate strategy implications of the stable and dynamic perspectives DIVERSIFICATION Diversification process Types of businesses Heavy reliance on acquisition Many seemingly un-related businesses Primarily organic Many businesses clustered in a few related industries Company Product extensions/ new product lines Few related product lines MITY THREE CORPORATE STRATEGY DECISIONS THAT ARISE WHEN MAKING ENTRY/EXIT DECISIONS In which business arenas should a com- pany compete? Which vehicles should it use to enter/exit a business? What underlining economic logic makes it sensible to . | Chapter 7 Developing Corporate Strategy OBJECTIVES Define corporate strategy 1 Understand the roles of economies of scope and revenue-enhancement synergy in corporate strategy 2 Explain the different forms of diversification 3 Understand when it makes sense for a firm to own a particular business 4 Explain the corporate strategy implications of the stable and dynamic perspectives 5 6 Explain the corporate strategy implications of the stable and dynamic perspectives DIVERSIFICATION Diversification process Types of businesses Heavy reliance on acquisition Many seemingly un-related businesses Primarily organic Many businesses clustered in a few related industries Company Product extensions/ new product lines Few related product lines MITY THREE CORPORATE STRATEGY DECISIONS THAT ARISE WHEN MAKING ENTRY/EXIT DECISIONS In which business arenas should a com- pany compete? Which vehicles should it use to enter/exit a business? What underlining economic logic makes it sensible to compete in multiple businesses? Also, how do we create synergies between our busi- nesses? 1 2 3 A SHIFT IN IBM’S CORPORATE STRATEGY The Answers can change What businesses should we be in? PC’s and Mainframes THEN Computer Services INTEGRATION General motors began operating steel plants Dupont moved from gunpowder making onto dynamite, nitro-glycerine, guncotton, and smokeless power Examples P & G ? Can a paper production plant be shared? P & G manufactures paper towels and diapers. MUST DETERMINE VALUE CREATION 19 Geographic diversification Horizontal diversification Vertical diversification Does this create value? Economies of scope? Revenue- enhancement opportunities? INTEGRATION Example Fed Ex acquired Kinko’s Drop off and pick up points for packages SOURCES OF VALUE FROM DIVERSIFICATION/EXPANSION Economies of scope Lower price of a common resource by combining purchases Share manufacturing capacity to reduce average costs Share distribution to .