浙江理工大学科技与艺术学院4.ppt

Chapters 9 - 10 Corporate Level Strategy Goals of Corporate Strategy Moves to enter new businesses Boosting combined performance of the businesses Capturing synergies and turning them into competitive advantages Establishing investment priorities and steering resources into business units 4 Corporate Level Strategies 1) Vertical Integration 2) Strategic Outsourcing 3) Horizontal Integration 4) Diversification – two or more different businesses with distinct operations 1) Vertical Integration Forward or backwards Full integration Taper integration Benefits Build barriers to entry Facilitates investment in specialized assets Protecting product quality Improved scheduling Risks Costs Rapid technological changes Demand predictability Alternatives to Vertical Integration Competitive bidding Long term contracts or strategic alliances 2) Outsourcing Cost reduction and differentiation Hold-ups, scheduling and hallowing out 3) Horizontal Integration Acquiring or merging with industry competitors Reduce cost and economies of scale Increasing value through wider product line or product bundling Manage industry rivalry Decrease buyer and supplier power 4) How to Diversify? 1) Internal Development - corporate entrepreneurship or internal venturing able to appropriate a larger portion of wealth avoids complexities of multiple partners time consuming and requires diversity of organizational capabilities 4) How to Diversify? 2) Strategic Alliances and Joint Ventures entering a new market via the combination of complementary resources - do more together cost reduction sharing development/diffusion of technology Problems appropriate partners - skills and compatibility trust and commitment communication 4) How to Diversify? 3) Mergers Acquisition Failures of Acquisitions 30 - 40% average acquisition premium Acquiring firm’s value drops 4% in the 3 months following acquisitions 30 - 50% of acquisitions are later divested Acquirers underperform SP by 14%, peers by 4% 3 month pe