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SMMC_G5__[CS-1] Corporate Scope, G5 Group member, Cash flow, Strategy,…
SMMC_G5__[CS-1] Corporate Scope
Horizontal scope
Diversification
University of Illinois Urbana-Champaign
Advantages
Easy working in the same direction
To connect with faculty and colleagues across the campus
Learn from them
Disadvantages
Get lost in a large pool of students
May not feel as special as others
refers to merging with another company in the exact same industry
increasing the size of the company in the same business
Diversification and firm performance
Unrelated diversification
Generally associated with lower performance
Solve the problem
Gordon Gekko breaking them up into their component parts to make value
GE CEO, Jack Welch, got rid of most staff and corporate headquarters
The value of the business is lower than the sum
Diversification premium
Enter related businesses to increase market power
Rducing competition are likely to run a foul of antitrust laws
Don't actually work in a free and dynamic economy
Synergies are complementarities between businesses
Pizza Hut, Taco Bell, and KFC cooperation
Can scale common resources that can be used in multiple businesses
Pecialized resources that are unique to the firm
Managers may also sometimes diversify to reduce risk or grow the size of the firm
BCG Matrix
Vertical scope
Forward integration
At the very front end is the customer, and the closer you get to the customer
Backward integration
Where the raw materials come in, the closer we get to that end
Outsourcing
When the company don't have the quality of the needed resources or capabilities to handle an activity
try to learn from their outsourcing partners
they can stop eventually outsourcing a critical or profitable activity
the partner firm maybe better able to aggregate demand and build scale
For example : between Coursera & University of Illinois
Transaction cost economics
Transaction costs
Associated with economic exchanges,negotiating,monitoring,enforcing contracts
Moral hazard
Information asymmetries
Abuse of a benefit
Hold up problem
Asset specificity
Uncertainty and opportunism
Adverse selection
Information asymmetries
Lemons problem
Administrative costs
Associated with organization within a hierarchy bureaucracy,weak incentives,sclerotic
Principal-agent problem
Performance is unobservable
Owner-manager,or manager-subordinate
Lack of dynamism
Impossible to selectively intervene
Weak incentives
Zone of indifference
Expectation of continuity
Introduction
Definition
The pursuit of competitive advantage
Configuration
Coordination
Three key dimensions :key:
Vertical
Horizontal
Geographic
Managing integrated firms
Delink the benefits
Conduct analysis
Identify
Integration
Diversification
Whether or not to vertically integrate
Bottlers
Vertically integrated bottling operation
Reasons
More control over the overall quality
Ensure that new technology or marketing Investments are made
Independent bottlers
Features
Understand their local markets and business conditions well
Hustle more, and penetrate the market better
Lower routine operating cost
How to maintain these features even in a vertically integrated bottling operation
Whether or not to horizontally diversify
More autonomous to more coordinated
Even market incentives can be replicated to a degree
Approach depends on nature of synergies
Resource redeployment or transferring
More autonomy and financial control of units
Resources scaling or sharing
More coordination and operating control
G5 Group member
國企三 邱品儒 Ｗilliam
國企三 陳智霖 ZHILIN
國企三 梁美好 Helen
國企三 陳孟傑 MJ
國企三 邱鈺翔 Zion
國企三 朱德鑫 Denny
Cash flow
Cash Cow
High and Stable
Dog
Neutral or Negative
Question Marks
Negative
Star
Neutral
Strategy
Star
Hold or Invest for growth
Question Marks
Increase market share or Harvest/Divest
Cash Cow
Hold
Dog
Harvest / Divest
Strategic Alliances
Buy
Make
A similar playbook :book:
General point
Recognizing the issues also has implications
How companies manage their outsourced operations
Their vertically integrated business
Question Marks :question:
Cash Cow :cow2:
Dog :dog2:
Star :star:
High
Low
High
Relative Market Share
Market Growth
Spot market transactions
Short-term contracts
Relational contracts
Equity alliances
Joint Ventures
Autonomous SBUs
Coordinated SBUs
Less integrated
More integrated
Better Adaptation
Better Coordination