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G3_[CS-1] Corporate Scope, G3 Group members - Coggle Diagram

- - - - develop an online grocery business
    - - the approach companies take to diversification
        
        autonomous
        
        replicate market-like incentives
        
        coordinate
        
        reduce transaction costs through more hierarchical organization
        
        nature of synergies
        
        resources scaling (sharing)
        
        any changes will need to be coordinated with all the other units to ensure interests are not undermined
        
        requires more obtrusive operational control of the units
        
        resource deployment (transferring)
        
        allow more autonomy of units and financial controls of units
        
        generated by resource transfers, which don't require active real-time management
        
        pay attention to the resources and treat them as a corporate pool
  - - - vertical integration
    - - diversification
- - - - Depend on the exact way in which outsourcing or vertical integration is done,
        there may be some overlaps in these costs
        .
    - - transaction cost
        
        source of costs
        
        Adverse selection
        
        Moral hazard
        
        hold up problem
        
        associate with
        
        economic change, negotiating, monitoring, enforcing contracts
      - administrative costs
        
        associate with
        
        hierarchy, bureaucracy, weak incentive, sclerotic
        
        source of costs
        
        weak incentive
        
        Principal-agent problem
        
        lack of dynamism
  - - - the way to achieve objective
        
        vertical integration(Making it)
        
        compare these relative advantages and disadvantages,
        and decide which is better for firm
        
        the market (Buying it)
  - - - vertical integration
        
        company will change its value chain/ module by more profitable field
        
        judge by
        
        five force analysis
      - value chain
        
        support activities
        
        primary activities
- - - - it is possible to exit current business and entermore profit one,or start new buiness
  - - - advantage
        
        there is a sufficient population to communicate with people from different backgrounds and different cultures
        
        teachers can conduct academic discussions with teachers in other fields to improve their teaching and research
        
        students can take courses not taught by their department
        
        students who want to have two majors can also have enough opportunities
      - downside
        
        it is easy to get everyone working in the same direction,but it is a challenge that faculty engage in activities which they don't familiar with
        
        students may feel they are not as special as other people
        
        student my get lost in the large pool
        
        resources will be dispersed and cannot be concentrated in a single college
  - - - merging companies in the same industry
    - - firm's business across a set of different business,that is the firm's diversification
  - - - Dog
        
        Business that are neither in growing industries, nor an area of
        strength for the company.
        
        divested to raise cash
      - Cash cow
        
        yesterday's stores, businesses,but in markets that aren't growing as quickly
        
        less need to invest
      - Star
        
        has fast growing markets and strong market share
        
        beinvesting in
      - Question mark
        
        in fast growing markets
        
        divest
        
        invest in fast growing ones
  - - - manage different business by analyzing the financials,.
      - not effective in creating value from unrelated businesses.
    - - Two different modes
        
        one company
        
        internal transfers of
        cash
        
        less efficient
        
        separate companies
        
        focusing on the respective
        businesses
        
        efficient
      - stock market reaction
        
        zoomed up
    - - sell off businesses
        
        run out of cash
      - spun out into separate
        companies
  - - - any alternative diversification such as an alliance
      - diversification versus organizing through the market
  - - - the result of managerial hubris or even misaligned incentives
    - - two types
        
        develop slack resources and redeploy these resources
        
        scale common resources
      - complementarities between businesses
    - - by reducing competition from related products
  - - - how it can create a diversification premium
      - to ensure that GE had a lot of good star and cash cow businesses for the future
      - All businesses were required to become number one or number two in their industry or they would be divested
    - - financed with a lot of debt at very high interest rates which was added to the company's balance sheet
    - - the value of the diversified firm is less than the sum of its SBU's, the sum of its separate businesses
- - - - vertical
        value chain
        
        bottlers of Pepsi in 2009
      - geographic
        regional,national,global market
      - horizontal
        products,service
        
        GE changed and expended its range of products and service