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SMMCG10[CS-1] Corporate Scope, G10 group members - Coggle Diagram
SMMC
G10
[CS-1] Corporate Scope
Horizontal Scope
what’s the term of "horizontal mergers"?
increasing the scale of the company in the same business
merge with another company in the exact same industry
example of diversification: the modern Multi-specialty university
advantage
natural ground for interdisciplinary research
having the resources of the other universities
having such strong programs with great research opportunities
disadvantage
sometimes the students can feel they are not as special as other people
the students maybe get lost in the large pool
Vertical Scope Part 2
transaction cost economics
monitoring
enforcing contracts
negotiating
market exchanges or outsourcing
buy
better adaptation
moral hazard
the holdup problem
adverse selection
administrative costs
bureaucracy
weak incentives
vertical integration
make
better coordination
principal-agent problem
a lack of dynamism
weak incentives
sclerotic
Horizontal Scope Part 3
Motivations for diversification
Market Power
Synergies
common resources
Brand, IT system
slack resources
Supply chain, Resources allocation
Reduce risks
For managers
Pursue profitable opportunities
Conclusion: Core motivation
Create value(synergies) for company
Implications for horizontal scope
The ownership test
The better-off test
Resources and relatedness
Critical for synergies
"Firm-specific" resources
Underlying(firm-specific) resources
Case study- John Deere
Alliance with Hitachi in mining industry
Unrelated diversification
lower performance
diversification discount
Gordon Gekko's strategy
break into component parts
take over these Conglomerates
get rid of useless headquarters staff
GE strategy
got rid of most staff and corporate headquarters
strong focus on each SPU to be No.1 in its industry
Vertical Scope
WHY NEED
invested in specialized assets
increased market power
limited by
competition
antitrust
anti-competition
business strategy
more profitable businesses
same company
integrate across a value chain that's oriented from the bottom to the top
more profitable value stages
vertical integration
forward
no needed resources or capabilities to handle an activity
outsourcing
problems
depend on
behind
backward
Horizontal Scope Part 2
BCG matrix
corporations need to be active in different businesses, that are at various stages of their industry life-cycle.
mature
grow slowly
growth is graphed along the vertical axis
horizontal axis
company's strength
vertical axis
market or industry attractiveness
early
grow fast
How BCG create value for corporations
key sources of value
management tools
accounting and financial analysis
frameworks from strategy like the BCG matrix
help companies manage businesses professionally
the redeployment or transfer of resources between a company's businesses
CASH
BCG emphasize the redeployment of cash
bubbles in this BCG
question marks
stars
Dogs
help companies do decisions
2 more items...
cash cows
Introduction: Corporate Scope
corporate strategy
competitive advantage
configuration
company's multi-business activities
coordination
footprint of the company
What industry is the company engage in?
How should they be managed
three dimensions for scope of the firm
horizontal
geographic
vertical
Manageing Integrated Firms
Step
Identify whether integration or diversification makes sense relative to market-based alternatives
Delink the benefit sought from governance mode
Manage the units with independent feature
Google
Waymo
Amazon
Whole Foods Market
Develop online grocery business
Amazon IT system
Ways of approach of diversification
More autonomous
Replicate market-like incentives
More coordinated
Reduce transaction costs
Best approach
Depends on nature of synergies
Resource scaling or sharing
Reqiure more coordination to manage that resource
Resource deployment or transferring
More autonomy of units and only financial controls being used to manage them
G10 group members
東南亞四105108022魏郡奎
東南亞三 106108003 鍾語謙
東南亞四 105132017 古景元
歷史六 103105031 李尚學
東南亞三106108025林芯瑜
國企三 106212010 張容禎
國比三 106402044 薛羽彤