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Week 17 Introduction to corporate strategy - Coggle Diagram
Week 17 Introduction to corporate strategy
corporate strategy
three key strategic choices:
markets should the firm compete?
Which activities should it carry out to create the most value?
How should it enter any business or market to maximise its performance?
is about the big question you ask - what business should we be in
corporate strategy
Vertical scope
how many value chain activities should the firm perform?
Product scope:
how specialised
Geographical scope:
how many countries in operation?
Growth
Vertical integration
controlling more than one stage of the supply chain.
Horizontal intergration
firms handling the same part of the production process consolidate.
Product diversification
compete in more than one business or industry.
Internationalisation
multiple geographical markets
Strategy
Business
how to compete day to day
Corporate
question you ask whole organisation, what business should you be in? where should we expand to?
These two strategies are usuful for multinational companies
Methods of growth
Internal growth or organic development.
building business from scratch
External growth.
Mergers.
two or more organisations join together
Acquisitions.
one organisation buying another
Alliances.
collaborative agreements between two or more organisations
Joint ventures
equity alliance where two or more parties agree to create a new company that they jointly own
Johnson et al. (2011) Buy, ally, or do-it-yourself [DIY] matrix
Mergers and acquisitions
M&A
interchangable
often used interchangeably in practice.
Johnson et al. (2011) three main categories of M&A motives
Strategic
extend
consolidate
more resources & capas
Financial
increase financial efficiency
Managerial.
affect the decision- managers might encourae company to do M&A
target M&A firms:
firm is undervalued and/or has poor leadership
strategic fit, strengths and compliments eachother
organisational fit. - management and culture fit
Strategic alliances
collaborative agreements
Equity alliances.minority stakes, cross-shareholdings, and joint ventures.
Non-equity alliances.
Licensing
Franchising
Johnson et al. (2011) propose the following:
Achieving economies of scale
Access new resources and markets
Alleviate weaknesses
Collusion