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SMMCG8[LN-9 & LN-12] Corporate Strategies: Vertical Integration,…

- - - - Strategic Choice
        
        Strategy Implementation
        
        Competitive Advantage
        
        Corporate-Level Strategy
        
        Decision: Which Businesses to Enter?
        Key Strategy: Vertical Integration
  - - - Regional
      - International or Global
        
        McDonald’s, Coca-Cola
    - - Related Products
        
        Disney
      - Unrelated Products
        
        GE
    - - Upstream=Backward
        
        Disney
      - Downstream=Forward
        
        Nike
    - - Organic Growth
      - Mechanical Growth (M&A)
- - - - The core of TCE is how firms make the "Make or Buy" decision.
    - - Using the Market incurs Transaction Costs
      - Within the Hierarchy (inside the firm), there are Administrative or Bureaucracy Costs
      - The firm's goal is Total Cost Minimization
  - - - Asset Specificity
      - Uncertainty
      - Transaction Frequency
      - The possibility of Opportunism (self-interest seeking with guile
- - - - Strategy & Judgment :thinking_face:
        
        Remove emotion from decision
        
        Know business value
        
        Time the deal right
      - Buyer Market Management :money_mouth_face:
        
        Maintain buyer pool
        
        Tell the deal’s story
      - Process & Communication :speech_balloon:
        
        Use a project office
        
        Communicate clearly & frequently
- - - - Combined or new company name
      - Joint or reorganized management
      - Parent stocks retired, new stock issued
    - - Can be friendly or hostile
      - Often through a tender offer
      - One parent typically takes over management
      - Controlling share, majority, or full ownership
  - - - The ability to recognize, assimilate, and apply external knowledge
    - - Continuity of the alliance ≠ success
    - - Competitors gain low-cost access to technology/markets
      - Competition to competenc can destabilize the alliance
  - - - Contractual safeguards (e.g., non-compete clauses)
      - Cross-licensing valuable technologies
      - Walling off sensitive technology
      - Equity involvement to show commitment
    - - Building mutual trust
      - Learning from partners
    - - Shared vision for alliance purpose
      - Good reputation