Corporate-level strategy

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Corporate-level strategy

Internal development

Limitations

time-consuming

Motives

no need for external funding

no need to merge diverse corporate culture

no need to share wealth

occurs when a company uses its own tools and resources to expand

Strategic alliances & joint ventures

able to develop new strategies

able to reduce manufacturing costs

able to enter new market

cooperative relationship between 2 or more firms with potential advantage

Mergers and acquisitions

Divestment - the disposal of assets in any of a variety of ways, usually for ethical, financial, or political reasons.

objectives

freeing up resources to spend on more attractive alternatives

redirecting focus on the firm's core business

raising cash to help fund existing business

cutting financial losses

helps firm to develop synergy

Acquisitions

one firm buying another either through stock purchase, cash or issuance of debt

Mergers

combination of 2 firms to form 1 legal entity

Managerial motives

managers act in their own self-interest

use of antitakeover tactics

poison pills

golden parachutes

green mail

excessive egotism

growth for growth's sake

Unrelated diversification - when a firm enters an industry that lacks any important similarities with the firm's existing industry.

portfolio management

Boston Consulting Group's (BCG) growth

restructuring

management restructuring

redistribute assets & capital

parenting

create value through management expertise and competent central functions

Related diversification - occurs when a firm moves into a new industry that has important similarities with the firm's existing industry.

gain market power by

vertical integration - becoming its own supplier/distributor

forward integration

backward integration

pooled negotiating power - gaining greater bargaining power with suppliers and customers

economies of scope

enhance differentiation

share related activities

leverage core competencies

Diversification

create synergy - cooperation of two or more organizations to produce a combined effect greater than the sum of their separate effects.

create value for s/h

internal development

joint ventures

strategic alliances

mergers and acquisitions