CHAPTER 6.3.docx - replicate the value gained from the...

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replicate the value gained from the economies of scope developed through operational relatedness and corporate relatedness. o Restructuring of assets: A firm creates value by buying and selling other firms’ assets in the external market. Resource allocation decisions may become complex, so success often requires: Focus on mature, low technology businesses. Focus on businesses not reliant on a client orientation. o Value neutral diversification: incentives and resources. o Antitrust regulation (external incentive) Antitrust laws in 1960s and 1970s discouraged mergers that created increased market power (vertical or horizontal integration.) Mergers in the 1960s and 1970s thus tended to be unrelated (pursuing different lines of business) Relaxation of antitrust enforcement results in more and larger horizontal mergers. Early 2000: antitrust concerns seem to be emerging and mergers now more closely scrutinized.
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