CHAPTER 6.1.docx - o Value-creating Diversification related...

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o Value-creating Diversification: related constrained and related linked Diversification o With the related diversification corporate-level strategy, the firm builds upon or extends its resources and capabilities to build a competitive advantage by creating value for customers (want to develop and exploit economies of scope.) Economies of scope are cost savings that the firm creates by successfully sharing some of its resources and capabilities or transferring one or more corporate-level core competencies that were developed in one of its businesses to another of its businesses. The difference between sharing activities and transferring competencies is based on how the resources are jointly used to create economies of scope o Operational relatedness: Created by sharing either a primary activity such as inventory delivery systems, or a support activity such as purchasing. Activity sharing requires sharing strategic control over business units. (it can create value) Activity sharing may create risk because business unit ties create links between outcomes.
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  • Fall '11
  • MichelleZorn
  • Economics, Simultaneous Operational Relatedness and Corporate Relatedness

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