BusinessPolicyNotes10

BusinessPolicyNotes10 - Chapter 10 Corporate Strategy -...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 10 Corporate Strategy - Diversification, Acquisitions, and Internal New Ventures 246 STRATEGIC MANAGEMENT Lecture 10 Dr. John Kraft 3 , Expanding Beyond a Single Industry Overview .:. Diversification The process of adding new businesses to the company that are distinct from its established operations ':'Vehicles for diversification Intemal new venturing Starting. new business from scratch Acquisitions Joint ventures .:. Restructuring Reducing the scope of diversified operations by exiting from business areas ~,=,",,~'"\f~..=k Opening Case 3 2 .:. United Technologies has an "Ace in its Pocket" .:. Advantages of staying in a single industry Focus resources and capabilities on competing successfully in one area Focus on what the company knows and does best .:. Disadvantages of being in a single industry Danger of the industry declining Missing the opportunity to leverage resources and capabilities to other activities Resting on laurels and not continually learning c United Technologies 3 3 3 Types of Diversification .:. Related diversification Entry into a new business activity in a different industry that is related to a company's existing business activity, or activities, by commonalities between one or more components of each activity's value chain .:. Unrelated diversification Entry into industries that have no obvious connection to any of a company's value chain activities in its present industry or industries Bureaucratic Costs and Diversification Strategy .:. The costs increases that arise in large, complex organizations due to managerial inefficiencies .:. Number of businesses in a company's portfolio Information overload .:. Coordination among businesses Inability to identify the unique profit contribution of a business unit that shares resources with another unit 3 5 247 3 1 Strategy in Action :Diversification at 3M: Leveraging Technology Strategy in Action :Related Diversification at Intel intet 3 7 3 Bureaucratic Costs and Diversification Strate confd :Limits of diversification Bureaucratic costs place a limit on the amount of diversification that can profitably be pursued ' :Related or unrelated diversification? Related diversified companies can create value in more ways than unrelated companies, but they have to bear higher bureaucratic costs Real World .:. "Iridium" 3 3 '0 Strategy in Action :Postacquisition Problems at Mellon Bank Strategy in Action :JDS Uniphase's $40 Billion Error 3 " 248 3 1 2 2 Real World :"The Restructuring of Sears" Real World .:. "McDonald's to Shed Only 2 Brands" 3 1 3 3 ,. Real World :"Downscoping at Corning" Film :Jack Welch and GE 3 1 5 3 ,....
View Full Document

This note was uploaded on 05/12/2010 for the course MAN 6721 taught by Professor Kraft during the Spring '10 term at University of Florida.

Page1 / 28

BusinessPolicyNotes10 - Chapter 10 Corporate Strategy -...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online