chapter7 - Learning Obiectives After reading this chaPter,...

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Unformatted text preview: Learning Obiectives After reading this chaPter, You s h o u l d b e a b l e t o 1. Discuss the arguments'for and against concentrating a company's resources a n d c o m P e t i n g i n i u s t one industry 1 : , 1 1 1 , , ' ' l ' f : , ' : ' 1 , 1 ' r ' i : ' : : : : t ' ' : : : ' : : ' 1' ' l. Concentration on a Single IndustrY a. Horizontal Integ'il'i: b. Benefits and Costs-or Horizontal lntegtttlon -, c. Outsourcing Functionat Activities ll. Vertical Integration. -, " ;. Arguments for Vertical lntegration b' Arguments Against-' v"iitul Integration I c. Ve'tical lntegration and outsourcing lll. Entering New tn!.usl1tes "" if,rough Diu*ttification ,.' C-t"it'ng Value Through Diversification b. Related versus Unrelated Diversification , lV. Restructuring and Downsizing - a' WhY Restructurer b' Exit Strategtes "ttry or'indw IT,T,;'J;l;;T'ff1,;:li.ilryr*ffif,i:a'ffi: p any has sever ui'option, 9::, *# ilffitT?S$n ::'nm:' *"il{:i company.un .on..ntrate on only ;;ili;n i1 ,nut r,raustrl.lli ffi hfi :'J:fi '?p,l;iilrtiltff..#;,r*";:ii;; of the industry,"r,r. .rt.l,,by pursuing a strategy o Ct 2 . E x P l a i n t h e c o n d i t i o n s u n d e r w h i c h a c o m P a n Y is likelY to Pursue vertical integration as a *:?nt ]: ,trrngtft"n its Position tn its core industrY 3. APPreciate the conditions u n d e r w h i c h a c o m p a n y c a n c r e a t e m o r e v a l u e through diversificatton u n O * h y t h e r e i s a l i m i t t o ,u..t"f u I diversificati on 4. Understand whY restructuring a comPanY is often necessarY and discuss the Pros and cons of the strategies a comPanY can adoPt t: :*l' businesses and industrtes Orrerrrierr I Concentration on a concentration on a single industry CHAPTER 7 Corporate-Level Strategy and Long-Run Profitability it begins to make its own inputs and/or sell its own products. Third, a company can choose to enter new industries that may or may not be connected to its existing in- dustry by pursuing a strategy of diversification.Finally, a company may choose to exit businesses and industries to increase its long-run profitability and to shrink the boundaries of the organization by restructuring and downsizing its activities. In this chapter, we explore these different alternatives and discuss the pros and cons of each as a method of increasing a company's profitability over time. The chap- ter repeatedly stresses that if corporate-level strategy is to increase long-run prof- itability, it must enable a company, or its different business units, to perform one or more value creation functions at a lower cost andlor in a way that leads to increased dffirentiation (and thus a premium price). Thus, successful corporate-level strategy works to build a company's distinctive competences and increase its competitive advantage over industry rivals. There is, therefore, a yery important link between corporate-level strategy and creating competitive advantage at the business level....
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This note was uploaded on 10/22/2010 for the course BUS 496 taught by Professor Staff during the Spring '08 term at University of Nevada, Las Vegas.

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chapter7 - Learning Obiectives After reading this chaPter,...

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