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Iridium[1] - The Rise and Fall of Iridium Oct 10 No class...

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The Rise and Fall of Iridium Oct. 10 – No class – Time off to prepare for mini- presentations.
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Corporate Strategy Recap Firm Economic Profits (Π29 Industry-Level  Sources Firm-Level  Sources Industry Structure Competitive Positioning Resources & Capabilities Corporate Strategy Strategy Implementation Corp Social Responsibility
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Issues in Corporate Strategy l Deciding on the business mix l Which businesses should we be in? l Vertical integration l How much of the value chain should we own? l Horizontal diversification l In which business areas should we be active? l horizontal diversification vs. consolidation l Related vs. unrelated diversification l Modes of diversification l Should we develop internally (expand) or externally (acquire)? l With whom should we partner or purchase?
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Firm scope – how to diversify? l Internal development l start up new business inside firm l speed = slow; control = high l can leverage existing capabilities l can slowly develop new capabilities l Mergers & acquisitions l i.e., purchase, merger l speed = fast; control = lower l can access other firms’ capabilities l can be costly (winner’s curse, overconfidence, integration) l Alliances & Joint Ventures offer mix of both
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Strategic Alliances l Pros: l Speed (vs. acquisition or internal expansion) l Access to partner’s resources and capabilities l Reduction of competition l Low-cost entry into new industries and industry segments l Cons: l Loss of control; must share decision making l Potential spillover of knowledge and capabilities to partner l May distract firm from developing its own capabilities l Organizational clashes may limit overall effectiveness
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The Rise and Fall of Iridium
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