8_lecture_CorporateStrategies_handout

On an increase in the variety of products or markets

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Unformatted text preview: most promising in ­house Alternatives along the Make or Buy Continuum Alterna?ves (“Hybrid arrangements”) of the Make or Buy Con?nuum Strategic alliances Facilitate investment without administrative costs Ex: Long-term contacts, equity alliances, joint ventures •  Short ­term contacts –  Compe<<ve bidding process –  Less than one ­year term –  Lower prices cost advantages •  Strategic alliances –  Facilitate investment without administra<ve costs •  Ex: Long ­term contacts, equity alliances, joint ventures Short-term contacts Competitive bidding process Less than one-year term Lower prices cost advantages Parent – subsidiary relationship •  Most integrated alternative • Parent companies have command and control Ex: GM owns Opel and Vauxhall in Europe •  Parent – subsidiary rela<onship –  Most integrated alterna<ve –  Parent companies have command and control •  Ex: GM owns Opel and Vauxhall in Europe Corporate Diversifica?on: An increase in the variety of products or markets in which to compete Benefits of Ver?cal Integra?on •  Specialized assets •  Degrees of diversifica<on –  Assets that have significantly more value in their intended use than in their next best use (have high opportunity cost) –  Range of products and services a firm should offer •  Ex: PepsiCo also owns Lay's & Quaker Oats. •  Types of specialized assets •  Diversifica<on strategies: 1.  Site specificity –  Product diversifica<on •  Co ­located such as mining equipment •  Ac<ve in several different product categories 2.  Physical asset specificity –  Geographic diversifica<on •  Bokling machinery •  Ac<ve in several different countries 3.  Human asset specificity –  Product – market diversifica<on •  Ac<ve in a range of both product and countries •  Mastering procedure...
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