2300 book notes

Can add value if managers can find a way to share

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Unformatted text preview: ns and create threats that must be countered by changing the organization's strategy o may reduce a company's ability to create value when the environment changes • Diversification o expanding a company's business operations into a new industry in order to produce new kinds of valuable goods or services o related - entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses ! can add value if managers can find a way to share costs between business unites o synergy - performance gains that result when individuals and departments coordinate their actions ! value created by two divisions together is greater than the value created by the two divisions operating separately • ex: disposable diapers and paper towel divisions from P&G share costs of procuring inputs such as paper and packaging... making their costs cheaper o unrelated - entering a new industry or being a company in a new industry that is not related in any way to an organization's current businesses or industries ! reason - management can buy a poorly performing company and turn it out around crating value ! another reason - allows diversification in businesses and a portfolio strategy, spreading out risk ! • disadvantage - increasingly difficult for managers to keep track of each separate business unit in depth, causing managers to lose control of organization and its core businesses International expansion o global strategy - selling the same standardized product and using the same basic marketing approach in each national market ! little if any customization ! advantage - significant cost savings for not customizing products or their marketing plans ! disadvantage - ignores national differences o multidomestic strategy - customizing products and marketing strategies to specific national conditions ! advantages - customize to differences and this can allow them to get higher market share or increase price ! disadvantages - more costly Choosing a way to expand internationally • list by low level of foreign involvement and low risk to high level of involvement and high risk o importing and exporting o licensing and franchising ! licensing - allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee ! franchising - selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits o strategic alliance, joint ventures ! strategic alliance - an agreement in which managers pool or share their organization's resources and know-hows with a foreign company, and the two organizations share the rewards and risk of starting a new venture ! joint venture - a strategic alliance among two or more companies that agree to jointly establish and share the ownership of a new business o wholly owned foreign subsidiary ! production operations established in a foreign coun...
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This document was uploaded on 02/18/2014 for the course BCOR 2300 at Colorado.

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