MGSC01H3 Lecture Notes - Lecture 4: Capital Market
Document Summary
A firm can operate many business units in many industries. Most large firms operate in multiple industries and some frequently change the mix of industries they operate in: between 1995 to 2005, the average us-based fortune 500 company operated in four distinct industries (piskorski 2007) Corporate strategy is the set of choices that create competitive advantage for a multi-industry firm, with two components: configuration: which industries to be in, coordination: how business activities in different industries relate to each other. Two types of common corporate strategies: horizontal diversification, simultaneous ownership of two or more business units that utilize a similar set of tangible and intangible resources. (providing new and unrelated products or services to existing consumers. For example, a notebook manufacturer that enters the pen market is pursuing a horizontal diversification strategy. ) Common reasons for the better-off test to pass: Cross-sell: selling an additional product or service to an existing customer.
