MGCR 423 Lecture Notes - Lecture 8: Market Power, Vertical Integration, Tacit Collusion
Document Summary
Business level strategy (competitive): each business unit in a diversified firm chooses a business-level strategy as its means of competing in its individual product markets. Corporate level strategy (companywide): specifies actions taken by the firm to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets. Corporate-level strateg(cid:455)"s value: the degree to which the businesses in the portfolio are worth more under the management of the firm than they would be under other ownership. Low levels of diversification: single business: 95% revenues come from single business, dominant business: between 75% and 95% from single. Very high levels of diversification: unrelated: less than 70% of revenue comes from dominant businesses and there are no common links between businesses. Creates value in two ways: eliminates resource duplication, provides intangible resources that are difficult for competitors to understand and imitate (a transferred intangible resource gives an immediate competitive advantage over its rivals)
