MGBU 4441 Lecture Notes - Lecture 18: Market Power, World Trade Organization, Social Complexity
17 Apr 2017
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Where would added value come from: raise prices merge w/ competitors to increase market power, add new profitable sales buy firms in areas not in. Types of diversification: related businesses that have similarities/potential business relationship w/to acquiring firm w/ goal of creating synergies across businesses themselves. Horizontal derives from economies of scope/cross-selling/economies of scale. Acquire firms in order to add related product/services. Share aspects of business that relate to products & services themselves. Buying/merging w/ competitors to increase market power, scale, & efficiency. Vertical company buys supplier/distributors/some part of value chain that not doing themselves. Reduces flexibility (no ability to change suppliers, distributors, etc. ) Reduces risk of negative associations w/ poor service (if acquiring distributor) Increases control: unrelated buy businesses that have no similarities to acquiring firm"s businesses. General use of business infrastructure and/or reputation. Impose discipline by cutting costs and/or selling off underperforming businesses. Executives" might be excellent @ picking investment. The bad news: corporate-level strategy often fail.
