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Lecture 16

MGT 201 Lecture 16: Lecture16

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The College of New Jersey
MGT 201

Lecture 16 Chapter 6: Corporate-Level Strategy • Developing a Corporate-Level Strategy: o Corporate-level strategy: ▪ The way a company seeks to create value through the configuration and coordination of multimarket activities o Corporate advantage: ▪ Occurs when a firm maximizes its resources to builds a competitive advantage across its business units • Corporate-Level Strategy Choices: o Scope: ▪ The markets and businesses the firm will compete in o Organizational design: ▪ The manner in which activities of the firm will be coordinated o Ownership: ▪ The relationship between business units • Corporate-Level Strategy Decisions: o “Big Bets” ▪ Motivation to pursue diversification strategies ▪ Diversification into international markets ▪ Whether the firm should vertically integrate • History of Diversification: • Approaches to Diversification: o A firm may engage in several different businesses that may or may not be related in an attempt to create more value than if the businesses existed as stand-alone entities o Single-product strategy: ▪ A firm focuses on one specific product, typically in one market o Horizontal (related) diversification ▪ A firm pursues businesses that share a similar set of tangible and intangible resources o Unrelated diversification: ▪ A firm that manages several businesses with no connection o Economies of scope: ▪ Exists when the costs of operating two or more businesses or producing two or more products with the same corporate structure is less than the costs of operati
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