BUSI 4609 Chapter Notes - Chapter 6: Greenmail, Shareholder Rights Plan, Takeover
7 May 2018
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Chapter 6
Business level strategy: competing in individual product market
Corporate level strategy: gain CA in several industry
1. level of diversification
a. low
i. single: 95%
ii. dominant: 70-95%
b. moderate to high
i. related constrain : more than 70%, share resource
ii. related linked: more than 70%, limited link
c. high
i. unrelated diversification: more than 70%, not link
2. reason for diversification
a. value creating
b. value neutral
c. value reducing
i. high compensation
ii. diverse employment risk
3. value creating strategy
a. related diversification
i. Economies of scope
ii. Transfer core competency
iii. Market power
b. unrelated diversification
c. operational + corporate relatedness
d. related link
e. financial economies
i. cost saving
ii. efficient internal capital allocation
iii. restructuring
4. value neutral
a. external
i. anti trust legislation
ii. tax law
b. internal
i. low performance
ii. uncertain FCF
▪ defensive
▪ mature and threaten product line
▪ small in mature industry
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