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Terms in this set (11)Corporate Level Strategy • The primary reason a firm uses a corporate-level strategy to become more diversified is to create additional value. Related Diversification • The related diversification corporate-level strategy helps the firm create value by sharing activities or transferring competencies between different businesses in the company's portfolio. Sharing Activities • Sharing activities usually involves sharing tangible resources between businesses. Transferring • Transferring core competencies is often associated with related linked (or mixed related and unrelated) diversification, although firms pursuing both sharing activities and transferring core competencies can also use the related linked strategy. Unrelated Diversification • Efficiently allocating resources or restructuring a target firm's assets and placing them under rigorous financial controls are two ways to accomplish successful unrelated
diversification. Value-Neutral • Diversification is sometimes pursued for value-neutral reasons. Incentives from tax and antitrust government policies, performance disappointments, or uncertainties about future cash flow are examples of value-neutral reasons that firms may choose to become more diversified. Motives to Diversify • Managerial motives to diversify (including to increase compensation) can lead to overdiversification and a subsequent reduction in a firm's ability to create value. Optimum Diversification • Managers need to pay attention to their firm's internal organization and its external environment when making decisions about the optimum level of diversification for their company. Low levels of Diversification -Single Business 95% one thing Moderate to high levels of Diversification -Related Constrained less then 70% not thing, all businesses share products, tech and distribution (Sharing activities!) Very High Diversification -Unrelated Students also viewedStrategic Management Chapter 76 terms rebecca7722 Essay Questions For Chapter 67 terms tsgaffney0201 BA 4060 9-1085 terms spencer_case7 MGMT 406060 terms jodee_obeirn Sets found in the same folderCh. 4: Business Level Strategy20 terms taryn_fredricks Ch. 5: Competitive Dynamics10 terms taryn_fredricks Ch. 6: Corporate Strategy18 terms taryn_fredricks Ch. 1: Strategic Management and Competitiveness16 terms taryn_fredricks Other sets by this creatorCh. 18: Responsible Marketing10 terms taryn_fredricks Ch. 15 & 16: Advertising Programs11 terms taryn_fredricks Ch. 14: Designing and Managing Integrated Marketin…13 terms taryn_fredricks Ch. 12 & 13: Deliver the Goods19 terms taryn_fredricks Recommended textbook solutionsInformation Technology Project Management: Providing Measurable Organizational Value5th EditionJack T. Marchewka 346 solutions Information Technology Project Management: Providing Measurable Organizational Value5th EditionJack T. Marchewka 346 solutions Operations Management: Sustainability and Supply Chain Management12th EditionBarry Render, Chuck Munson, Jay Heizer 1,698 solutions
Human Resource Management15th EditionJohn David Jackson, Patricia Meglich, Robert Mathis, Sean Valentine 249 solutions Other Quizlet setsAboriginal Studies: Ancient Cultures and Archaeolo…39 terms Mr_M_Morrison Microbiology Lab Practical30 terms hannahh2019 CLARKE FULL FINAL EXAM (good luck)250 terms superchowder123 World geography quiz19 terms ThomasAndrewWestTeacher What are the two ways an unrelated diversification strategy can create value through financial economies?The benefits of unrelated diversification are rooted in two conditions: (1) increased efficiency in cash management and in allocation of investment capital and (2) the capability to call on profitable, low-growth businesses to provide the cash flow for high-growth businesses that require significant infusions of cash.
What are two ways in which firms create value when using a related diversification strategy?Answer and Explanation: The firms can create value by using related diversification strategy through operational relatedness and corporate relatedness. Under operational relatedness the firm share its activities; whereas, under corporate relatedness the firm relocate its core competencies.
How is value created through unrelated diversification?2) Unrelated diversified firms can also create value by purchasing other businesses at low prices, restructuring them, and reselling them at a higher price.
What are the two types of diversification strategies?There are three types of diversification techniques:. Concentric diversification. Concentric diversification involves adding similar products or services to the existing business. ... . Horizontal diversification. ... . Conglomerate diversification.. |
What are the two ways an unrelated diversification strategy can create value through financial economies quizlet?
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