MGT 405 Chpt 10

  1. Process of entering new industries, distinct from a company's core or original industry, to make new kinds of product that can be sold profitably to customers in these new industries
  2. One that makes and sells products in two or more different or distinct industries (industries not in adjacent stages of an industry value chain as in vertical integration)
    Diversified company
  3. Cash in excess of that required to fund investments in the company's existing industry and to meet any debt commitments
    Free cash flow
  4. Involves taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry
    Transferring competencies
  5. Involves taking a distinctive competency developed by a business unit in one industry and using it to create a new business unit or division in a different industry
    Leveraging competencies
  6. Arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because they can more effectively pool, share, and utilize expensive resources or capabilities
    Economies of scope
  7. A company's ability to create a structure, culture, and control systems that motivate and coordinate employees to perform at a high level
    Organizational design
  8. Corporate-level strategy that is based on the goal of establishing a business unit (division) in a new industry that is related to a company's existing business units by some form of commonality or linkage between the value-chain functions of the existing and new business units
    Related diversification
  9. Corporate-level strategy based on a multibusiness model whose goal is to increase profitability through the use of general organizational competencies to increase the performance of all the company's business units
    Unrelated diversification
  10. Business organizations that operate in many diverse industries
  11. Costs associated with solving the transaction difficulties that arise between a company's business units, and between business units and corporate headquarters, as the company attempts to obtain the benefits from transferring, sharing, and leveraging competencies
    Bureaucratic costs
  12. Process of transferring resources to and creating a new business unit or division in a new industry
    Internal new venturing
  13. The stock of highly diversified companies is valued lower, relative to their earnings, than the stock of less diversified companies
    Diversification discount
Card Set
MGT 405 Chpt 10
Corporate-Level Strategy: Related & Unrelated Diversification