Chapter 6: Corporate-Level Strategy

Dr. Dodd-Walker

Key Vocabulary CL#1

Strategy: An ______ the firm takes (exploiting core

competencies) to gain/sustain a competitive
advantage; it requires a ________________.

Corporate-Level Strategy: An action the firm takes

(exploiting core competencies) to gain/sustain a
competitive advantage in a ________ _______
__________/_________________________.

(Hitt, Ireland, Hoskisson, 2005)

Key Vocabulary CL#2

Financial Economies: ______________ realized

through improved allocation of financial resources
based on investments inside or outside of the firm.

____________________: Exists when 2 or more

diversified firms simultaneously compete in the same
product areas or geographic markets. (Another
approach to gaining market power through
diversification.)
(Hitt, Ireland, Hoskisson, 2005)

Key Vocabulary CL#3

Synergy: ___________________. (The whole is

greater than the sum of its parts.)

Example: 1 + 1 = 3

or

2+2=5

___________________: Financial resources

accumulated in one part of the world used to fight a
competitive battle in another part of the world. It is
used to undermine strong domestic market share!

Introduction

What? CL Strategy. It addresses 2 issues:

1. What businesses a corporation should ___________ in.
2. How these businesses should be managed to create ________.

Why? They explain how firms _______________: new products, markets, or

technologies.

How? Related and Unrelated Diversification

Who? n/a

Related Diversification 1

(Dess & Lumpkin, 2003)

Leveraging Core Competencies:

The _______________ of accumulated ____________________
across a corporations business units.
Sharing Activities:
The sharing of __________________________ across a firms
business units, such as common manufacturing facilities,
distribution channels, and sales forces.

Related Diversification 2

(Dess & Lumpkin, 2003)

Pooled Negotiating Power:

Refers to _________________________________ (or a business
with its parent) to strengthen the firms bargaining position.
Vertical Integration:
Refers to ________________________ by integrating preceding
or successive productive processes.

Unrelated Diversification

(Dess & Lumpkin, 2003)

Restructuring:
Corporation seeks firms with unrealized potential with the goal of
improving their efficiency to _______________.
Corporate Parenting:
The parent company _______________ through its management
expertise by improving the efficiency/effectiveness of the
subsidiary.
Portfolio Management/Analysis:
The corporate office seeks to _________________________ its
portfolio of businesses.

Means of Diversification

(Dess & Lumpkin, 2003)

Mergers & Acquisitions:

_______________ the assets and competencies of other firms.
Strategic Alliances & Joint Ventures:
_________________________ to achieve a common end.
Internal Development:
Internal ____________________ lead to new product markets.

Levels of Diversification

(Hitt et al., 2005)

Single Business:
More than _____ of revenue from a single business.
Dominant Business:
__________ of revenue from a single business.
Diversified Business:
Less than _____ of revenue from a single business.

Diversification Advantages & Disadvantages

(Hitt et al., 2005)

(See

Single vs. Diversified Comparison Chart.)

Limitations of Vertical Integration

(Hitt et al., 2005)

1.
2.
3.
4.

______________ may produce product at lower cost.

______________ costs may occur.
It may reduce the ____________________ because
of the substantial investment.
Demand changes may create capacity balance and
____________________ problems.