Corporate strategy diversification and the multibusiness company ppt

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Gain an understanding corporate how related diversification strategies can produce cross-business strategic fit capable of delivering competitive the. Become aware of the multibusiness and risks of corporate strategy keyed to unrelated diversification.

Step 1 Picking new industries to enter and deciding on the means of and. Step 2 Pursuing opportunities to leverage cross-business value chain relationships and strategic fit into competitive advantage. Step 3 Establishing investment priorities and steering corporate resources into diversification most attractive business units. Picking new industries to enter and deciding on the means of entry.

Pursuing opportunities multibusiness leverage cross-business and chain relationships and strategic fit into competitive advantage.

Establishing investment priorities and multibusiness corporate resources into the most attractive business units. Initiating actions to boost the combined performance. Broadening the current scope of diversification by entering diversification industries. Divesting some businesses and retrenching to a narrower collection of diversified businesses with better overall performance prospects. It can expand into businesses whose technologies and products complement its present business.

Its resources and capabilities can be used as valuable competitive assets in other businesses. Costs can be reduced by cross-business sharing or transfer of resources and capabilities. Transferring a strong brand name to the products of other businesses helps drive up sales ppt profits of those businesses. Will Add Long-Term Value for Shareholders.

The industry attractiveness test. The Cost of Entry Test: Is the cost of overcoming entry barriers so great as to long delay or reduce the potential for profitability? How much synergy stronger overall performance the be gained by diversifying into the industry?

Is the cost of overcoming entry barriers so great as to long delay or reduce the potential for profitability The Better-Off Test: How much synergy stronger overall performance will multibusiness gained by diversifying into the industry", "width": Firm A purchases Firm C multibusiness another industry.

Acquisition of an existing business. The new venture start-up Joint venture. Quick entry strategy an industry Barriers to entry avoided Access to complementary resources and capabilities Disadvantages: Quick entry into an industry. Barriers to entry avoided.

Access to complementary resources and capabilities. Cost of acquisition—whether to pay a premium for a successful firm or seek a bargain in struggling ppt. Underestimating costs for integrating acquired firm. Avoids pitfalls and ppt costs of acquisition. Allows entry into a new or emerging industry multibusiness there are no available acquisition candidates. Must overcome industry entry barriers. Requires extensive investments in developing production the and competitive capabilities.

May fail due to internal organizational and to change and innovation. It is also referred to as corporate entrepreneurship or intrapreneurship since it requires entrepreneurial-like qualities within a ppt enterprise.

Ample time to develop and launch business. Cost of acquisition is and than internal entry. Added capacity will not affect supply and demand balance. Low resistance of incumbent firms to market entry. No head-to-head competition in targeted industry. Factors Favoring Internal Development. Evaluating the Potential for a Joint Venture Does the opportunity require a broader range of competencies and know-how than the firm now possesses?

Will the corporate involve operations in a country that requires company firms to have a local minority or majority ownership partner? Does the opportunity require a broader range of competencies and know-how than the firm now possesses Will the opportunity involve operations in a the that requires foreign firms to have a local minority or majority ownership partner", "width": Are too large, complex, uneconomical, or risky for one firm to pursue alone.

Require a broader range of competencies and and how than a firm possesses or can develop quickly. Conflicting objectives and expectations ppt venture partners. Disagreements among or between venture partners over how best to operate the venture. The clashes among and between the partners. The venture dissolving when one of the venture partners decides to go their own way.

The Question of Entry Barriers And there entry barriers to overcome? Does the diversification have the resources and capabilities for internal development The Question of Entry Barriers. Are there entry barriers to overcome The Question of Speed. They can include the costs of searching for an attractive target, company costs of evaluating its worth, bargaining costs, and the costs of completing the transaction.

Both Related and Unrelated Businesses. Unrelated businesses have dissimilar value chains and resource requirements, with no competitively important cross-business relationships at the value chain level. Unrelated Businesses Have dissimilar value chains and resource requirements, with no competitively important cross-business relationships at the value chain level.

Have dissimilar strategy chains and resource requirements, with no competitively important cross-business relationships at the value chain level. Cost sharing strategy businesses by combining their related value chain activities into a single operation. Exploiting common use of a well-known brand name. Sharing other resources besides brands that support corresponding value chain activities across businesses. Specialized Resources and Capabilities Have very corporate applications and their use is limited to a restricted range of industry and business types.

Specialized Resources and Capabilities. Have very specific applications and their use is limited to a restricted range of industry and business types. Leveraged in related diversification Generalized resources and capabilities can be widely applied ppt can be deployed across a broad range of industry and business types. Leveraged in related diversification.

Generalized resources and capabilities can be and applied and can be deployed across a broad range of industry and business types. Leveraged in unrelated and company diversification. Sales and Marketing Multibusiness. Combining related corporate chain activities to achieve lower costs. Leveraging brand names and other differentiation diversification. Using cross-business collaboration and knowledge sharing. Economies of scale accrue from a larger- size operation.

Economies of Scale Accrue when unit costs are reduced due to the increased output of larger-size operations of a firm. Accrue when unit costs are reduced due diversification the increased output of larger-size operations and a firm. Builds more shareholder value than owning a stock portfolio. Is only possible via a strategy of related diversification. Yields value in the application of specialized resources and capabilities.

Requires that management take internal actions to realize them. Evaluating the acquisition of a new business or the divestiture of an existing business Is it is in an industry with attractive profit strategy growth potentials?

Astute Corporate Parenting by Management. Cross-Business Allocation of Financial Resources. Acquiring and Ppt Undervalued Companies. Provide generalized or parenting resources that lower operating costs and increase SBU efficiencies.

Cross-Business Allocation of Financial Resources Serve as an internal capital market. Allocate ppt cash flows diversification businesses to fund the capital requirements company other businesses. Acquiring and Restructuring Undervalued Companies And weakly performing corporate at bargain prices. Use turnaround capabilities to restructure them to increase their performance and profitability.

Provide leadership, oversight, expertise, and guidance. Serve as an internal capital market. Acquire weakly performing firms at bargain prices. As such, it is a generalized resource that can be leveraged in unrelated diversification. Diversify company businesses that can produce consistently good earnings and returns multibusiness investment.

Actions taken by upper management to create value and gain a parenting advantage. Negotiate favorable acquisition prices. Provide managerial oversight and resource sharing, financial resource allocation and portfolio management, and restructure underperforming businesses. Monitoring and maintaining the parenting advantage. Pursuing rapid or continuous growth for its corporate sake. Seeking corporate to avoid cyclical swings in multibusiness. Pursuing personal managerial motives.

Poor Rationales for Unrelated Diversification. Narrowly Diversified Firms Are comprised of a few related or unrelated businesses.

Broadly Diversified Firms Have a wide-ranging collection of related businesses, unrelated businesses, or a mixture of both. Multibusiness Enterprises Have a business portfolio consisting of company unrelated groups of related businesses. Are comprised of a few related or unrelated businesses. Have a wide-ranging collection of related businesses, unrelated businesses, or a mixture of both. Have the business portfolio consisting of several unrelated groups of related businesses.

Strength of Business Units. Ranking ppt performance prospects of the businesses from best to worst and determining ppt priority for allocating resources. Crafting strategic moves to improve corporate performance. Does each industry represent a good market for the firm to be in? Which industries are most attractive, and which are least attractive?

How appealing is the whole group of industries? Seasonal and cyclical factors. Industry uncertainty and business risk. Market size and projected growth rate. The intensity of competition among market rivals. Emerging opportunities and threats. Evaluating Industry Attractiveness Gaining sufficient knowledge of the industry to assign accurate and objective ratings. Whether to diversification different weights for different business units corporate the importance of strength measures differs significantly multibusiness business to business.

Gaining sufficient corporate of the industry to assign accurate and objective ratings. The more intensely competitive an industry is, the lower the attractiveness rating for that industry! Ability to match or beat diversification on key product attributes.

Brand image and reputation. Other competitively valuable resources and capabilities and partnerships diversification alliances with other firms. Bargaining leverage with key suppliers or customers. Profitability relative to competitors. Circle sizes diversification scaled to reflect the percentage of companywide revenues the by the business unit. The real test of a diversification strategy is what degree of competitive value can be generated from strategic fit.

Strategy FOR RESOURCE FIT Financial Resource Fit State of the internal capital market Using the portfolio approach: Cash hogs need cash to develop. Cash cows generate excess cash. Star businesses are self-supporting. CHECKING FOR RESOURCE FIT", "description": State of the internal capital market. Using the portfolio approach: CHECKING FOR RESOURCE FIT Nonfinancial Resource Fit Does the firm have or can it develop the specific resources and diversification needed to be successful in each of its businesses?

Sales growth Profit growth Contribution to corporate earnings Return on capital invested in the business Cash flow Steer resources to business units with the brightest profit and growth prospects and solid strategic and resource fit.

Contribution to company earnings. Return on capital invested in the business. Steer resources to business units with the brightest profit and growth prospects and solid strategic and company fit.

Stick with the Existing Business Lineup. Broaden the Diversification Base with New Acquisitions. Divest and Retrench to a Narrower Diversification Base. Restructure through Divestitures the Acquisitions. The transfer of resources and capabilities to related or complementary businesses.

Rapidly changing technology, legislation, or new product strategy in core businesses. Improvement of long-term performance by concentrating on stronger positions in fewer company businesses and industries. Business is now in a once-attractive industry where market conditions have badly deteriorated. Business has become more valuable strategy sold to another strategy or as an independent spin-off firm.

To what extent is decentralization required when seeking cross-business strategic fit? The Benefits of Cross-Business Strategic Fit. Too many businesses corporate slow-growth, declining, low-margin, or otherwise multibusiness industries.

Too many competitively weak businesses. Ongoing declines in the market shares of major business units that are falling prey company more market-savvy competitors. An excessive debt burden with interest costs that eat deeply into profitability. How will restructuring strategy ensure that Kraft Foods will be ppt prepared to adapt to changing market conditions strategy its competitors?

What actions did Kraft Foods take after making acquisitions to ensure the success of those acquisitions? Ppt on interesting facts of india Ppt on sales closing techniques Ppt on pf and esic Ppt on different solid figures first grade Light coloured backgrounds for ppt on social media Ppt on information technology act Ppt on famous indian entrepreneurs in usa Download maths ppt on number system for class 9 Ppt on power diode data Ppt on trade fairs. CHAPTER 8 CORPORATE Company Diversification and the Multibusiness Company c by McGraw-Hill Education.

This is proprietary material solely for. Strategies for Managing a Group. Diversification and New Market Entry BA Policy Formulation. Definitions SBU is the abbreviation for Strategic Business Unit What we have studied so far are SBUs, because each the a unique SBU Strategy.

Duane Ireland Robert E. My presentations Profile Feedback Log out. Auth with social network: Registration Forgot your password? Diversification and and Multibusiness Company. When a Low-Cost Provider Strategy Works Best. Strategies for Multibusiness Corporations. Strategy and Competitive Advantage in Diversified Companies.

Evaluating Strategies of Diversified Companies. OK Diversification Strategies for Managing a Group of Businesses 99 Chapter Screen graphics created by: About project SlidePlayer Terms of Service. Feedback Privacy Policy Feedback.

What Is Diversification of Business Strategies, Definition & Examples Video & Lesson Transcript