Corporate Strategy
1.
The way a company creates value through the configuration and coordination of its multi-market activities.
Vision
1.
Where a company wants to be or what it wishes to become in the long-term.
Objectives and Goals
1.
Shorter-term objectives that serve as milestones to achieve the vision.
- Goals: qualitative
- Objectives: quantitative
Resources
1.
Assets, skills and capabilities of the firm.
- They determine WHAT the firm can do, its competitive advantages and the range of its market opportunities.
Businesses
1.
The different industries where the firm competes and their respective competitive strategies.
Structure, Systems and Processes
1.
The way a firm coordinates and controls its different business units.
- Structure: the way the firm is divided into discrete units
- Systems: the formal policies that govern organizational behaviour
- Processes: the set of informal elements of an organization
Corporate Strategy
1.
How Resources, Businesses and Structure, Systems and Processes work together as a system of value creation through multi-market activity.
3 Questions to Test Corporate Advantage
1.
- Does ownership of the business create value somewhere in the firm?
- Are the benefits created superior to the costs of corporate overhead?
- Does the corporation create more value with the business than any other corporate parent?
Imperfect Markets
2.
- Limited participants
- Heterogeneous products
- Asymmetric information
- Product scarcity
Purposes of Strategy
2.
- External Positioning: positioning in the market, relative to competitors (Porter’s 5 Forces, Generic Strategies)
- Internal Alignment: of investments and activities. Aligned with External Positioning and coherent with eachother.
Types of Resources
2.
- Tangible
- Intangible
- Capabilities
Assumptions about RBV
2.
- Heterogeneity
- Immobility
Resource-Based View (RBV)
2.
Resources are seen as the main profit generator.
- Different resource bundles in each firm justifies different performances.
- Resources determine the stratigies that each firm can adopt.
What makes resources valuable?
2.
- Demand
- Scarcity
- Appropriability
Economic Rents
2.
- Ricardian rents: scarcity
- Schumpeterian rent: uniqueness
Resource-Based Strategy
2.
- Identify
- Invest
- Upgrade
- Leverage
Integration
3.
Expansion of the firm within the same industry.
- Horizontal: in the same level
- Vertical: within the supply chain
Diversification
3.
Expansion of the firm’s acitvites to different markets/industries.
- Related: related industries
- Unrelated: unrelated industries
Dimensions of Scope
3.
- Geography
- Value chain
- Product market
Economies of Scale
3.
When AC decreases with the production of an additional unit.
- Single-Site Economies: physical production, one plant
- Multiple-Site Economices: non-physical production, multiple plants
c = aQ^b
c2/c1 = (Q2/Q1)^b
Minimum Efficient Scale (MES)
3.
Smallest scale at which economies of scale are exhausted.
Experience/Learning Curves
3.
Reductions in AC from increases in cummulative production.
“Learn by doing”.
Explain why transfers of knowledge across different locations can be difficult.
c = aP^b
c2/c1 = (P2/P1)^b
Economies of Scope
3.
When the costs of producing/selling multiple products together is inferior to the cost of producing/selling the same quantity of products individually.
Obstacles to Exploiting Scale and Scope
3.
- Poor analysis
- Implementation difficulties (bureaucracy)
- Core rigidities
- Inertia
- Relatedness
