Strategic Ambnagement Assignment

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-reasons for diversification: value-creating diversification(related and unrelated), value- neutral diversification, value- reducing diversification.

-value-creating diversification: related constrained and related linked diversification(economies of scope between business units; operational relatedness and corporate relatedness).

-market power(multi- point competition and vertical integration).

-unrelated diversification. External incentives to diversify(competition regulations, tax laws). Internal incentives to diversity is a low performance.

The third day

We studied acquisition and restructuring strategies, international strategy, cooperative strategy.

7 topic

- Merges(two firms agree to integrate their operations) , acquisitions (one firm has a controlling packet )and takeovers(the target firm didn’t solicit the acquiring firm’s bid).

- Reasons for acquisitions(increase market power(horizontal, vertical, related acquisitions), overcoming entry barriers, cost of new product development, increase speed to market , lower risk compared to developing new product, increase diversification, reshaping the firm’s competitive scope).

- Restructuring(downsizing, down scoping, leveraged buyouts)

- Downsizing-a reduction in the number of a firm’s employees and sometimes, in the number of its operating units. Reasons for downsing: expectation of improved profitability from cost reductions; desire or necessity for more efficient operations, new technology, globalization.

- Leverage buyouts- a restructuring strategy whereby a party buys all of a firm’s assets in order to take the firm private.

8 topic

-International strategy- a firm sells its goods or services outside its domestic market

- incentives to use an international strategy( traditional and emerging).

- incentives to use an international strategy( increase market size, return on investment, economies of scale, scope for internationalization, location advantages).

- international business- level strategy(factors of production, demand conditions, related and support industries, firm strategy, structure and rivalry).

-multi-domestic strategy- is decentralized to the strategic business unit in each country.

-global strategic- standardized products across country markets.

-Transnational strategy seeks to achieve both global efficiency and local responsiveness.

- global market entry: exporting, licensing, strategic alliances, acquisition, new wholly owned subsidiary.

- strategic competitiveness outcomes (international diversification and returns, international diversification and innovation).

- risk in an international environment (political risks, economic risks).

9 topic

-Cooperative strategy- a strategy in which firms work together to achieve a shared objective.

-Strategic alliances are a primary type of cooperative strategy. Three types of strategic alliances: joint venture, equity, non-equity strategic alliance.

- business- level cooperative strategies improves a firm’s performance in individual product markets. Four types of cooperative strategies( complementary strategic alliances (horizontal and vertical), competition response strategy, uncertainty- reducing, competition-reducing strategy).

- corporate- level cooperative strategy(3 types: diversifying, synergistic strategic alliance, franchising).

- international cooperative strategy : cross- border strategic alliance, multinational corporations outperform domestic firms, limited growth opportunities, foreign and local companies alliance, transformation in core business.

- network cooperative strategy-wherein several firms from multiple partnerships to achieve shared objectives. Types are stable, dynamic alliance network.

- strategies for managing cooperative strategies( cost minimization, opportunity- maximization).

The fourth day

We studied corporate governance, organizational structure and controls, strategic leadership.

10 topic

Corporate governance represents the set of mechanisms used to manage the relationship among stakeholders that determines and control the strategic direction and performance of organizations

- Internal governance mechanism( ownership concentration, board of directors, executive compensation). External governance mechanism- market for corporate control.

- Separation of ownership and managerial control(historically, modern cooperation)

- Agency relationships when someone hire another one. Problems : different interests, publicly traded corporations, agent makes decision resulting conflicts, agents managerial opportunism, etc..

- Manager and shareholder risk and diversification.

- Market for corporate control(individual and firms buy or take over undervalued corporations).

- External governance mechanism(managerial defense tactics).

11 topic

Organizational structure specifies the firm’s formal reporting relationships, procedures, controls and authority and decision making processes.

- Organizational controls( organizational, strategic, financial controls ).

- Strategy and structure growth pattern. A simple structure is an organization form in which the owner- manager makes all major decisions directly and monitors all activities, while the staff serves as an extension of the manager’s supervisory authority.

- Functional structure consists of a CEO and limited corporate staff, with functional line managers in dominant organizational areas, such as production, accounting, marketing, R&D, engineering and HR.

- Multi-divisional structure is composed of operating