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bus 450 ch.5
| Question | Answer |
|---|---|
| Vertical integration | A combination of three strategies: backward, forward, and horizontal integration, allowing a firm to gain control over distributors, suppliers, or competitors, respectively. |
| Unrelated diversification | When a firm acquires a new business whose value chains are so dissimilar that no competitively valuable cross-business relationships exist. |
| Blue ocean strategy | Actions that aim to target a new market where competition is not yet present, thus creating a “blue ocean” as opposed to a red ocean where many firms are competing often on price and the gains of one firm are often at the expense of another.\ |
| Core competence | A value chain activity that a firm performs especially well. |
| Market penetration | Increasing market share for present products or services in present markets through greater marketing efforts. |
| Liquidation | Selling all of a company’s assets, in parts, for their tangible worth. |
| Bankruptcy | A legal document that allows a firm to avoid major debt obligations and void union contracts to survive and regroup as a firm. There are five major types: Chapter 7, Chapter 9, Chapter 11, Chapter 12, and Chapter 13. |
| Cost leadership | One of Michael Porter’s strategy dimensions that involves a firm producing standardized products at a very low per-unit cost for consumers who are price sensitive. |
| Leveraged buyout (LBO) | When the outstanding shares of a corporation are bought by the company’s management and other private investors using borrowed funds. |
| Market development | Introducing present products or services into new geographic areas. |
| Related diversification | When a firm acquires a new business whose value chain possesses competitively valuable cross-business strategic fits. |
| unrelated diversification | is when the old versus new business value chains are so dissimilar that no competitively valuable cross-business relationships exist. |
| De-integration | Reducing the pursuit of backward integration; instead of owning suppliers, companies negotiate with several outside suppliers. |
| Hostile takeover | If the merger or acquisition is not desired by both firms. |
| Combination strategy | The pursuit of a combination of two or more strategies simultaneously. |
| Horizontal integration | Acquiring a rival firm. |
| Franchising | An effective means of implementing forward integration whereby a franchisee purchases the right to own one or more stores or restaurants of a chain firm. |
| Merger | When two organizations of about equal size unite to form one enterprise; an acquisition. |
| Long-term objectives | Specific results that an organization seeks to achieve (in more than 1 year) in pursuing its basic vision, mission, or strategy. |
| Turnaround strategy | A retrenchment strategy designed to fortify an organization’s basic distinctive competencies by regrouping through cost and asset reduction to reverse declining sales and profits. |
| Benchmarking | A management technique associated with value chain analysis, whereby a firm compares itself on a wide variety of performance-related criteria against the best firms in the industry, thus establishing standards of excellence. |
| Forward integration | A strategy that involves gaining ownership or increased control over distributors or retailers, such as a manufacturer opening its own chain of stores. |
| First-mover advantages | The benefits a firm may achieve by entering a new market or developing a new product or service before rival firms. |
| Backward integration | A strategy seeking ownership or increased control of a firm’s suppliers, such as a manufacturer acquiring its raw material source firms. |
| Differentiation | One of Michael Porter’s strategy dimensions that involves a firm producing products and services considered unique industrywide and directed at consumers who are relatively price insensitive. |
| Michael Porter’s strategy breakdown; consists of three strategies: | cost leadership, differentiation, and focus. |
| Financial objectives | Include desired results growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, and so on. |
| Friendly merger | If the merger or acquisition is desired by both firms. |
| Value chain analysis (VCA) | The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing product(s) to marketing those products and compares these costs to rival firms using benchmarking. |
| Divestiture | Selling a division or part of an organization. |
| Retrenchment | When an organization regroups through cost and asset reduction to reverse declining sales and profits. |
| Integration strategies | Includes forward integration, backward integration, and horizontal integration (sometimes collectively referred to as vertical integration strategies). |
| Product development | Increased sales by improving or modifying present products or services. |
| Acquisition | When a large organization purchases (acquires) a smaller firm; a merger. |
| Intensive strategies | Includes market development, market penetration, and product development. |
| Joint venture | A strategy that occurs when two or more companies form a temporary partnership, consortium, or business for the purpose of capitalizing on some opportunity. |
| Organic growth | A term denoting strategies that aim for a firm to build or grow from within rather than through acquisition. |
| Value chain | The business of a firm, where total revenues minus total costs of all activities undertaken to develop, produce, and market a product or service yields value. |
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