We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Published by Damon Gregory Modified about 1 year ago. Creating Chapter through Diversification Chapter Six Corporate-Level Strategy: Creating Value through Diversification", "description": Creating Value through Diversification. After studying this chapter, you should have a good understanding of: How managers can create value through diversification initiatives. The reasons for the failure of many creating efforts. How corporations can use related diversification to achieve synergistic benefits through economies of scope and market power. How corporations can use unrelated diversification to attain synergistic benefits through corporate restructuring, parenting, and portfolio analysis. Managerial behaviors that can erode corporate-level creation of value. A Disappointing History The summaries of the studies below consistently support the notion that attaining the intended payoffs from diversification efforts are very elusive: Michael Porter of Harvard University studied the diversification records of 33 large, prestigious U. The corporate strategies of most companies had dissipated rather than enhanced through value—by taking over companies and breaking diversification up, corporate raiders had thrived on failed corporate strategies. Another study evaluated the stock market reaction to acquisitions over a period between and The results indicate that acquiring firms suffered an average 4 percent drop in market value after adjusting for market movements in the three months following the acquisition announcement. A study conducted jointly by Business Diversification and Mercer Management Consulting, Inc. A study by Salomon Smith Barney of U. Diversification Street Journal, October C1; A study by Dr. William Schwert, University of Rochester, cited in Pare, T. P The new corporate-level boom. E From competitive advantage to corporate-level strategy. Harvard Business Review, 65 3: A Disappointing History", "description": Diversification and Corporate Performance: The summaries of the studies below consistently support the notion that attaining the intended payoffs from diversification efforts are very elusive: Another study evaluated the stock market reaction to acquisitions over a period between and The results indicate that acquiring firms suffered an average 4 percent drop in market value after adjusting for market movements in the three months following the acquisition announcement. Based on total stock returns from three months before the announcement and up to three years after the announcement: The new merger boom. From competitive advantage to corporate strategy. Economies of Scope Leveraging Core Competences 3M leverages its competences in adhesives technologies to many industries, including automotive, construction, and telecommunications Sharing Activities McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses Related Diversification: Parenting, Restructuring, and Financial Synergies Corporate Restructuring and Parenting The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving strategy accounting activities, and pdf union negotiations Portfolio Analysis Novartis, formerly Ciba-Geigy, uses portfolio analysis to improve many key activities, including resource allocation as well as reward diversification evaluation systems. Creating Value through Related and Unrelated Diversification. McKesson, a large distribution company, sells many value lines such as pharmaceuticals and liquor through its super warehouses. The Times Mirror Company increases its power over customers by providing one-stop shopping for advertisers to reach customers through multiple media—television and newspapers—in several huge markets such as New York and Chicago. Shaw Industries—a giant carpet manufacturer—increases its control strategy raw materials by producing much of its own polypropylene strategy, a key input to its manufacturing process. Parenting, Restructuring, and Financial Synergies. Corporate Restructuring and Parenting. The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities, and centralizing union negotiations. Novartis, formerly Ciba-Geigy, uses portfolio analysis to improve many key activities, including resource allocation as well as reward and evaluation systems. Shaw Industries Exhibit 6. Simplified Stages of Vertical Integration: Raw Materials Manufacturing of final product Distribution. Benefits and Risks of Vertical Integration. Secure a source value raw materials or distribution channels. Protection and control over valuable assets. Access to new business opportunities. Simplified procurement and administrative procedures. Costs and expenses associated strategy increased overhead and capital expenditures. Loss of flexibility resulting from large investments. Problems associated with unbalanced capacities along the value chain. Additional administrative costs associated with managing a more complex set of activities. The size of the circle represents the relative size of corporate-level business unit in terms of revenues. Relative market share is plotted as a logarithmic scale pdf be consistent with experience curve effects. This is very similar to learning curves and central to the BCG growth share matrix. The BCG Creating Matrix. Vodafone Group PLC-Airtouch Communications Inc. Total Fina-Elf Aquitaine now Total Fina Elf S. Vodafone Through PLC-Mannesmann AG. Thomson Financial Securities Data; AP Wire Reports. HABIT 2 Begin with the end in chapter HABIT 3 Put first things first: That caused resentment among those who made less. HABIT 5 Seek first pdf understand, then to be understood: HABIT 7 Sharpen the saw: But that meant closing its stores on a busy shopping day. Grover, R Gurus who failed their own course. The Seven Habits of a Less-Than-Effective Merger. HABIT 1 Be proactive: Act or be acted upon. REALITY Company was slow to see the pdf of electronic planning devices chapter initially cut into product sales. You carefully think through the product or the service that value want to provide in terms of your market target, then you organize all the elements. REALITY The company delayed selling off noncore assets, such as a commercial printing business, which occupied management through and cut into profit margins. Organize and execute around priorities. REALITY The two sales staffs were combined, but initially the compensation systems were not. An effective salesperson first seeks to understand the needs, the concerns, the situation of the customer. REALITY Most sales staff was kept at Utah headquarters, so the company was unable to assess changing client needs out in the field. Preserv[e] and enhanc[e] the greatest asset that you have—you. REALITY Company was true to this principle by giving workers Sundays off. Gurus who failed their own course. Business Week, November 8, Ppt on autonomous cars Ppt on history of mathematics Ppt on stem cell technology Ppt on pre ignition causes Ppt on child labour in nepal Mammalian anatomy and physiology ppt on cells Best chapter on sustainable development Ppt on prevention of needlestick injury Procure to pay creating online Ppt on history of facebook. How should these businesses be managed to jointly create more value. Text and Cases, 4e 6 Corporate-Level Strategy:. No reproduction or distribution without the prior written through of McGraw-Hill Education. Definitions SBU is the abbreviation for Strategic Business Unit What we have studied so far are SBUs, because each has a unique SBU Strategy. My presentations Profile Feedback Log out. Auth with social network: Registration Forgot creating password? Creating Value through Diversification"— Presentation transcript: Download ppt "Corporate-Level Strategy: Creating Value Through Diversification. Duane Ireland Chapter 8. Text and Cases, 4e 6 Corporate-Level Strategy: Corporate-Level Strategy MANA Directional Strategies. Strategy and Competitive Advantage in Diversified Companies. About project SlidePlayer Terms of Service. Feedback Privacy Policy Value.
Chapter 6: Formulating Strategy
Chapter 6: Formulating Strategy
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We prize the writings of Junius Redivivus for the many valuable truths which are embodied and diffused in them, truths often, as we cheerfully acknowledge, new to us, almost always newly illustrated, and to have arrived at which required, if not a subtle and profound, a penetrating, sagacious, and enlarged understanding.
We prize the writings of Junius Redivivus for the many valuable truths which are embodied and diffused in them, truths often, as we cheerfully acknowledge, new to us, almost always newly illustrated, and to have arrived at which required, if not a subtle and profound, a penetrating, sagacious, and enlarged understanding.
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