Corporate-Level Strategies

• Corporate-level strategies involve top managers' decisions on strategies for the entire organization.

Parenting Advantage

• Benefit is related to how well the parent's characteristics fit the business' critical success factors.
• Feel is related to how well the parent's characteristics fit with the business's parenting opportunities.
• Ballast businesses are high on feel but low on benefit.

Vertical Integration

• Vertical integration integrates adjacent activities in the value chain.
• Firms pursuing dominant business diversification generate 70% to 95% of sales in a single product market.
• Disney's acquisition of Pixar in 2006 for $7.4 billion is an example of forward vertical integration.
• Unrelated diversification does not seek operational or corporate relatedness.
• Unrelated diversification can create value through efficient internal capital market allocation.
• Internal capital allocations increase risk among businesses.
• Restructuring acquired assets creates value through unrelated diversification.
• Disney launching Disney+ in 2019 to distribute content directly is forward vertical integration.
• A joint venture involves partners gaining leverage on the target market through combined strengths.
• The hubris argument suggests acquirers overpay due to having big egos that impede rational decision-making.
• Reduced competition is not typically a benefit of a merger or acquisition.
• Target firm shareholders benefit most when the acquirer firm's management is more efficient and replaces the target firm's management.

Acquisition Synergies

• Acquisitions create synergies by:
  • Increasing market power
  • Improving distribution networks
  • Integrating resources and capabilities
• A wholly-owned subsidiary is complex, costly, time-consuming, provides full control, and has high profitability potential, but it is not low risk

Corporate-level Strategies

• A global strategy is suitable when global integration pressure is high and local adaptation pressure is low.
• Companies expand outside their home market:
  • to gain new customers, exploit core competencies, and enhance return on R&D
• A global strategy example is IKEA selling standardized furniture at low prices.
• Global economies of scale arise when products or services are provided more cheaply at greater volume and technological advances.

Xiaomi Entering International Markets

• Xiaomi expanded internationally:
  • because the smartphone industry was growing, the Chinese market was saturated, and domestic competition was intense, and to gain economies of scale
• Non-equity strategic alliances form when firms have a contractual relationship to share resources.

Strategic Alliances

• Firms participate in strategic alliances:
  • to create value, enter markets quickly, and gain access to resources
• A reason not to participate in strategic alliances is to retain control over intangible core competencies.
• Strategic alliances in standard-cycle markets are not formed to create an industry standard.

Risks of Cooperative Strategies

• Risks include:
  • misrepresentation of competencies, opportunistic behavior, insufficient variation in core competencies and failure to provide complementary resources.
• Value creation in platform businesses does not include the exchange of currency.

Platform Markets

• In platform markets:
  • some customers value products/services more, and those customers aid product diffusion
• Collaborative communities are best for open innovation in platform businesses when the type of innovation requires a variety of solutions.
• Diffuse ownership weakens monitoring of manager decisions because owners struggle to coordinate.
• Academic researchers from a US university participated in revealing the Volkswagen fraud.

AI Wars Case

• In the AI Wars case:
  • Alphabet was cautious about generative AI chatbots threatening online searches
• For resources/capabilities to be a competitive advantage, they must enable the firm to perform uniquely and create more value than competitors.
• Strategy is less important for organizations that don't need financial profit, as it creates a competitive advantage.
• A competitive advantage is less important for firms selling commodities.

Corporate Scandals

• Corporate scandals:
  • involve actual, apparent, or alleged transgressions, are publicized, and generate spillovers
• Economies of scale owned by existing companies increase barriers to entry.

Porter's Five Forces

• Substitutes, in Porter's Five Forces:
  • strengthen the threat when switching costs are low
• Statements about strategic groups:
  • Strength of Porter's Five Forces are not the same across different strategic groups

Industrial Organizations Model

• The industrial organizations model:
  • Resources cannot be transferred between firms

Competition

• The strength of competition within an industry increases with high fixed costs and high exit barriers.
• Examples of primary activities in value chain analysis (VCA) include handling raw materials and distributing products to consumers.
• "Bad barrels" refers to organizational features causing corporate misconduct.
• Realized strategy combines intended and emergent strategies.
• Stakeholders are not an example of shareholders.

Resources

• Correct statements about resources:
  • intangible resources are undervalued, are harder to replicate and often reasons for difference in company's book value and market valuation
• Internal corporate governance mechanisms include greenmail.
• Business strategy questions include whether to buy up a supplier.
• If a resource is rare, it yields a temporary competitive advantage and average or above-average returns.

Coursera's Business Model

• Key features include:
  • access to course content against a subscription fee and supplementary fees for granting a certificate, uses of "freemium" model, compensations for content creators
• Strategies are less important for organizations without direct competitors because the purpose of strategy is to beat competition.
• Cost advantages do not always come from economies of scale,

Competitive behavior

• Drivers of competitive behavior relates to:
  • Awareness to a competitor tends to be stronger when those competitors has similar resources
  • excessive competition resulting from lack of awareness
  • greater the resource imbalance between two firms, the greater the delay in responding to an attack for the disadvantaged firm
• Corporate governance should ideally consist of both insiders and outsiders on a balanced board.
• In the Cola Wars case, more than one of the statments is correct.
• It is less important for firms which sell commodities to have a competitive advantage.

Miscellaneous points

• Statements about substitues as defined in Porter's Five Forces include low switching costs.
  • The porter 5 forces will not be the same across different strategic groups
  • Internal enviroment is key in industrial organizations
  • In value chain analysis it is both the handling of raw materials and distributing products to consumers
  • Intended strategy is about planning
  • Coke and pepsi had similar resources so the war was more measured because coke and pepsi can both imitate one another.
  • Supplier to concentrate producers likely are producers with high bargaining power
  • and they are product, organizational, and community shareholders.