Value Creating Diversification and Corporate Core Competencies Quiz

Cost savings a firm creates by successfully sharing resources and capabilities.

Less than 70% of revenue comes from the dominant business, and there are no common links between businesses.

Complex sets of resources and capabilities that link different businesses.

Exist when a firm is able to sell its product above the existing competitive level.

Exists when two or more diversified firms simultaneously compete in the same product areas or geographical markets.

Exists when a company produces its own inputs (backward integration) or owns its own source of output distribution (forward integration).

Market power exists when a firm can sell its goods and services above competitive levels. A firm can increase its market power through horizontal acquisition by exploiting cost-based and revenue-based synergies.

Vertical acquisition involves acquiring a supplier or distributor, while related acquisition focuses on creating value through synergy by integrating resources and capabilities.

Barriers to entry are factors that increase the expense and difficulty new firms face when entering a market. These barriers can be created by existing firms or market conditions.

Cross-border acquisitions are important as they involve companies with headquarters in different countries. They allow firms to expand their market reach and access new opportunities globally.

Acquiring new products provides lower risk as the outcomes can be estimated more easily. It also allows for increased diversification and faster speed to market.

Increased diversification can make it easier for firms to introduce new products in markets they are currently serving. It allows for a broader product portfolio and can help spread risks.

Synergy exists when the value created by units working together exceeds the value that those units could create working independently.

Private synergies are created when combining and integrating assets of acquiring and acquired firms yield capabilities and core competencies that couldn't be developed otherwise.

Managers' considerable time and energy are required for acquisition strategies to be successful.

Restructuring is when a firm changes its set of businesses or its financial structure.

Downsizing is a reduction in the number of a firm's employees and sometimes in the number of its operating units.

Managers get involved in searching for viable acquisition candidates, due diligence, negotiations, and managing the integration process.

International Business Level Strategy and International Corporate Level Strategy

Inputs necessary for a firm to compete in any industry such as labor, land, natural resources, capital, and infrastructure.

By locating facilities in international locations that provide easier access to lower cost labor, energy, and natural resources.

It is characterized by the nature and size of customers' needs in the home market for the products firms produce.

They enhance the ability to reduce costs and increase the value of products for customers.

They are businesses that supply inputs or purchase businesses' outputs, forming a network of support.

A transnational strategy is an international strategy that seeks to achieve both global efficiency and local responsiveness.

Liability of Foreignness refers to the costs associated with issues firms face when entering foreign markets, such as unfamiliar operating environments, cultural differences, and coordination challenges.

Regionalization influences a firm's choice by allowing it to focus on specific regions to compete effectively and understand the local cultures and norms.

Exporting is when a firm sends products produced in its domestic market to international markets as the initial mode of entry.

Two important trends are Liability of Foreignness and Regionalization.

Regional focus helps firms by enabling better understanding of local cultures, legal norms, and other factors crucial for effective competition in those markets.