Podcast
Questions and Answers
What does corporate level strategy specify?
What does corporate level strategy specify?
- Actions to increase market dominance
- Actions to reduce product variety
- Actions unrelated to business scope
- Actions to gain competitive advantage (correct)
What is the focus of business unit or LOB strategy?
What is the focus of business unit or LOB strategy?
How a business competes successfully in a particular market.
What is operational strategy concerned with?
What is operational strategy concerned with?
How each part of the business is organized to deliver strategic direction.
Corporate level strategy deals with two main issues: 1. In what product markets and businesses should the firm compete? 2. How will these businesses be managed by _____?
Corporate level strategy deals with two main issues: 1. In what product markets and businesses should the firm compete? 2. How will these businesses be managed by _____?
What helps firms to select new strategic positions expected to increase value?
What helps firms to select new strategic positions expected to increase value?
What determines the value of corporate-level strategy?
What determines the value of corporate-level strategy?
What is the growth strategy focused on?
What is the growth strategy focused on?
Match the following types of corporate growth strategies.
Match the following types of corporate growth strategies.
Concentration Strategy is used when a single-business organization pursues _____ through increasing its level of operation.
Concentration Strategy is used when a single-business organization pursues _____ through increasing its level of operation.
What is a notable advantage of the concentration strategy?
What is a notable advantage of the concentration strategy?
What is a drawback of the concentration strategy?
What is a drawback of the concentration strategy?
What is horizontal integration?
What is horizontal integration?
What are the two types of strategies that diversified firms need?
What are the two types of strategies that diversified firms need?
When is a firm considered to have low levels of diversification?
When is a firm considered to have low levels of diversification?
What type of diversification occurs when businesses share links across products, technologies, or distribution channels?
What type of diversification occurs when businesses share links across products, technologies, or distribution channels?
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Study Notes
Corporate Strategy
- Encompasses actions firms take to achieve competitive advantage by managing various businesses across different markets.
- Focuses on fulfilling stakeholder expectations and guiding strategic decisions at all organizational levels.
Business Unit / LOB Strategy
- Targets how businesses compete in specific markets.
- Involves strategic choices regarding product offerings, customer needs, and competitive advantages.
Operational Strategy
- Relates to the organization of business components to execute corporate and business-unit strategies effectively.
Key Issues in Corporate Level Strategy
- Determines which product markets and businesses the firm will compete in.
- Outlines the management approach for these businesses at the corporate level.
Corporate Level Strategy Dynamics
- Facilitates the selection of strategic positions anticipated to enhance firm value.
- Firms may adopt either defensive or offensive strategies to achieve growth, reflecting varied strategic intents.
Value of Corporate Level Strategy
- Assessing the worth of businesses under corporate management compared to other ownership is crucial for strategy valuation.
Growth Strategy
- Focuses on achieving specific growth targets through the expansion of operational capacity.
Typical Business Growth Objectives
- Increase sales revenues, enhance earnings or profits, and improve overall performance metrics.
Types of Corporate Growth Strategies
- Concentration
- Geographical expansion
- Vertical integration (backward or forward)
- Horizontal integration
- Diversification (related or unrelated)
Concentration Strategy
- Emphasizes growth within a primary line of business.
- Single-business organizations utilize this strategy to achieve growth through increased operational scale.
Concentration Strategy Advantages and Drawbacks
- Advantage: Expertise in the primary business area.
- Drawback: Increased vulnerability to market and environmental changes.
Related Integration Directions
- Horizontal Integration: Involves businesses at similar value chain stages, often with high relatedness (concentric diversification).
- Vertical Integration: Engages in multiple stages of the value chain, including forward (distribution) and backward (supply).
Diversification Strategies
- Involvement in new business areas can be related or unrelated, leveraging excess resources for added value.
- Requires corporate-level and business-level strategies for effective management across diverse product markets.
Related Diversification Links
- Connections across products, technologies, and distribution channels enhance organizational synergy.
- "Unrelated" diversification signifies the lack of direct links among business activities.
Levels of Diversification
- Low Levels: Single Business Strategy generates 95%+ of revenue from core business; Dominant Business Strategy accounts for 70-95% of sales in a primary field.
- Moderate to High Levels: Related constrained strategies leverage businesses that are interlinked strategically.
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