Corporate Strategy Final

What is corporate strategy and why is it important for firms?

Corporate strategy refers to the overarching plan and direction a company takes to achieve its long-term goals and objectives. It is important because it helps firms allocate resources effectively, navigate competitive environments, and create value across different business units.

What are the two main types of vertical integration?

The two main types of vertical integration are backward integration, which involves acquiring suppliers or raw materials, and forward integration, which involves acquiring distribution channels or closer customer relationships.

How does the value chain concept apply to corporate strategy?

The value chain concept describes the internal activities a firm engages in to transform inputs into outputs. It helps firms identify areas for improvement and competitive advantage by analyzing each step in the production process.

What are the benefits and risks associated with vertical integration?

Benefits of vertical integration include improved supply chain control, reduced costs, and increased market power. Risks include potential inefficiencies, high capital requirements, and reduced flexibility in responding to market changes.

What is taper integration and how does it differ from full integration?

Taper integration is a strategy where a firm is partially integrated, relying on both internal and external suppliers or distributors. This differs from full integration, where a firm controls all aspects of its supply chain.

What is strategic outsourcing and what are its governance mechanisms?

Strategic outsourcing involves moving internal value chain activities to external firms to enhance efficiency. Governance mechanisms include non-equity arrangements, equity alliances, and joint ventures.

What are the key reasons for mergers and acquisitions in corporate strategy?

Key reasons for mergers and acquisitions include achieving economies of scale, gaining access to new markets, acquiring new technologies, and enhancing competitive positioning.

What is foreign direct investment (FDI) and how does it relate to global strategy?

Foreign direct investment (FDI) is an investment made by a company in one country in business interests in another country. It relates to global strategy as it represents a method for firms to expand their operations and market presence internationally.

What are the stages of globalization and how do they impact corporate strategy?

The stages of globalization include domestic, international, multinational, and global. Each stage impacts corporate strategy by determining the level of market engagement and resource allocation across different regions.

What is the CAGE distance framework and how is it used in global strategy?

The CAGE distance framework analyzes the Cultural, Administrative, Geographic, and Economic distances between countries to assess the challenges and opportunities for international business expansion.

What is the integration-responsiveness framework and what are its four strategies?

The integration-responsiveness framework helps firms balance global efficiency with local responsiveness. The four strategies are international, global-standardization, multidomestic, and transnational.

How does Porter’s Diamond of National Competitive Advantage explain a country's competitiveness?

Porter’s Diamond identifies four determinants of national competitive advantage: factor conditions, demand conditions, competitive intensity, and complements. These factors explain why certain countries excel in specific industries.

What are the key components of organizational design?

Key components of organizational design include organizational structure, specialization, formalization, and the management of external transaction costs.

What is the make-or-buy decision and what factors influence it?

The make-or-buy decision involves determining whether to produce goods internally ('make') or purchase them externally ('buy'). Factors influencing this decision include cost, capacity, and strategic alignment.

What is the Build-Borrow-Buy framework and how does it guide resource acquisition?

The Build-Borrow-Buy framework helps firms decide whether to build internal capabilities, borrow through alliances, or buy through acquisitions based on relevance, tradability, closeness, and integration.

What are strategic alliances and what are their governance structures?

Strategic alliances are voluntary agreements between firms to share knowledge, resources, and capabilities. Governance structures can include non-equity arrangements, equity alliances, and joint ventures.

What is diversification and what are its two main types?

Diversification is a strategy that involves entering new markets or offering new products. The two main types are product diversification, which involves a range of products, and geographic diversification, which involves entering different regional or national markets.

What are the characteristics of a single business diversification strategy?

A single business diversification strategy is characterized by a firm deriving more than 95% of its revenues from one business, focusing its resources and efforts on that single market.

What defines a dominant business diversification strategy?

A dominant business diversification strategy is defined by a firm deriving between 70% and 95% of its revenues from a single business while also engaging in at least one other business activity.

What is related diversification and how does it differ from unrelated diversification?

Related diversification occurs when a firm derives less than 70% of its revenues from a single business and obtains revenues from other lines of business linked to the primary activity. Unrelated diversification involves entering markets that are not connected to the firm's existing business.