04.1: Diversification Flashcards Preview

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Flashcards in 04.1: Diversification Deck (5)
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1
Q

Strategic diversification:
Types
Frequent outcome

A

related or unrelated

often fails

2
Q

Related diversification:

4 ways to create value

A

Horizontal strategies:
-leveraging core competencies > more VA to clients
-sharing resources > share activities > lower costs, higher revenues
-pooling negotiating power w peers
Vertical strategies:
-pooling negotiating power w strong parent
-vertical integration > more control but costs

3
Q

Unrelated diversification:

taxonomy

A
  • restructuring:
    • assets: sell unproductive assets, buy new ones
    • capital: debt-equity mix
    • mgmt: chg team
  • corporate parenting
  • portfolio analysis
4
Q

Means of diversification

A
Strategic alliances
Joint ventures
M&A
-Divestments
Internal development
5
Q

Strategic alliances:
Types
Pros
Cons

A
  • M&A, joint ventures; flip side=divestment
  • synergies: leverage competencies, sharing activities, build market power; enter new markets
  • can be expensive, copied, ego-driven