COMM 315 Lecture Notes - Lecture 4: Capacity Utilization, Reward System, Horizontal Integration
Document Summary
What is the role of the center: capital model: how do i allocate capital and other (scarce resources). Corporate-level strategy"s value is ultimately determined by the degree to which the businesses in the portfolio are worth more under the management of the company than they would be under any other ownership paths to grow include: market development: Developing new products or significantly improving existing ones. Horizontal integration: acquisition of competitors, horizontal movement at the same point in the value chain vertical integration: Becoming your own supplier or distributor through acquisition; vertical movement up or down the value chain. 3 reasons to diversify: value creating diversification (economies of scope, financial economies, value-neutral diversification (tax laws, uncertain future cash flows, value-reducing diversification (diversify managerial employment risk, increase managerial compensation) Reason number one is what really drives diversification. The two main ways diversification strategies create value are through operational and corporate relatedness.