MGMT 4489 Chapter Notes - Chapter 6: Vertical Integration, Cash Flow, Greenmail
22 Jul 2018
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Making diversification work: diversification initiatives: must be justified by the creation of value for shareholders, synergy: working together . 2: high market shares, low growth industries, limited long-run potential but have a source of current cash flows, dogs, weak market shares, low growth industries, weak positions and limited potential. Strategic alliances: cooperative relationships between two or more firms . Joint ventures: special types of alliances in that the firms contribute assets to form a new legal entity. Managerial motives sometimes can erode rather than to enhance value creation. Growth for growth"s sake , excessive egotism, introduction of a wide variety of anti-takeover tactics to protect the entrenchment of current management. Anti-takeover tactics: poison pills or shareholder rights plans, greenmail, controlling shareholders, staggered boards, lock-up agreements, white knights, golden parachutes. Evaluating corporate strategy: consistency, consonance, advantage, feasibility. Michael porters evaluation of a diversification strategy: the attractiveness test, the cost of entry test, the better-off test.
