Chapter 9 Corporate Strategy and Diversification文档.pptVIP

Future of Corporate Diversification Divestment activity More firms attempting to shed unrelated acquisitions in order to focus on core businesses. However, diversification as a whole increased during 1988-1992 period. Firms will continue to diversify to reduce their reliance on declining business lines or industries. Logical to conclude that those firms most likely to de-diversify may be those that are having the most trouble managing diversification. Future of Corporate Diversification (cont.) Corporate restructuring efforts Undertaken to emphasize those value-chain activities that contribute to their competitive advantage. Outsourcing Firms are outsourcing the less critical activities that perhaps do not contribute significantly to their competitive advantage. Conclusions Size alone does not guarantee firms an advantage. Coordination required to exploit economies of scale and scope is not without cost. Size creates additional challenges and difficulties, including problems of communication and coordination. Higher levels of diversification are not incompatible with high performance -- nor do they necessarily imply that firms will suffer lower performance levels. Conclusions (cont.) Critical factor in determining success is the level of management expertise in formulating and implementing corporate strategy. More difficult for diversified firms. Managers of large diversified firms possess a variety of well-developed mental models that provide them with powerful understandings of how to manage their firms. Key Points Introduced in Chapter 9 Corporate strategy is concerned with determining the appropriate scale (size) and scope (extent of diversification) of firms. Firms can be small or large and they can focus on single line of business or they can participate in many diverse industries. Firms diversify for variety of reasons. Desire to grow. More fully utilize existing resources and capabilities. Key Points Introduced in Chapter 9 (cont.) Escape from undesirable