Suggested Study Topics for Final Quiz BUSB 481 Strategic Management Chapter 6: Value Chainthat set of activities

ities that must be accomplished to bring a product or service from raw materials to the point that it can be sold to a final customer. Vertical Integrationthe number of steps in the value chain that a firm accomplishes within its boundaries Opportunisma firm is unfairly exploited in an exchange Flexibilityhow costly it is for a firm to alter its strategic and organizational decisions.

Chapter 7: Corporate Diversification Strategywhen a firm operates in multiple industries or markets simultaneously. Product Diversificationa firm operates in multiple industries simultaneously. Economic Value in Corporate Diversificationthe difference between the perceived benefits gained by a customer who purchases a firms products or services and the full economic cost of these products or services. Core Competenciesthe collective learning in an organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies. Escalation of Commitmentan increased commitment by managers to an incorrect course of action, even as its limitations become manifest. Tacit Collusionfirms coordinate their production and pricing decisions not by communicating directly with other firms, but by using signals to inform their intent.

Chapter 8: M-form or Multidivisional Organizational Structurean organizational structure for implementing a corporate diversification strategy whereby each business a firm engages in is managed through a separate profit and loss division. Three Critical Control Processes for Firms Implementing Diversification Strategies. evaluating the performance of divisions, allocating capitol across divisions, transferring intermediate products between divisions. Roles of the Chairman of the Board, Chief Executive Officer and Chief Operating Officer in corporate executive management (Office of the 1

President)COB- Supervision of the board of directors in its monitoring role, CEO-Strategy formulation, COO- Strategy Implementation Zero-based Budgetingcorporate execs create a list of all capital allocation request from divisions in a firm, rank them from most important to leas important, and then fund all the projects the firm can afford given the amount of capital it has available. IPO or Initial Public Offering the initial sale of stock of a privately held firm or a division of a corporation to the general public.

Herbert Simon decisionmaking terms: Bounded Rationality Satisficing

Article 3: Outsourcing jobs to bottom of the pyramid (BOP) markets keeps costs down and can enhance growth since job creation ultimately increases local consumers purchasing power.

Chapter 9: Strategic Alliancewhenever two or more independent organizations cooperate in the development, manufacture, or sale of products or services. Types of Alliances - Non-equityfirms agree to work together to develop, manufacture, or sell products/services but dont take equity positions in each others firms or form an independent unit to manage their cooperative efforts. - Equitycooperating firms supplement contracts with equity holdings in alliance partners. - Joint Venture cooperating firms create a legally independent firm in which they invest and from which they share any profits that are created. Collusiontwo or more firms in an industry coordinate their strategic choices to reduce competition in that industry. Strategic Alliance Opportunities: - Improve Performance of Current Operations - Create a Favorable Competitive Environment - Facilitating Entry and Exit Substitutes for Strategic Alliances: - Going It Alone - Acquisitions

Chapter 10: Acquisitiona firm purchases another firm Mergerthe assets of two similar-sized firms are combined

Chapter 11: Reasons for International Diversification Strategies: To gain access to new customers for current products of services To gain access to low-cost factors of production To develop new core competencies To leverage current core competencies in new ways To manage corporate risk Risks in pursuing International Diversification Strategies: Financial Risks: currency fluctuation and inflation Political Risks Strategies for International Diversification (Market Entry) in ascending order of risk, commitment and cost: Exporting Strategic Alliance Licensing/Franchising Joint Ventures Mergers/Acquisitions Greenfield Operation