Corporate Strategy

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What is diversification?
Increasing the range of products or markets served by an organisation
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What is related diversification?
Diversifying products/services with relationships to the existing business
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What is conglomerate diversification?
Diversifying into products/services that have no relationship to the existing business
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What are the 5 strategic reasons to diversification?
Economies of scale, enhancing industry attractiveness, developing synergy of resource use, exploiting superior internal processes and maintaining growth/survival
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What are the 4 non-strategic reasons to diversification?
Spread risk, surplus liquidity, managerial and growth for growth's sake
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According to the Boston Consulting Group Report (2006), what are the 5 ways to create superior value through diversification?
Efficient capital allocation, clear & consistent portfolio strategy, lean organisation structure, CEO-driven management initiatives and management development & skill transfer
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What is horizontal integration?
Entering activities where the organisation introduces new products, which they do not contribute to the present product line
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What is vertical integration?
Entering activities where the organisation is its own supplier or customer
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What is backwards integration?
A type of vertical integration where there is development into activities concerned with the inputs into the company's current business
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What is forwards integration?
A type of vertical integration where there is development into activities concerned with the outputs of a company's current business
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Other cards in this set

Card 2

Front

What is related diversification?

Back

Diversifying products/services with relationships to the existing business

Card 3

Front

What is conglomerate diversification?

Back

Preview of the front of card 3

Card 4

Front

What are the 5 strategic reasons to diversification?

Back

Preview of the front of card 4

Card 5

Front

What are the 4 non-strategic reasons to diversification?

Back

Preview of the front of card 5
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