Business-Level Strategy
Three levels of firm strategy?
corporate-level, business-level, functional-level
What type of diversification does Disney's acquisition of Marvel and Pixar exemplify?
related diversification
Best Buy offers services like in-home tech consultations, price matching, and personalized customer service—features that are considered unique in the consumer electronics retail industry. Does this exemplify a cost leadership strategy or a differentiation strategy?
differentiation strategy
GE expanded beyond its original focus on lighting and electrical solutions into several distinct industries, including healthcare, aviation, power generation, financial services, and entertainment. What type of "diversification strategy" did GE pursue by entering these unrelated industries?
unrelated diversification
Professor Park arrived about 10 minutes late on Wed, October 15. Do you remember what happened to him that morning?
He had a nosebleed.
Two main sources of firms' competitive advantage?
cost advantage, differentiation advantage
What type of diversification does Disney's overall business portfolio exemplify?
unrelated diversification
What was Microsoft’s main reason for acquiring Nokia’s Devices division in 2013?
to strengthen its smartphone presence and create synergy with its Windows Phone software.
How did Disney create synergies across its business lines?
By leveraging its characters and stories across various business units (e.g., media networks, theme parks, licensing, and consumer products).
The industry life cycle illustrates the progression of an industry through four pivotal stages:
Introduction, growth, maturity, and decline
Name one of the several reasons why gaining a competitive advantage matters to a firm.
Create superior value for customers -> Earn the potential for above-average profit -> Reinvest and adapt to changes in the environment -> Achieve long-term survival and a clear sense of purpose
A strategy that allows a firm to streamline its operations by taking direct ownership of various stages of its production process
vertical integration
Which semiconductor company is known for focusing exclusively on chip manufacturing (rather than designing its own chips)?
Hint: This company is headquartered in Taiwan
TSMC (Taiwan Semiconductor Manufacturing Company)
Best Buy, a consumer electronics retail company, expanded into digital healthcare services. This move exemplifies which level of strategy?
corporate-level strategy
What’s the professor’s go-to coffee order?
(a) Regular hot black coffee
(b) Iced Americano
(c) Cold brew
(d) Latte with oat milk
(a) Regular hot black coffee
Name one reason why firms cannot easily pursue both cost leadership and differentiation strategies at the same time.
Trying to do both raises costs and blurs the firm’s identity
Customers may get confused about what the firm stands for
Each strategy requires different activities, structures, and cultures
Two main managerial questions/decisions for corporate-level strategy?
How should the firm manage its portfolio of various business lines to achieve synergy?
Elena is the founder and CEO of Eco Packaging, a company that produces biodegradable packaging materials for consumer goods. She recently decided to acquire a chain of organic grocery stores so she can sell her own packaged products directly to end customers. Elena will engage in: ?
forward vertical integration
In 2022, AT&T spun off its media subsidiary, WarnerMedia, which then merged with Discovery.
Name one reason why AT&T made this decision.
Refocus on its core telecommunications business
Reduce debt and streamline operations
Lack of expected synergies
Which company did PepsiCo acquire in 2001 as part of its "related" diversification strategy?
Hint: Its name is linked to the Society of Friends.
Quaker Oats
Two potential downsides of a cost leadership strategy?
Thin profit margins, perception of lower quality, price wars, and/or limit the firm's ability to innovate/respond to market changes
Name the three main business areas GE decided to focus on as of March 2024
GE has spun off into three independent, public companies:
GE Aerospace (aerospace)
GE Vernova (power and renewable energy)
GE HealthCare (healthcare)
Name one of the several reasons why GE decided to split into three independent companies in 2024.
Hint: Consider the challenges of managing a highly diversified conglomerate.
By creating three separate companies, GE aimed to achieve greater focus, more tailored capital allocation, and increased strategic flexibility, while reducing the complexity of managing unrelated businesses.
What company did Best Buy acquire in 2002 to add in-house tech support and service differentiation?
Geek Squad
Which two companies merged in 1998 in an attempt to create synergies in the automotive industry, but ultimately failed due to cultural clashes?
Daimler-Benz and Chrysler