The purpose of this paper is to identify and explain how market orientation and entrepreneurial orientation helps a firm in effectively differentiating its product or service offerings in relation to its industry rivals. The discussion in the paper has been done from various perspectives in the light of relevant past and modern researches while keeping the focus towards explaining how market orientation and entrepreneurial orientation practices of a firm allow it to achieve a competitive advantage in the industry by effectively differentiating its products. Market orientation has been discussed as an important antecedent to product differentiation and innovation which lead to greater competitiveness and superior performance in the industry. The findings suggest that market orientation and entrepreneurial orientation have a direct positive relationship with a firm's ability to properly differentiate its offerings against its competitors. They help a firm in analyzing its customers' needs, competitors' strategies, and changing market conditions; reducing preference uncertainty, and understanding the consequences and associated risks with the late strategic moves and product differentiation strategies. Show
Presentation on theme: "Corporate-Level Strategy: Creating Value through Diversification"— Presentation transcript: 1 Corporate-Level Strategy: Creating Value through Diversification 2 Making Diversification Work
3 Making Diversification Work
4 Making Diversification Work
5 Making Diversification Work 6 Related Diversification
7 Related Diversification 8 Leveraging Core Competencies
9 Leveraging Core Competencies 10 Three Criteria of Core Competencies
11 QUESTION Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as A. Utilizing common infrastructures B. Capitalizing on core competencies C. Reducing corporate risk D. Using portfolio analysis Answer: B. Capitalizing
on core competencies 6-11 11 12 Sharing Activities
Corporations can also achieve synergy by sharing tangible and value-creating activities across their business units Common manufacturing facilities Distribution channels Sales forces sharing activities having activities of two or more businesses’ value chains done by one of the businesses. 6-12 12
13 Market Power Market power
14 Market Power Pooled negotiating power Vertical integration 15 Pooled Negotiating Power 16 Vertical Integration 6-16 17
Vertical Integration Benefits 18
Vertical Integration Risks
19 Making Vertical Integration Decisions 20 Making Vertical Integration Decisions (cont.) 21 Transaction Cost Perspective 22 Unrelated Diversification
23 Corporate Parenting and Restructuring
24 Corporate Parenting and Restructuring
25 Corporate Restructuring 26 Portfolio Management Portfolio management 27 BCG Portfolio Matrix Key
28 Portfolio Management Allocate resources 29 Limitations of Portfolio Management
30 Means to Achieve Diversification 31 Mergers and Acquisitions 32 Limitations Competing firms often can imitate any advantages realized or copy synergies
that result from the M&A. There can be many cultural issues that may doom the intended benefits from M&A endeavors. The takeover premium that is paid for an acquisition typically is very high Competing firms often can imitate any advantages realized or copy synergies that result from the M&A. Managers’ credibility and ego can sometimes get in the way of sound business decisions. There can be many cultural issues that
may doom the intended benefits from M&A endeavors. 6-32 33 Strategic Alliances and Joint Ventures 34 Strategic Alliances and Joint Ventures 35 Unmet Expectations: Strategic Alliances and Joint Ventures 36 Managerial Motives Can Erode
Value Creation Is the process of firms expanding their operations by entering new businesses?Mergers and acquisitions enable firms to fully integrate operations; acquire valuable resources and exploit them through leveraging core competencies, sharing activities, and building market power; consolidate the industry, and enter new market segments.
Is the incorporation of one firm into another through purchase?A merger occurs when two companies combine to form a new company. An acquisition is the purchase of one company by another with no new company being formed. A hostile takeover occurs when a company is purchased even though the company's management and Board of Directors do not want to be acquired.
Which of the following are the three main purposes of portfolio management?Three goals were revealed by a study of portfolio management practices in industry: maximizing the value of the portfolio, achieving the right balance and mix of projects, and linking the portfolio to the strategy of the business.
Is a firm's strategy of cost savings from leveraging core competencies or sharing related activities among businesses in corporation?(p. 209), Market power refers to cost savings from leveraging core competencies or sharing activities among the businesses in a corporation. Market power refers to the ability of the firm to profit through restricting or controlling supply to a market or coordinating with other firms to reduce investment.
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