Credible commitment
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Long term strategic decision that is difficult and costly to revers
Core competencies
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Unique strengths embedded within firm
Related constrained diversification
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Pursue businesses where thy can apply resources from primary business
only
3 Dimensions of Corporate Strategy
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Vertical integration, diversification, geographic scope
Backwards vertical integration
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Moving ownership of activities upstream
Transaction costs
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costs associated with economic exchange
Site specificity
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, Required to be co-located
Disadvantages to producing within the firm
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1. Admin costs
2. Low powered incentives
3. Principal-agent problem (agent performing on behalf of principal
pursues own interests
Strategic outsourcing
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Moving 1 or more value chain activities outside the firm's boundaries to
other firms
External transaction costs
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Searching for firm to contract, negotiate, monitor and enforce the contract
Diversification premium
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Long term strategic decision that is difficult and costly to revers
Core competencies
Give this one a try later!
Unique strengths embedded within firm
Related constrained diversification
,Give this one a try later!
Pursue businesses where thy can apply resources from primary business
only
3 Dimensions of Corporate Strategy
Give this one a try later!
Vertical integration, diversification, geographic scope
Backwards vertical integration
Give this one a try later!
Moving ownership of activities upstream
Transaction costs
Give this one a try later!
costs associated with economic exchange
Site specificity
Give this one a try later!
, Required to be co-located
Disadvantages to producing within the firm
Give this one a try later!
1. Admin costs
2. Low powered incentives
3. Principal-agent problem (agent performing on behalf of principal
pursues own interests
Strategic outsourcing
Give this one a try later!
Moving 1 or more value chain activities outside the firm's boundaries to
other firms
External transaction costs
Give this one a try later!
Searching for firm to contract, negotiate, monitor and enforce the contract
Diversification premium
