“Victory Motorcycles” Please respond to the following:From the e-Activity and the case study, evaluate the business-level strategy of Victory Motorcycles to determine whether you believe the strategy is appropriate to offset forces in the industry. Provide specific examples to support your response.Make recommendations for improving this strategy as well as describing any challenges you foresee in executing those recommendations. Provide specific examples to support your response.Week 5 eActivitiesUse the Internet or the Strayer Library to research a large corporation headquartered in your home state, with a focus on its current level of diversification. Be prepared to discuss. Use the Internet or the Strayer Library to research the corporate-level strategies of Victory Motorcycles. Be prepared to discuss.Senior Seminar in Business Administration
BUS 499
Corporate-Level Strategy
Objectives
• Upon completion of this lesson, you will be
able to:
– Identify various levels and types of strategy in
a firm
Supporting Topics
• Levels of Diversification
• Reasons for Diversification
• Value-Creating Diversification: Related
Constrained and Related Linked Diversification
• Unrelated Diversification
• Value-Neutral Diversification
• Value-Reducing Diversification: Managerial
Motives to Diversify
Levels of Diversification
• How Firms Vary
– Level of diversification
– Connections among their businesses
• Single Business Diversification Strategy
• Related Constrained Diversification
Strategy
• Unrelated Diversification Strategy
Reasons for Diversification
• Corporate Level Diversification Strategies
– Increase a firm’s value
• Related or unrelated diversification
– Neutral effects
• Value-neutral reasons for diversification
• Two Diversification Strategies to Create
Value
– Operational Relatedness
– Corporate Relatedness
Value-Creating Diversification
• Diversification Corporate-Level Strategy
– Builds upon or extends resources and
capabilities
• Creates value
• Economies of Scope
• Two Ways to Create Value
– Sharing activities
– Transferring corporate-level core
competencies
Value-Creating Diversification, continued
• Creating Operational Relatedness
– Sharing a primary activity or support activity
– Create value through related constrained
diversification strategy share activities
• Activity sharing is risky
– Ties among businesses create links between
outcomes
• Research shows activity sharing can
create value
Value-Creating Diversification, continued
• How Time Comes Into Play
– Intangible resources become the foundation
of core competencies
• Corporate-Level Competencies
• Two Ways Related Linked Diversification
Strategies Help Create Value
Value-Creating Diversification, continued
•
•
•
•
Market Power
Multipoint Competition
Vertical Integration
Creating Economies of Scope
– Firms seek operational and corporate
relatedness
• Diseconomies
PROPERTIES
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Unrelated Diversification, continued
• What are Financial Economies
• Market Economies
– Capital markets are thought to allocate capital
– Efficiency results from investors taking equity
positions
• Large Diversified Firms
Unrelated Diversification, continued
• Financial Economies
• When a Company Has Become Diversified
• High Technology Businesses
– Highly complex resource allocation decisions
– Human resource dependent
• Buying and Restructuring Service-Based
Assets
Value-Neutral Diversification
• Incentives to Diversify
– External
• Antitrust regulations
• Tax laws
– Internal
• Low performance
• Uncertain cash flows
• Pursuit of synergy and reduction
• Government Antitrust Policies and Tax
Laws
Value-Neutral Diversification, continued
• Corporate Level Diversity Strategy
Requirements
– Types and levels of resources
– Capabilities
• Importance of Resources
– Example of free cash lows
Value- Reducing Diversification: Managerial
Motives to Diversify
• Managerial Motives to Diversify
– Reasons
• Value-neutral
• Vale-creating
• Additional Benefits for Top-Level Managers
– As firm size increases so does executive
compensation
• Governance Mechanisms to Limit Managerial
Tendencies
PROPERTIES
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Summary
• Levels of Diversification
• Reasons for Diversification
• Value-Creating Diversification: Related
Constrained and Related Linked Diversification
• Unrelated Diversification
• Value-Neutral Diversification
• Value-Reducing Diversification: Managerial
Motives to Diversify
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