Moves to enter new businesses Boosting combined performance of the businesses Capturing synergies and turning them into competitive advantages Establishing investment priorities and steering resources into business units
• Risks
• Costs • Rapid technological changes • Demand predictability
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Alternatives to Vertical Integration
• Competitive bidding • Long term contracts or strategic alliances
ResultsPoor源自PerformanceOverestimation of Synergy
Overdiversification
Managerial energy absorption
Become too large Substitute for innovation
Who Wins?
Acquired Firm Shareholders
Vertical Integration
Form of Relationship
Hybrid & Contracts/Alliances
Markets & Competitive Bidding
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2) Outsourcing
• Cost reduction and differentiation • Hold-ups, scheduling and hallowing out