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Corporate Development (Fach) / Introduction (Lektion)
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- Key questions bei der Corporate Development Positiv: Was sind die Ziele der Firma Normativ: Was sollten die Ziele der Firma sein
- Key problems of the separation of ownership and control larger corporations not managed by the owner manager is not residual claimant agency problem: conflict of interest between manager and shareholder
- Problems when incentive contracts are not carefully designed exert too little effort take on excessive risk do not choose value-maximising projects
- what is a strategy? basic long term goals and objectives (Chandler) pattern of objectives, purposes or goals and the major plans for achieving these goals (Andrews)
- Economic value (created) Price P Benefit B (maximum willigness to pay) Cost C (labor, raw materials etc.) Value created: B-C B-c negative: no transactions will be carried out B-C positive: win-win deal
- How is Benefit B determined By the features or the quality of the particular product
- How are the Costs C determined For instance by effectivenes of the production process
- Impacts of B,C,P B-C being positive not sufficient for firm to earn when market entry easy and Bs similar -> competition drives P towards C
- Porters five forces Entry Buyer Power Substitutes and Complements Supplier Power Internal Rivalry
- Definition Competitive Advantage When a firm earns a higher rate of economic profit than the average rate of economic profit of other firms competing within the same market, the firm has a competitive advantagein that market.
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- Types of competitive Advantage Benefit advantage (deliver higher Benefit B, Unique selling point) Cost advantage (lower costs C)
- Elements of the Value Chain Firm infrastructure HR Management Technology development Procurement Inbound Logistics Production Operations Outbound Logistivs Marketing and Sales Service
- What are "Resources" Firm-specific assets such as patents or trade marks brand name reputation installed base (network externalities etc.) Organizational culture workers with specific human capital
- What are capabilities/core competencies things a firm "can do" activities a firm does especially well compared with other firms particular technologies typically valueable across multiple products/markets often tacit:
- How can a firm attain competitive advantage By organizing the value chain more effectively than competitors By building capabilities and resources that competitors lack