What is Outsourcing? Outsourcing is a strategic decision by a company to reduce costs and increase efficiency by hiring another individual or company to perform tasks, provide services, or handle operations that were previously done by employees within the company. In other words, outsourcing is the practice of getting certain job functions done outside a…
What is a Staggered Board of Directors? A staggered board of directors, also known as a classified board, refers to a board that consists of different classes of directors. In a staggered board of directors, only one class is open to elections each term. It is different from a normal board of directors, where all…
What is Buy and Build? The buy and build strategy is when a company expands its operations by acquiring a platform company with developed expertise that it can then build out. When a business requires growth and expansion, there are several possibilities to consider. The company can develop its internal capabilities that will drive the…
What is Scalability? Scalability can fall into both financial and business strategy contexts. In both cases, it stands for the ability of an entity to withstand pressure as a result of growth, without being hindered by its resources or structure. Scalability continues to gain popularity, especially following the advancements in technology that ease communication to…
What is Product Diversification? Product diversification is a strategy employed by a company to increase profitability and achieve higher sales volume from new products. Diversification can occur at the business level or at the corporate level. Business-level product diversification – Expanding into a new segment of an industry that the company is already operating in….
What is Succession Planning? Succession planning refers to the process in which employees are recruited and developed with the aim of filling a key role within an organization. It increases the availability of experienced and competent employees who are prepared to replace old leaders as they leave, retire, or die. The preparation for the employee…
What is Shareholder Value? Shareholder value is the financial worth owners of a business receive for owning shares in the company. An increase in shareholder value is created when a company earns a return on invested capital (ROIC) that is greater than its weighted average cost of capital (WACC). Put more simply, value is created…
What is Vertical Integration? Vertical integration is when a firm extends its operations within its supply chain. It means that a vertically integrated company will bring in previously outsourced operations in-house. The direction of vertical integration can either be upstream (backward) or downstream (forward). It can be achieved either by internally developing an extended production…
What is a Vertical Merger? A vertical merger is a union between two companies in the same industry but at different stages of the production process. In other words, a vertical merger is the combination and integration of two or more companies that are involved in different stages of the supply chain in the production…
What is Total Addressable Market (TAM)? Total Addressable Market (TAM), also referred to as total available market, is the overall revenue opportunity that is available for a product or service if 100% market share is achieved. Because it represents the potential opportunity, it is often used to determine the level of funding or resources that…
