pert 6 - corporate level strategy - r1
TRANSCRIPT
CORPORATE LEVEL STRATEGY
Lina WidyatamaRonald M. Sutedjo
Yunior Liem
R
READING 6.1 Strategy and the business portfolio
• As a result of an existence competitor in a high market share segment, business must able to develop the lowest cost position and hence most stable and highest profit.
• The important of growth in shaping strategy:– Business growth, hence cost->gain market share– Opportunity to investment
• In low-growth business: tend to require an actual volume reduction in competitor sales.
• In high-growth business: securing largest share of growth in the business.
Y
BCG Growth share matrix
Portfolio
• Strategy involves striking a balance in portfolio such that the cash generated by cash cows sufficient to support the company’s stars and to fund the selected question marks through to dominance.
• Stars: Maintain market share, Cash cow: current profitability, Dogs: yield cash, ?: increase market share or managed for cash.
• To reduce vicious circle of decline select only few question marks through careful analysis and finance those.
READING 6.2 The Core Competence of the Corporation
• Company’s competitiveness derives from the price/performance attributes of current products, but in long term it’s from the ability to build at lower cost and more speedily than competitors, the core competencies that spawn unanticipated products.
• Core competence is about harmonizing streams of technology, organization of work and delivery of value, communication, involvement and deep commitment, do not dimmish with use.
• Identify core competencies:– It provides potential access to a wide variety of markets. (Casio: watch, remote TV)– Should make a significant contribution to perceived customer benefits of the end
product. (Honda)– Difficult for competitors to imitate.
• Core products is the tangible link between core competencies and end products. (physical embodiments)
Two concepts of the corporationSBU Core competence
Basis for competition
Competitiveness of today’s products
Interfirm competition to build competencies
Corporate structure Portfolio of business related in product-market terms
Portfolio of competencies, core products and business
Status of the business unit
Autonomy is sacrosanct; the SBU ‘owns’ all resources other than cash
SBU is a potential reservoir of core competencies
Resources allocation Discrete businesses are the unit of analysis; capital is allocated business by business
Businesses and competencies are the unit of analysis: top management allocates capital and talent
Value added of top management
Optimizing corporate returns through capital allocation trade-offs among business
Enunciating strategic architecture and building competencies to build the future
Digestive problems..?
Case: DANONE
L
• Mission:“Bring the health through tasty, nutritious, & affordable food
and beverage products.”• Positioning as:►Bottled water
Evian, Badoit, Volvic, Bonafont, Aqua
►Baby food Blédina
►Medical nutrition Activia, Actimel, Crush
Danone has opened exclusive talks to sell its biscuit and cereal division to Kraft Foods
to sharpen its business focus on the health and
nutrition segments
DANONE
Source: http://www.nutraceuticalsworld.com/contents/view_online-exclusives/2007-07-01/danone-acquires-royal-numico/
NUMICO• Who?
– Specialist in healthy baby food and healthcare nutrition– Leader in baby products as number one in Western Europe and Eastern
Europe, number two in Asia and number three in Australia, Africa and the Middle East
• Positioning as:►Oral nutrition
Nutridrink, Fortimel and Fortisip
►Tube nutrition Nutrison
►Targeted nutrition Infatrini and Nutrini, Diasip and Diason
►Special needs nutrition Neocate, Lophlex LQ
DANONE - NUMICO• Danone acquired Numico (July 2007)
– Danone agreed to pay 55 euros a share, or 12.3 billion euros ($16.8 billion), or a 44% premium over Numico's average share price in the last three months
Source: http://www.reuters.com/article/2007/07/10/us-danone-numico-idUSL1087495920070710
Overpaid??
NO!!•Numico was the most sought-after target in the sector•…and also…..
DANONE - NUMICO• Danone acquired Numico (July 2007)
– The reason behind:• Danone has sharpen its business segment• Numico has the in-line products with Danone business
focus (health & nutritious)• Numico’s strength in the infant nutrition segment will
boost Danone’s sizable dairy market presence• The collaboration in R&D of Danone (Probiotics) &
Numico (Prebiotics)• The form of business culture is close to Danone’s own
Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf
DANONE - NUMICO
Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf
DANONE - NUMICO
Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf
Baby Product (Formerly Numico)
Medical Nutrition (Formerly Numico)
DECENTRALIZE
Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf
THANK YOUBinus Business School 2012