premises of corporate strategy competition occurs only at the business unit level
TRANSCRIPT
Premises Of Corporate Strategy
• Competition Occurs Only at the Business Unit Level
Premises Of Corporate Strategy
• Competition Occurs Only at the Business Unit Level
• Diversification Inevitably Adds Costs and Constraints to Business Units
Premises Of Corporate Strategy
• Competition Occurs Only at the Business Unit Level
• Diversification Inevitably Adds Costs and Constraints to Business Units
• Shareholders Can Readily Diversify Themselves
Passing the Essential Tests
• The Attractiveness Test
Passing the Essential Tests
• The Attractiveness Test
• The Cost-of-Entry Test
Passing the Essential Tests
• The Attractiveness Test
• The Cost-of-Entry Test
• The Better-off Test
Concepts of Corporate Strategy
• Portfolio Management --Acquire sound, attractive companies
with competent mangers who stay --Companies are autonomous --Requires good but undervalued
companies --Essentially an LBO concept with a
“conglomerate discount” for public companies
Concepts of Corporate Strategy
• Restructuring --Underdeveloped, sick, or threatened
organizations or industries on the threshold of significant change
--Parent intervenes frequently changing the management team, shifting strategy, or infusing the company with new technology
--Business is sold when parent is no longer adding value
Concepts of Corporate Strategy
• Transferring skills
--Knowledge about how to perform activities is transferred among the units
--Characterized by units with similar buyers, channels, value activities and/or the same strategic concept
--Expertise must be a meaningful source of competitive advantage
Concepts of Corporate Strategy
• Sharing activities --Leads to lowering costs or raising
differentiation --Must involve activities that are
significant to competitive advantage and costs outweighed by benefits --Business unit collaboration is
encouraged and reinforced
Concepts of Corporate Strategy
• Portfolio Management
• Restructuring
• Transferring Skills
• Sharing Activities
An Action Program
1. Identify Interrelationships Among Units
An Action Program
1. Identify Interrelationships Among Units
2. Select Core Business
An Action Program
1. Identify Interrelationships Among Units
2. Select Core Business
3. Facilitate Interrelationships
An Action Program
1. Identify Interrelationships Among Units
2. Select Core Business
3. Facilitate Interrelationships
4. Diversify Via Shared Activities
An Action Program
1. Identify Interrelationships Among Units
2. Select Core Business
3. Facilitate Interrelationships
4. Diversify Via Shared Activities
5. Diversify Via Transfer of Skills
An Action Program
1. Identify Interrelationships Among Units
2. Select Core Business
3. Facilitate Interrelationships
4. Diversify Via Shared Activities
5. Diversify Via Transfer of Skills
6. Diversify Via Restructuring
An Action Program
1. Identify Interrelationships Among Units
2. Select Core Business
3. Facilitate Interrelationships
4. Diversify Via Shared Activities
5. Diversify Via Transfer of Skills
6. Diversify Via Restructuring
7. Pay Dividends Instead