Module:

Corporate Level Strategies

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 Key Decisions for a Corporate
• Which businesses to be in?
– Only keep businesses where the corporate
can add value to its businesses
• Which business to enter?
– Can a new business add value to portfolio of
existing businesses? If yes, enter
• Which business to exit?
– Is a business unable to add value to the
overall portfolio? If yes, exit
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How to manage multiple (2 or more)
businesses?

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 Creating Corporate Advantage
• How can you tell if your company is really
more than the sum of its parts?

• Central question is: Can the corporate

create value for businesses?

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Corporate Value: What Does It Mean?

Corporate

Business B
Business A Business C
Add value by sharing / transferring capabilities across businesses 5
The Triangle of Corporate Strategy

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The Resource Continuum

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 Enabler of Transferring :
Matrix Structure – an example

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The Resource Continuum

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 Corporate Rationales
• Portfolio manager: buy and sell businesses

• Synergy manager: build synergy between

portfolio of businesses
– Hence, may also buy and sell businesses

• Parental developer

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 Control Rationales – Vertical
Control
• Control by Portfolio manager
– Bottom up

• Control by Synergy manager

– Top down
• Control by Parental developer
– Situational
• Bottom up and Top down

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The Resource Continuum

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Corporate Spinoffs

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 Key Questions before Diversification

1. What can our company do better than any of the competitors in the current market?
– Focus on Strategic Assets: What are our strategic assets? How and where can
we make the best use of them?
– E.g. Boddington Group (UK) – brewery, wholesaling and pubs
– Sold off brewery business and acquired resorts, restaurants, nursing homes
and health clubs
2. What strategic assets do we need in order to succeed in the new market?
– Existing capabilities are rarely enough e.g. Coca Cola and wine business
3. Can we purchase missing assets / develop them / change the rules of the industry?
Can we do it at a reasonable cost?
4. Will the diversification break up the strategic assets that need to be kept together?
5. Will we be simply a player in the new market or will we emerge as a winner?
6. What can our company learn by diversifying, and are we sufficiently organized to
learn it?
– Beachheads

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