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Corporate Strategy

Corporate Strategy. BM499 Strategic Management David J. Bryce. November 5, 2002. Corporate vs. Business Unit Strategy. Corporate Strategy What business(es) should we be in? How will we coordinate or integrate businesses to create value? Business Unit Strategy

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Corporate Strategy

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  1. Corporate Strategy BM499 Strategic Management David J. Bryce November 5, 2002

  2. Corporate vs. Business Unit Strategy • Corporate Strategy • What business(es) should we be in? • How will we coordinate or integrate businesses to create value? • Business Unit Strategy • To whom will we sell, for what price? • How will we source, manufacture, distribute, etc. our product? Adapted from M. Porter, 2001, HBR

  3. Definition: Corporate Advantage • “The way a company creates value through the configuration and coordination of its multibusiness activities.” -- Collis & Montgomery, 1998 Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

  4. Scope of the Firm Horizontal Scope Prod./Ind. B Prod./Ind. C Prod./Ind. A Sales Sales Sales output-products Distrib Distrib Distrib Manuf. Manuf. Manuf. . . . Sales Sales Sales Vertical Scope Distrib Distrib Distrib Input-products Manuf. Manuf. Manuf. . . .

  5. Newell Horizontal Scope Prod./Ind. B Prod./Ind. C Prod./Ind. A Sales Sales Sales output-products Distrib Distrib Distrib Manuf. Manuf. Manuf. . . . Sales Sales Sales Vertical Scope Distrib Distrib Distrib Input-products Manuf. Manuf. Manuf. . . .

  6. Wal-mart Horizontal Scope Prod./Ind. B Prod./Ind. C Prod./Ind. A Sales Sales Sales output-products Distrib Distrib Distrib Manuf. Manuf. Manuf. . . . Sales Sales Sales Vertical Scope Distrib Distrib Distrib Input-products Manuf. Manuf. Manuf. . . .

  7. GE Horizontal Scope Prod./Ind. C Refrigerators Aircraft Engines Sales Sales Sales output-products Distrib Distrib Distrib Manuf. Manuf. Manuf. . . . Sales Sales Sales Vertical Scope Distrib Distrib Distrib Input-products Manuf. Manuf. Manuf. . . .

  8. The Triangle of Corporate Strategy Competitive Advantage Resources Businesses Organization Coordination Control Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

  9. The Resource Continuum Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

  10. The Resource Continuum (continued) Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

  11. Coordination “Public Goods” May be used in a number of production processes without dminishing their value or availability; e.g. Brand names; know-how “Private Goods” Usage diminishes value or availability; e.g. human resources, machines, etc.

  12. The Resource Continuum (continued) Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

  13. Control • Financial • Run the business by managing to a set of financial measures; e.g. return on assets, growth in revenue, profitability, etc. • Operational • Run the business by managing to a set of operational measures; e.g. days in inventory; reject rates, delivery lead times, book-to-bill ratios, etc.

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