6.1+Corporate+Level+Strategy.pptx - Corporate Level Strategy Learning Goals Define corporate-level strategy and discuss its purpose Describe different

6.1+Corporate+Level+Strategy.pptx - Corporate Level...

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Corporate Level Strategy
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Learning Goals Define corporate-level strategy and discuss its purpose. Describe different levels of diversification achieved using different corporate-level strategies. Explain three primary reasons firms diversify. Describe how firms can create value by using a related diversification strategy. Explain the two ways value can be created with an unrelated diversification strategy. Discuss the incentives and resources that encourage diversification. Describe motives that can encourage managers to over diversify a firm.
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Threat of new entrants Bargaining power of suppliers Rivalry among competing firms Bargaining power of buyers Threat of substitute products Five Competitive Forces
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Figure 4.1 Five Business Level Strategies (p. 117) Business Strategy is determining the path of Who? What? How?
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Figure 5.2 Model of Competitive Rivalry Intensive rivalry often leads to decreased average profitability. However, it may also help the firm be sharply competitive over the long term.
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Fig 6.4
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Role of Diversification Diversification strategies play a major role in the behavior of large firms. Product diversification concerns: The scope of the industries and markets in which the firm competes. How managers buy, create and sell different businesses to match skills and strengths with opportunities presented to the firm.
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Two Strategy Levels Business-level Strategy (Competitive) Each business unit in a diversified firm chooses a business-level strategy as its means of competing in its individual product markets. Corporate-level Strategy (Companywide) Specifies actions taken by the firm to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.
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Key Questions Corporate Level Strategy Corporate-level Strategy’s Value The degree to which the businesses in the portfolio are worth more under the management of the firm than they would be under other ownership . What businesses should the firm be in? How should the corporate office manage the group of businesses? Business Units Value from diversification: 2+2+2 = 10 rather than 6
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Levels of Diversification: Low Level Dominant Business Between 70% and 95% of revenue comes from a single business. A A B Single Business More than 95% of revenue comes from a single business .
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Levels of Diversification Moderate to High, p. 177 Related Constrained Less than 70% of revenue comes from a single business and all businesses share product, technological and distribution linkages. Core Competencies!
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  • Fall '15
  • Ben Chen
  • corporate relatedness, Simultaneous Operational Relatedness and Corporate

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