49056181-Strategic-Mgmt-ch09 - Chapter 9 Multi-business...

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Chapter 9 Multi-business Strategy 0Chapter Summary Recent evolution of strategic analysis and choice has expanded on the core competency notion to focus on a series of fundamental questions that multibusiness companies should address in order to make diversification work. With both the accelerated rates of change in most global markets and trying economic conditions, multibusiness companies have adapted the fundamental questions into an approach called “patching” to map and remap their business units swiftly against changing market opportunities. Finally, as companies have embraced lean organizational structures, strategic analysis in multibusiness companies has included careful assessment of the corporate parent, its role, and value or lack thereof in contributing to the stand-alone performance of their business units. This chapter will examine each of these approaches to shaping multibusiness corporate strategy. 0Learning Objectives 1. Understand the portfolio approach to strategic analysis and choice in multibusiness companies. 2. Understand and use three different portfolio approaches to conduct strategic analysis and choice in multibusiness companies. 3. Identify the limitations and weaknesses of the various portfolio approaches. 4. Understand the synergy approach to strategic analysis and choice in multibusiness companies. 5. Evaluate the parent company role in strategic analysis and choice to determine whether and how it adds tangible value in a multibusiness company. 0Lecture Outline I0. Introduction A0. Strategic analysis and choice is complicated for corporate-level managers because they must create a strategy to guide a company that contains numerous businesses. 10. They must examine and choose which businesses to own and which ones to forgo or divest. 2. They must consider business managers’ plans to capture and exploit competitive advantage in each business, and then decide how to allocate resources among those businesses. B. The portfolio approach was one of the early approaches for charting strategy and allocating resources in multibusiness companies. 189
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1. It was particularly popular in the 1960s and 1970s, after which corporate managers, concerned with some shortcomings in this type of approach, welcomed new options. 2. Yet while many companies have moved on to use other approaches, the portfolio approach remains a useful technique for some. See Exhibit 9.1, Strategy in Action . C. Improvement on the portfolio approach focused on ways to broaden the rationale behind pursuit of diversification strategies. 1. This approach centered on the idea that at the heart of effective diversification is the identification of core competencies in a business or set of businesses to then leverage as the basis for competitive advantage in the growth of those businesses and the entry in or divestiture of other businesses. 2.
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This note was uploaded on 06/02/2011 for the course BA 13213 taught by Professor Deez during the Spring '10 term at Aarhus Universitet, Aarhus.

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49056181-Strategic-Mgmt-ch09 - Chapter 9 Multi-business...

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