corporate strategy

corporate strategy - A Diversified Company has 2 levels of...

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1 Corporate-Level Strategy (Companywide Strategy) A Diversified Company has 2 levels of strategy: Business-Level Strategy (Competitive Strategy) -lowcost - differentiation - integrated low cost/differentiation -lowcost - differentiation - integrated low cost/differentiation - focused low cost - focused differentiation - focused low cost - focused differentiation A Diversified Company has 2 levels of strategy: How to create competitive advantage in each business in which the company competes How to create competitive advantage in each business in which the company competes Business-Level Strategy (Competitive Strategy) How to create value for the corporation as a whole Diversification usually occurs through acquisition referred to as SBUs – Single Business Units How to create value for the corporation as a whole Diversification usually occurs through referred to as SBUs – Single Business Units A Diversified Company has 2 levels of strategy: Corporate Corporate -Level Strategy Level Strategy (Companywide Strategy) (Companywide Strategy) Corporate Corporate -Level Strategy Level Strategy (Companywide Strategy) The overall plan for a diversified company Fortune 500 companies Account for 40% US GNP Avg. 10 discrete lines of business 50% of all acquisitions made by 33 large corps before 1975 had been divested by 1985 20% of all corp. assets changed hands What businesses should the corporation be in? How should the corporate office manage the array of business units? Corporate Strategy is what makes the corporate whole add up to more than the sum of it business unit parts Corporate Strategy concerns 2 key questions: Corporate Corporate -Level Strategy Level Strategy (Companywide Strategy) (Companywide Strategy) In the 60’s Andrew’s stated “building distinctive competence” M-form – allow companies to manage extensive array of separate business 70’s Rumelt found closely related corp. strategies outperformed highly diversified corp. strategies since then these findings have been challenged
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2 Single-business > 95% of revenues from a single business unit Low Levels of Diversification Dominant-business Between 70% and 95% of revenues from a single business unit Sometimes known as Dominant Product Strategy Most firms begin this way -- Fed Ex, Xerox, McDonald’s Firms Vary by Degree of Diversification Related-Diversified < 70% of revenues from a single business unit Moderate to High Levels of Diversification Businesses share product, techno- logical or distribution linkages Sometimes known as Related Diversification Strategy Horizontal or Vertical Firms Vary by Degree of Diversification Examples of Horizontal Related Diversification z Dental Products z Oral Contraceptives z Wound Care Products z Prescription Drugs
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corporate strategy - A Diversified Company has 2 levels of...

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