Corporate Strategy. Creating Corporate Advantages. Defining Corporate Strategy. Corporate Strategy is the way a company creates value through the configuration and coordination of its multi-market activities The definition has three important aspects:
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Creating Corporate Advantages
Corporate Strategy is the way a company creates value through the configuration and coordination of its multi-market activities
The definition has three important aspects:
Source: Collis and Montgomery, Corporate Strategy, 1997
The goal of corporate strategy is to build corporate advantage so as to earn above normal returns
Three tests of the existence of corporate advantage:
Source: Collis and MOntgomergy, 1998
Business Diversification - Horizontal expansion
Vertical Integration - forward or backward expansion
Geographic Scope - geographic and/or global expansion
1. Can the corporation create economic value by changing its scope? (Rent-generating opportunities)
2. Should activities be undertaken inside the corporation, or accessed through contracts, joint ventures, alliances, or other institutional arrangements?How should the corporation grow?
3. How should the corporation be structured and managed to enhance the combined value of its individual business units?
Business Strategy (competitive strategy) is concerned with how a firm competes within a particular market
Corporate strategy is concerned with wherea firm competes
Competition occurs at the business unit level
Corporate Strategy inevitably adds costs and constraints to business units
Shareholders can readily diversify themselves
Corporate Strategy cannot succeed unless it truly adds value to business units: