Ch6:Corporate-Level Strategy. Junichi Yamanoi 5/31/12 Chuo University Special Lecture (Strategy, Policy, and Planning). Two Strategy Levels. Business-level Strategy (Competitive)
Special Lecture (Strategy, Policy, and Planning)
-Electronics (TVs, computers, Blu-ray, Video games…), Music, Movies, Insurance, Banking, internet provider service….
Levels of Diversification: Low Level
More than 95% of revenue comes from a single business.
Between 70% and 95% of revenue comes from a single business.
Levels of Diversification: Moderate to High
Levels of Diversification: Very High Levels
Personal & Beauty
House & Home
Health & Wellness
Baby & Family
Pet Nutrition & Care
Coffee & Tea
1.Based on the data, what is the level of Sony’s diversification?
2.What do you think about links among Sony’s businesses?
Vertical Integration (Market Power)
Related Linked Diversification
(Economies of Scope)
UnrelatedDiversification (Financial Economies)
Both Operational and Corporate Relatedness(Rare capability that creates diseconomies of scope)
Value-Creating Strategies of Diversification
Operational and Corporate Relatedness
Operational Relatedness: Sharing Activities between Businesses
Corporate Relatedness: Transferring Skills into Businesses through Corporate Headquarters
Internal Incentives to Diversify
Uncertain Future Cash FlowsValue-Neutral Diversification:Internal Incentives to Diversify
-Satisfaction gained by diversification, and
-Diversifying employment risk.