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Corporate Strategy. BM499 Strategic Management David J. Bryce. November 5, 2002. Corporate vs. Business Unit Strategy. Corporate Strategy What business(es) should we be in? How will we coordinate or integrate businesses to create value? Business Unit Strategy

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corporate strategy

Corporate Strategy

BM499 Strategic Management

David J. Bryce

November 5, 2002

corporate vs business unit strategy
Corporate vs. Business Unit Strategy
  • Corporate Strategy
    • What business(es) should we be in?
    • How will we coordinate or integrate businesses to create value?
  • Business Unit Strategy
    • To whom will we sell, for what price?
    • How will we source, manufacture, distribute, etc. our product?

Adapted from M. Porter, 2001, HBR

definition corporate advantage
Definition: Corporate Advantage
  • “The way a company creates value through the configuration and coordination of its multibusiness activities.”

-- Collis & Montgomery, 1998

Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

scope of the firm
Scope of the Firm

Horizontal Scope

Prod./Ind. B

Prod./Ind. C

Prod./Ind. A

Sales

Sales

Sales

output-products

Distrib

Distrib

Distrib

Manuf.

Manuf.

Manuf.

. . .

Sales

Sales

Sales

Vertical Scope

Distrib

Distrib

Distrib

Input-products

Manuf.

Manuf.

Manuf.

. . .

newell
Newell

Horizontal Scope

Prod./Ind. B

Prod./Ind. C

Prod./Ind. A

Sales

Sales

Sales

output-products

Distrib

Distrib

Distrib

Manuf.

Manuf.

Manuf.

. . .

Sales

Sales

Sales

Vertical Scope

Distrib

Distrib

Distrib

Input-products

Manuf.

Manuf.

Manuf.

. . .

wal mart
Wal-mart

Horizontal Scope

Prod./Ind. B

Prod./Ind. C

Prod./Ind. A

Sales

Sales

Sales

output-products

Distrib

Distrib

Distrib

Manuf.

Manuf.

Manuf.

. . .

Sales

Sales

Sales

Vertical Scope

Distrib

Distrib

Distrib

Input-products

Manuf.

Manuf.

Manuf.

. . .

slide7
GE

Horizontal Scope

Prod./Ind. C

Refrigerators

Aircraft Engines

Sales

Sales

Sales

output-products

Distrib

Distrib

Distrib

Manuf.

Manuf.

Manuf.

. . .

Sales

Sales

Sales

Vertical Scope

Distrib

Distrib

Distrib

Input-products

Manuf.

Manuf.

Manuf.

. . .

the triangle of corporate strategy
The Triangle of Corporate Strategy

Competitive Advantage

Resources

Businesses

Organization

Coordination

Control

Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

the resource continuum
The Resource Continuum

Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

the resource continuum continued
The Resource Continuum (continued)

Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

coordination
Coordination

“Public Goods”

May be used in a number of production processes without dminishing their value or availability; e.g. Brand names; know-how

“Private Goods”

Usage diminishes value or availability; e.g. human resources, machines, etc.

the resource continuum continued1
The Resource Continuum (continued)

Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998

control
Control
  • Financial
    • Run the business by managing to a set of financial measures; e.g. return on assets, growth in revenue, profitability, etc.
  • Operational
    • Run the business by managing to a set of operational measures; e.g. days in inventory; reject rates, delivery lead times, book-to-bill ratios, etc.