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Where have we been; Where are we going?

Where have we been; Where are we going?. What is Strategy: Language of Strategic Thinking Business-level Strategy as Gestalts Strategy, firm (value chain), environment Strategy: cost leadership, differentiation, etc. External Analysis incl. competitive dynamics

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Where have we been; Where are we going?

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  1. Where have we been; Where are we going? • What is Strategy: Language of Strategic Thinking • Business-level Strategy as Gestalts • Strategy, firm (value chain), environment • Strategy: cost leadership, differentiation, etc. • External Analysis incl. competitive dynamics • Internal Analysis: value chain, resource based view • Going to: • Other types of Strategy: corporate, international, cooperative Kernochan, 2005

  2. Corporate Strategy: Central Issue How to select & manage multiple businesses (strategic gestalts) in a way that provides greater value to the stakeholders, creates competitive advantage for the firm • Conceptual Underpinnings: • Corp. firm = bundle or portfolio of businesses • the combination or mix of such businesses can create value or reduce risk (for managers and/or the firm) • combination involves 2 sets of relationships • (1) across businesses, and • (2) between parent/HQ and subsidiary businesses Kernochan, 2005

  3. Corporate Strategy & Strategic Gestalts • A strategic gestalt involves one product-market. • Multiple businesses involve multiple product-markets. • A firm may have one or multiple generic strategies for different product-markets • Therefore corporate strategy may involve only one or multiple strategic gestalts Kernochan, 2005

  4. Corporate Strategy: Key Concepts • Diversification • Moving into multiple (related/unrelated) businesses • reduces risk of (reliance on) core business • Relatedness • Different degrees/types of commonalities across businesses: • how are businesses similar in ways that are important? • Different perspectives/views of what constitutes relatedness • Operational (Value Chain) vs. • Corporate (Resources, Capabilities) Kernochan, 2005

  5. Corporate Strategy: Sources of Competitive Advantage (value creation) • economies of scope • market power • within markets: includes the use of size to create cost, distribution or other types of advantages • across markets: multipoint competition • financial economies Kernochan, 2005

  6. Levels & Types of Diversification • Three Levels of diversification: • low, moderate-high, very high • Five Types of diversification: • Low: single or dominant business • Mod-Hi: related constrained or related linked • Very High: unrelated Kernochan, 2005

  7. Corporate Strategy: Importance of Core Business • Centers or focuses the firm • Drives/dominates company thinking, culture and strategic perspectives • Generally, represents career path for top executives, hence technical knowledge • Importance: depends on culture, values regarding conformity over performance Kernochan, 2005

  8. Corporate Strategy: Action Patterns What are the actions or patterns of actions that represent corporate strategy? What do I look for? • Actions that affect the mix of businesses • Mergers, acquisitions, creation of horizontal or vertical, related or unrelated new businesses • divestiture or closing, significant expansion or downsizing of existing businesses • Actions that affect relationships among businesses • new ways of managing, organizing, controlling or knowledge/skills transfer across existing businesses to increase value Kernochan, 2005

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