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Kernochan, 2005 1 Where have we been
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Kernochan, 2005 1 Where have we been


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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
  • 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
  • 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
  • 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)
  • 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
  • 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
  • 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
  • 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