Where have we been;  Where are we going? <ul><li>What is Strategy: Language of Strategic Thinking </li></ul><ul><li>Busine...
Corporate Strategy: Central Issue <ul><li>How to select & manage multiple businesses (strategic gestalts) in a way that pr...
Corporate Strategy & Strategic Gestalts <ul><li>A strategic gestalt involves one product-market. </li></ul><ul><li>Multipl...
Corporate Strategy: Key Concepts <ul><li>Diversification </li></ul><ul><ul><li>Moving into multiple (related/unrelated) bu...
Corporate Strategy:  Sources of Competitive Advantage (value creation) <ul><li>economies of scope </li></ul><ul><li>market...
Levels & Types of Diversification <ul><li>Three Levels of diversification:  </li></ul><ul><ul><li>low, moderate-high, very...
Corporate Strategy: Importance of Core Business <ul><li>Centers or focuses the firm </li></ul><ul><li>Drives/dominates com...
Corporate Strategy: Action Patterns <ul><li>What are the actions or patterns of actions that represent corporate strategy?...
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Kernochan, 2005 1 Where have we been

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Kernochan, 2005 1 Where have we been

  1. 1. Where have we been; Where are we going? <ul><li>What is Strategy: Language of Strategic Thinking </li></ul><ul><li>Business-level Strategy as Gestalts </li></ul><ul><ul><li>Strategy, firm (value chain), environment </li></ul></ul><ul><ul><li>Strategy: cost leadership, differentiation, etc. </li></ul></ul><ul><ul><li>External Analysis incl. competitive dynamics </li></ul></ul><ul><ul><li>Internal Analysis: value chain, resource based view </li></ul></ul><ul><li>Going to: </li></ul><ul><ul><li>Other types of Strategy: corporate, international, cooperative </li></ul></ul>
  2. 2. Corporate Strategy: Central Issue <ul><li>How to select & manage multiple businesses (strategic gestalts) in a way that provides greater value to the stakeholders, creates competitive advantage for the firm </li></ul><ul><li>Conceptual Underpinnings: </li></ul><ul><ul><li>Corp. firm = bundle or portfolio of businesses </li></ul></ul><ul><ul><li>the combination or mix of such businesses can create value or reduce risk (for managers and/or the firm) </li></ul></ul><ul><ul><li>combination involves 2 sets of relationships </li></ul></ul><ul><ul><ul><li>(1) across businesses, and </li></ul></ul></ul><ul><ul><ul><li>(2) between parent/HQ and subsidiary businesses </li></ul></ul></ul>
  3. 3. Corporate Strategy & Strategic Gestalts <ul><li>A strategic gestalt involves one product-market. </li></ul><ul><li>Multiple businesses involve multiple product-markets. </li></ul><ul><li>A firm may have one or multiple generic strategies for different product-markets </li></ul><ul><li>Therefore corporate strategy may involve only one or multiple strategic gestalts </li></ul>
  4. 4. Corporate Strategy: Key Concepts <ul><li>Diversification </li></ul><ul><ul><li>Moving into multiple (related/unrelated) businesses </li></ul></ul><ul><ul><li>reduces risk of (reliance on) core business </li></ul></ul><ul><li>Relatedness </li></ul><ul><ul><li>Different degrees/types of commonalities across businesses: </li></ul></ul><ul><ul><ul><li>how are businesses similar in ways that are important? </li></ul></ul></ul><ul><ul><li>Different perspectives/views of what constitutes relatedness </li></ul></ul><ul><ul><ul><li>Operational (Value Chain) vs. </li></ul></ul></ul><ul><ul><ul><li>Corporate (Resources, Capabilities) </li></ul></ul></ul>
  5. 5. Corporate Strategy: Sources of Competitive Advantage (value creation) <ul><li>economies of scope </li></ul><ul><li>market power </li></ul><ul><ul><li>within markets: includes the use of size to create cost, distribution or other types of advantages </li></ul></ul><ul><ul><li>across markets: multipoint competition </li></ul></ul><ul><li>financial economies </li></ul>
  6. 6. Levels & Types of Diversification <ul><li>Three Levels of diversification: </li></ul><ul><ul><li>low, moderate-high, very high </li></ul></ul><ul><li>Five Types of diversification: </li></ul><ul><ul><li>Low: single or dominant business </li></ul></ul><ul><ul><li>Mod-Hi: related constrained or related linked </li></ul></ul><ul><ul><li>Very High: unrelated </li></ul></ul>
  7. 7. Corporate Strategy: Importance of Core Business <ul><li>Centers or focuses the firm </li></ul><ul><li>Drives/dominates company thinking, culture and strategic perspectives </li></ul><ul><li>Generally, represents career path for top executives, hence technical knowledge </li></ul><ul><li>Importance: depends on culture, values regarding conformity over performance </li></ul>
  8. 8. Corporate Strategy: Action Patterns <ul><li>What are the actions or patterns of actions that represent corporate strategy? What do I look for? </li></ul><ul><li>Actions that affect the mix of businesses </li></ul><ul><ul><li>Mergers, acquisitions, creation of horizontal or vertical, related or unrelated new businesses </li></ul></ul><ul><ul><li>divestiture or closing, significant expansion or downsizing of existing businesses </li></ul></ul><ul><li>Actions that affect relationships among businesses </li></ul><ul><ul><li>new ways of managing, organizing, controlling or knowledge/skills transfer across existing businesses to increase value </li></ul></ul>
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