Primer on Corporate Strategy – An Overview of External Thinking Download the entire document at: www.gazhoo.com

CONTENTS What is corporate strategy? Definition History and development Schools of thought Resources and capabilities Portfolio management Value-oriented management Aspiration-based management Bibliography Download the entire document at: www.gazhoo.com

What is corporate strategy?

Definition

History and development

Schools of thought

Resources and capabilities

Portfolio management

Value-oriented management

Aspiration-based management

Bibliography

SCHOOLS OF THOUGHT AND RESEARCH APPROACHES Aspiration-based management Purpose of the company as starting point and bench-mark of corporate strategy Resources and capabilities Resources and capabilities are important instead of SBUs Identification and exploitation of resources and capabilities to achieving competitive advantage Portfolio management Management of the corporate portfolio Identification/ selection of businesses to invest in/divest Value-oriented management Portfolio planning Portfolio concepts Diversification Core competen-cies Strategic capabilities Resource-based view Vision, mission and objectives Value-based management Parenting advantage Combination of strategic thinking and the modern theory of finance Increasing shareholder value Source: XYZ analysis Download the entire document at: www.gazhoo.com Research approaches Schools of thought Focus

Purpose of the company as starting point and bench-mark of corporate strategy

Resources and capabilities are important instead of SBUs

Identification and exploitation of resources and capabilities to achieving competitive advantage

Management of the corporate portfolio

Identification/ selection of businesses to invest in/divest

Portfolio planning

Portfolio concepts

Diversification

Core competen-cies

Strategic capabilities

Resource-based view

Vision, mission and objectives

Value-based management

Parenting advantage

Combination of strategic thinking and the modern theory of finance

Increasing shareholder value

NEW CAPABILITIES-BASED GROWTH LOGIC Businesses Geographicarea Strategic capabilities Source: Stalk, Evans and Shulman, 1992 Current Download the entire document at: www.gazhoo.com Strategic advantages built on capabilities are easier to transfer geographically than more traditional competitive advantages No growth/ diversification in businesses with new strategic business processes/ capabilities Previous choice of capabilities determines path and ability to grow; the right choice of them is thus the essence of strategy New growth 1 New growth 2 Biggest payoff for capabilities-led growth through entry in new businesses by "Cloning"/duplicating key business processes Creating processes so flexible and robust that the same set can serve many different businesses

Biggest payoff for capabilities-led growth through entry in new businesses by

"Cloning"/duplicating key business processes

Creating processes so flexible and robust that the same set can serve many different businesses

PORTFOLIO PLANNING: INDUSTRY ATTRACTIVENESS- BUSINESS POSITION-MATRIX High Medium Low Industry attractiveness Low Medium High Business position Invest Selective growth Up or out Harvest Harvest Divest Up or out Selective growth Up or out Key sources: XYZ General Electric Goal: Scoring model for portfolio planning Limitations: Results are highly sensitive to percep- tional change and modification in weighting Not easy to execute Source: Miller, 1998 Download the entire document at: www.gazhoo.com

XYZ

General Electric

Scoring model for portfolio planning

Results are highly sensitive to percep- tional change and modification in weighting

Not easy to execute

RESTRUCTURING HEXAGON Perceptions gap Maximum opportunity Operating improvement Financial engineering Disposal/new owners New growth opportunities Current market value Value as is 1 2 3 4 6 5 Source: Copeland, Koller and Murrin, 2000 Download the entire document at: www.gazhoo.com Total potential value Value with growth, internal improvements and disposals Value with internal improvements and disposals Value with internal improvements

TOOL : PARENTING-FIT MATRIX Ballast Edge of heart- land Heartland Alien territory Low High Fit between parenting opportunities and parenting characteristics High Low Misfit between critical success factors and parenting characteristics Value trap Source: Campbell, Goold and Alexander, 1995 Download the entire document at: www.gazhoo.com 5