Diversificar o no?

Corporate Level Strategy

Ian Lee, Ph.D Carleton University School of Business

July 2, 1999 July 2, 1999

Corporate Strategy
• Vertical integration (scale) • Horizontal diversification (scope) • International diversification • M&A versus Strategic Alliances
July 2, 1999 July 2, 1999

Jack Welch, CEO-GE
When I was younger I thought there was a room where all the strategic concepts wereworked out for the entire company. Only later did I realize there was no such room and that the strategy does not even exist in the mind of any one person. It is simply transmitted in a series of decisions made.
July 2, 1999 July 2, 1999

Grandmother’s Advice
• Eat your brocolli! • Why? Because its good for you • Why is it good for me? • Because my grandmother told me
July 2, 1999 July 2,1999

American Medical Research
• Brocolli is good for you • Why? • Because SGH is an anti-carcinogen • found in high quantities in brocolli
July 2, 1999 July 2, 1999

Coca Cola Manager, Prague
• Corporate Strategy is very useful • because now I know WHY • my Head Office chose the strategies it chose

July 2, 1999 July 2, 1999

Warren Buf t fe
W hen an indus ry wi a r t t fo t th epu aion r d f i l economics mee s a manager wi i f cu t t th ar ta ion fo exce l ,i i u l epu t r l ence t s sua ly t indus ry tha keeps i sr ta ion he t t t epu t it t n ac .
July 2, 1999 July 2, 1999

Diversified Company has 2 levels of strategy

July 2, 1999 July 2, 1999

Diversified Company has 2 levels of strategy Business-Level Strategy Business(Competitive Strategy)

Corporate-LevelStrategy Corporate-

(Company-wide Strategy) (Company-

July 2, 1999 July 2, 1999

Diversified Company has 2 levels of strategy Business-Level Strategy Business(Competitive Strategy)

How to create CA in each BU in which firm competes

July 2, 1999 July 2, 1999

A Diversified Company has 2 levels of strategy Business-Level Strategy Business(Competitive Strategy)

How to create CA ineach BU in which firm competes - low cost - focused low cost - differentiation - focused differentiation - integrated low cost/differentiation

July 2, 1999 July 2, 1999

A Diversified Company has 2 levels of strategy Business-Level Strategy Business(Competitive Strategy)

How to create CA in each BU in which competes - focused low cost - low cost - focused differentiation - differentiation- integrated low cost/differentiation

Corporate-Level Strategy Corporate-

(Company-wide Strategy) (Company-

How to create value for corporation as a whole
July 2, 1999 July 2, 1999

Purpose of Corporate Strategy
• Maximize shareholder value • why? • Who cares? • Why value value?
July 2, 1999 July 2, 1999

Valuing Value Creation
• Why are some country’s rich? • Why care if somebusiness people are rich? • Why should employees care?

July 2, 1999 July 2, 1999

Valuing Value Creation
• Shareholder wealth is a residual • maximize it - you maximize all stakeholders • capital flows to returns i.e. more profitable firms & countries
July 2, 1999 July 2, 1999

Stakeholder Involvement
Each of the key stakeholders involved wants a piece of the same pie 1 How do you dividethe pie in order to keep all stakeholders involved? 2 How do you increase the size of pie so that there is more to go around?

July 2, 1999 July 2, 1999

Corporate Strategy concerns 2 key questions:

July 2, 1999 July 2, 1999

Corporate Strategy concerns 2 key questions:
What businesses should corporation be in?

July 2, 1999 July 2, 1999

Corporate Strategy concerns 2 key questions:What businesses should corporation be in?

How should Head Office manage array of BUs? BUs?

July 2, 1999 July 2, 1999

Corporate Strategy concerns 2 key questions:
What businesses should the corporation be in?

How should Head Office manage its BUs? BUs?

Corporate Strategy = corporate whole add up to > sum of its BU parts
July 2, 1999 July 2, 1999

Corporate Strategy
•...