Corporate Level Strategy: An organizing Framework Flashcards
The Triangle
Licht de corporate strategy triangle toe
Resources, Businesses, and the roles coperate headquarters - represent the foundations of corporate level strategy. Collis and Montgomery (1998,2005) argue that only when they align with managers’ dominant logic, can resouces, businesses, and the roles of the headquarters produce a corporate advantage. Therefore, there cannot be one single best corporate level strategy, or even a limited set of generic, corporate level strategies, that leads to success (Collis & montgomery, 1998, 2005). A corporate level strategy creates value when, and only when, these elements fit together as a system.
Wat is Dominant logic?
The idea of “dominant logic” proposed by Prahalad and Bettis (1986), offers a way to align the three sides of the corporate strategy triangle. The dominant logic is “ the lens through which managers see all emering opportunities” (options) for the firm. When managers’ dominat logic does not match the needs of the businesses, tensions and problems arise, such as the wrong managers might be appointed to the businesses, inappropriate plans and investments might be sanctioned, and the wrong targets might be selected.
Wat zijn resources?
Resources consititue the critial building blocks of a strategy, (Wernerfelt, 1984) because they determine not what a firm wants to do but what it can do. At the business level, these stocks of assets can be a source of competitive advantage and can distinghuish one firm from another. Resources thus are the ultimate source of value creation, both within and across businesses. Indentifying, building, and deploying these valuable resources are critical aspects of both corporate and business level strategy.
Wat zijn Businesses?
Businesses refer to the industries or markets in which a firm operates, as well as to the business level strategy it adopts in each. Industry choice is critical to the long-term success of a corporate level strategy, and the best predictor of firm performance is the profitability of the industries in which it competes. This set of industries in which it operates also influences the extent to which the firm can share resources across its various businesses or transfer skills and competencies from one business to the other.
Licht The role of the corporate headquarters toe
The corporate headquarters is critica for prividing goals, directions, guidelines, structure and control systems to business unit managers
In a diversified firm, corporate managers rarely can or should, make all critical business unit decisions. Instead, they should influence delegated decision making through the careful desighn of the organizational structure, systems and processes in which business unit managers operate
The corportate office can play an important role in the business units’ decision making process to increase coordination across business units. The corporate office influences business units’ decisions through the firm’s organizational structure, systems and processes.
Wat zijn structure, systems, and processes?
Organizational structure refers to the way the firms is diveded into discrete units and describes the formal organization chart that delineates the allocation of authority whithin the corporate hierarchy.
Systems are formal policies and routines that govern organizational behavirour, as well as the set of rules that define how tasks, from strategic planning to personnel evaluations, should be fulfilled.
Processes decribe the informal elements of an organization’s activities.
Wat is corporate advantage?
An effective corporate level strategy results from a harmonious combination of the previously discussed elements. The elements work together as a system to create value through multimarket activity, that is, to yield a corporate advantage (Collis & Montgomery).
Wanneer can corporate advantage bereikt worden?
A corporate advantage can be established and corporate value created when, and only when, a firm’s business units are able to create more value within the firm than outside the firm as independent entities or as part of the portfolio of another firm. Corporate advantage is the raison d’ être of a multibusiness firm.
Hoe kan een fit gecreëerd worden tussen de diverse elementen van de corporate level triangle? (Noem 3 voorbeelden)
Een organisatie kan nieuwe resources aantrekekn door internal development, M&A, of strategische allianties. Een organisatie kan een ander bedrijf met dezelfde resources overnemen op synergieën te creëren, door bijvoorbeeld resources te delen om economies of scale te bereiken.
Bedijven kunnen unrelated businesses afstonen om haar scope te reduceren zodat er een betere fit ontstaat met de related diversification strategie wat resulteert in een fit met dominant logic gebaseerd op het delen van resources of overdracht van skills
It could restructure its business portfolio to make a better use of its resources, for example to increase resource sharing or better spread the risks across its portfolio of buisinesses.
It could restructure its incentive systems at the headquarters by establishing bonuses based an firm’s performance or business units’ performance in order to motivate business units’ managers to better collaborate with each other or alternatively to compete with each other
Levels of diversification. Licht deze toe
Bedrijven die diversificatie hebben, hebben diverse niveau’s van diversificatie
Single en dominant businesses hebben een lage mate van diversificatie. Zij focussen zich bijvoorbeeld op 1 dominante markt.
Bij moderate diversificatie is er sprake van related en unrelated diversificatie. Hoe meer links er zijn met verschillende businesses hoe meer ‘constrained’ de diversificatie is. Een bedrijf die als het ware related constrained is streeft ernaar om alle businesses met elkaar te linken om maximale synergie te behalen.
