Title: SESSION 13: Strategic Analysis and Choice in The Multi-Business Company
1SESSION 13 Strategic Analysis and Choice in The
Multi-Business Company
- Rationalizing Diversification and Building
Shareholder Value
2The Concept of Corporate-Level Strategy
- Primary Question - Where to Compete?
- Are there other business opportunities?
- Entering or exiting Industries
3CL Strategy Whether to Diversify?
- Synergies
- Growth Opportunities
- Agency Issues Empire Building
4Multibusiness Corporations
- Corporations comprised of multiply businesses
are often referred to as having a portfolio of
businesses
5- By Definition a change in Corporate Level
Strategy should be reflected in a change in
Mission Statement
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15SONY PICTURES STUDIOS
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19The Portfolio Approach to Corporate Level
Strategy
- Research Allocation Decisions
- How does Corporate Affiliation Provide Value?
20GE and McKinsey
- The Concept of The SBU
- Corporate Review Capability
- Matrices to Facilitate/Illuminate the Resource
Allocation Decision
21To Be Designated an SBU, Businesses had to
- Have a unique mission independent of other SBUs
- Have a clearly definable set of competitors
- Compete in external markets
- Be able to carry out integrative planning
relatively independent of other SBUs - Be able to manage resources in key areas
- Be large enough to justify senior management
attention
22Balancing Financial Resources Portfolio
Techniques
23BCG Growth-Share Matrix
24Factors Considered in Constructing an Industry
Attractiveness-Business Strength Matrix
Industry Attractiveness Factors
25Fig. 9-3 Factors Considered in Constructing an
Industry Attractiveness-Business Strength Matrix
(continued)
Industry Attractiveness Factors
26Fig. 9-3 Factors Considered in Constructing an
Industry Attractiveness-Business Strength Matrix
(continued)
Business Strength Factors
27Fig. 9-3 Factors Considered in Constructing an
Industry Attractiveness-Business Strength Matrix
(concluded)
Business Strength Factors
28Fig. 9-4 Industry Attractiveness-Business
Strength Matrix
29Advantages of the Industry Attractiveness-Business
Strength Matrix over the BCG Matrix
- Terminology is less offensive and more
understandable - Multiple measures associated with each dimension
tap many factors relevant to business strength
and market attractiveness - Allows for broader assessment during both
strategy formulation and implementation for a
multibusiness company
30Fig. 9-5 Market Life Cycle-Competitive Strength
Matrix
31Contributions of Portfolio Approaches
Convey large amounts of information about diverse
businesses and corporate plans in a simplified
format
Illuminate similarities and differences among
businesses, conveying the logic behind corporate
strategies for each business
Simplify priorities for sharing corporate
resources across diverse businesses
Provide a simple prescription of what should be
accomplished - a balanced portfolio of businesses
32Limitations of Portfolio Approaches
Does not address how value is created across
business units
Accurate measurement for matrix classification
not as easy as matrices implied
Underlying assumption about relationship between
market share and profits varies across different
industries and market segments
Limited strategic options viewed as basic
strategic missions
Portrays notion that firms need to be
self-sufficient in capital
Fails to compare competitive advantage a business
receives from being owned by a particular company
with costs of owning it