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Corporate Strategy

Corporate Strategy

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Published by rrgsbandara
management theory -Corporate Strategy
management theory -Corporate Strategy

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Published by: rrgsbandara on Jul 19, 2010
Copyright:Attribution Non-commercial

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10/25/2012

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 Corporate Strategy
Creating Corporate Advantages
 
Corporate Strategy 2
 
D
efining Corporate Strategy
Corporate Strategy is the way a company createsvalue through the configuration and coordination of its multi-market activities
The definition has three important aspects: ±
Value Creation
-the generation of superior financialperformance (rents) from multi-market activities that createcorporate advantages ±
Configuration
-the multi-market scope of the corporation(product/market diversification, geographic focus, andvertical boundaries) ±
Coordination
-the management of activities andbusinesses that lie within the corporate hierarchy
Source: Collis and Montgomery, Corporate Strategy, 1997
 
Corporate Strategy 3
 
G
oal of Corporate Strategy:Corporate Advantage
The goal of corporate strategy is to build
corporateadvantage
so as to earn above normal returns
analogous to a competitive advantage in a business unit
Three tests of the existence of 
corporate advantage
:
D
oes ownership of the business create benefit somewherein the corporation? (
D
oes parentage matter?)
A
re those benefits greater than the cost of corporateoverhead?
D
oes the corporation create more value with the businessthan any other possible corporate parent or alternativegovernance structure?
Source: Collis and MOntgomergy, 1998

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