Corporate level strategy:

It is applicable to multi-business organization.

All levels above business unit level in the
corporate structure, constitute corporate parent
and has no direct interaction with buyers and
competitors .
The issues covered in corporate level strategy
include :
•Scope decisions reflected in Product diversity,
international diversity. All decisions aim to
attain growth for the organization.
•Value creation for different business units ,
through the role to be played as a corporate
parent (for managing the business portfolio.)
 Corporate level strategy:
Development directions are the
strategic options available to an
organization , in terms of products
and market coverage.
These options take in to account the
strategic capability of organization
and stake holders’ expectations.
Corporate level strategy:
Strategy Development directions:
Corporate level strategy:
Strategy Development directions:

Protect/Build.

Consolidation: Maintaining current

position/market share, by taking appropriate
actions.

Market penetration: Organization gains market

share. Factors to consider are market growth
rate, resource issues and other players attitude
including complacency of market leader.
Corporate level strategy:
Strategy Development directions:
Product development: Delivering
modified or new products to existing
markets.
This could be expensive,risky, and
unprofitable.
Changed CSFs, short PLC, competitors’
actions are some situations
demanding this direction.
Corporate level strategy:
Strategy Development directions:
Market development: Offering
existing products in new markets.
Finding new uses of existing
product, finding new segments for
same product and geographical
spread are actions in this strategy.
 Corporate level strategy:
Diversification is a strategy that takes
organization in to both, new Markets
and new Products./ services.
Benefits of diversification are
•Gains in efficiency due to economies of
scope and synergy. (synergy refers to
benefits that might be gained where
activities or processes complement each
other such that their combined effect is
greater than the sum of the parts.
Corporate level strategy:
Benefits of diversification are
(contd.)
•Benefitting by applying Corporate
Managerial Capabilities.
•Increasing Market Power by having
ability to cross subsidize.
•To spread risk across businesses
•Meeting expectations of powerful
stake holders.
 Corporate level strategy:
Diversification Types:
•Related: Is where organization
extends beyond current products and
markets, but within the capabilities
or value network of the organization.
•Unrelated: Development of
products/services beyond current
capabilities or value network.
•This is also called as conglomerate
strategy.
 Corporate level strategy:
Diversification Types:
Related:
a) Backward integration.
b) Forward integration.
c) Horizontal integration.
d) Quasi integration.
e) Tapered integration.
 Corporate level strategy:
Diversification and its effect on
performance:
The graph of extent of diversity (x
axis)and performance is inverted U
shape curve suggesting that related
and limited diversity is beneficial to
an organization.
Corporate level strategy:
 Corporate level strategy:
How and why diversify?
• Through resulting economies of
scope, also referred as benefits of
synergy.
• By applying corporate managerial
capabilities, referred as dominant
logic.
• By increasing market powerability
to influence price in the market.
 Corporate level strategy:
How and why diversity? (contd.)
• To respond to environmental
changes.
• To spread risks across range of
business.
• To meet expectations of powerful
stake holders.
Two types of diversity:
1)Market diversity including
international diversity.
2)Product diversity
 Corporate level strategy:
Reasons for international diversity:
•Globalization of Markets and competition.
•Following your buyer/customer.
•Presence in home market of your global
customers.
•Exploiting differences between countries and
geographical regions.
•Internationalization of value adding activities
that has taken place.
•Enhancing knowledge base.
•Economic benefits where product modification
is least.
•Risk reduction.
 Corporate level strategy:
International Market selection : Factors
considered are
•Macro economic conditions.
GDP/Disposable income/currancy
stability/.
•Political environment
•Infrastructure
•Similarity of cultural norms and social
structure
•Political and legal risks.
 Corporate level strategy:
International Market entry
strategies:
•Exporting
•Contractual arrangements through
licensing and franchising.
•Joint venture and alliances.
•Foreign Direct Investment including
acquisitions.
•Green field investments.
 Corporate level strategy:
International Value Network concept:
•It includes decisions about location of
elements of an organization’s value
chain.
•The decisions try to exploit differences
between countries to conduct each
value chain activity, efficiently and
effectively by following strategies like
JV, FDI, Global sourcing.
 Corporate level strategy:
International Diversity challenges:
•Global – Local dilemma
•Concentration of assets and
productive capabilities.
Strategies to address above
challenges:
•Multi domestic strategy.
•Global strategy.
 Corporate level strategy:
Value creation by Corporate Parent:
•Identification and establishment of value
adding activities.
•Intervening within businesses to improve
overall organizational performance.
•Monitor performance of SBUs.
•Challenge and develop strategic ambition of
SBU.
•Coaching and training of people.
•Develop strategic capability.
•Achieving synergy by encouraging co operation
and doing co ordination.
•Offering central services and resources.
 Corporate level strategy:
Value creation by Corporate Parent:
•Providing expertise and service not
available in small units.
•Knowledge creation and sharing ,to
foster innovation and learning.
 Corporate level strategy:
Corporate Parent: Roles
Portfolio Manager:
•Acts as an agent of financial markets
and stake holders.
•Identifies and acquires under valued
businesses/assets and improves
them to get higher valuation.
•Divests from low performing
businesses.
 Corporate level strategy:
Corporate Parent: Roles
Synergy Manager:
•Enhances value across businesses by
managing synergies across SBUs.
•Makes possible sharing of resources,
skills, competencies.
Parental developer:
•Employ own competencies to add
value.
•Builds parenting skills appropriate to
particular business units.
 Corporate level strategy:
Business Portfolio Management:
Performed by using tools with an
objective of :
•Balancing the needs of corporation
and relation to its markets.
•Degree of fit within SBUs in
portfolio.
•Adequacy of attractiveness of
business units – current and future
profitability and growth rate.
 Corporate level strategy:
Tools used for Portfolio Management.

•BCG (Growth/share matrix.) and

related terms.
•GE Nine cell grid (Directional Policy
Matrix)
•Arthur D. Little Life cycle approach.
Corporate level strategy:
Corporate level strategy: