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 How Parents Create Value

Stand-alone influence Linkage influence

Central functions and services Corporate development

 Adding Value

•In order to create value, the parent must do more than

simply avoid creating misfits.
•It must have some skills or resources that are specially
helpful to its businesses.
•It must help its businesses address opportunities to
improve their performance that they would fail to
realize by themselves.
•Different opportunities can be realized only by applying
different parenting skills or characteristics.

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 Parenting Styles

High Strategic
Planning

Source: Goold and Campbell, 1987

Strategic
Planning Control
Influence
Financial
Control
Low

Flexible Tight Tight

Strategic Financial
Control Influence
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 Parenting Styles (Cont’d)
1. Strategic Planning Style
•
•Strategic Planning style parents are closely
involved with their businesses in the formulation
of plans and decisions.
•They typically provide a clear overall sense of
direction,
•within which their businesses develop their
strategies and take the lead on selected corporate
development initiatives.

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2. The Strategic Control Style
•
•Strategic Control style parents basically
decentralize planning to the businesses but retain
a role in checking and assessing what is proposed
by the businesses.
•Thus, businesses are expected to take
responsibility for putting forward strategies,
plans, and proposals in a “bottom-up” fashion,
•but the parent may sponsor certain themes,
initiatives, or objectives, and will only sanction
proposals that meet an appropriate balance of
strategic and financial criteria.

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3. The Financial Control Style
•Financial Control style parents are strongly
committed to decentralization of planning.
•They structure their businesses as stand-alone
units with as much autonomy as possible, and
with full responsibility for formulating their own
strategies and plans.
•Head office sets short term financial targets that
have to be met to ensure continued funding of
capital investments plans
•

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Value-Destroying Activities

Adding management costs

Adding bureaucratic complexity

Obscuring financial performance

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THE DIRECTIONAL POLICY
MATRIX
(FORMULATED BY SHELL INTERNATIONAL CHEMICAL
COMPANY)

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  Business Sector  Companies
Prospects competitiveness
 

Market Market share

Competition Technical skills

Technology Production

Economic Human Resources

environment financial

Government

Social Factore

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