CORPORATE STRATEGY

Poonam Singh
Question:

• Where to Play?
• In which
• product or service lines
• customer segment and
• geographies
should your firm operate?

• How much of the product value should you

develop internally?
 3 Pillars

What should be
Horizontal
the scope of the
firm?
Vertical

Geographical
Horizontal Scope
• Range of Product markets in which the firm operates
• Product market comprises of
• Product category
• Customer segment

• Example: Cybersecurity market (2018)

• Symantec and Mcfee operated in a broad product space:
perimeter security (firewall) and IMS (Identity
management systems
• Okta and Ping Identity operated in a narrow suite of
offering focused on IMS
• CyberArk and BeyondTrust operated in highly specialised
Privileged Account Management (PAM) systems
 Vertical Scope

• How much of the value chain should the firm

own?
• Example: Branded Apparel Retailer
• Target and Macy’s contract out most of the
supply chain including design, purchase,
manufacturing and supply of retail outlets
• Brook Brothers started as vertically integrated,
however over a period narrowed scope to retail
and oversight
• Zara completely vertically integrated
 Geographical Scope
• Spread of firm across geography
• Example: Investment Banks
• Bulge Bracket Investment Bank has offices
across the globe
• Goldman Sachs operated in 30 countries,
Morgan Stanley is present in 42
• Boutique Investment banks have narrow
geographical foot print: Allen and Company in
2019 was present in only New York City,
known as “Invisible Bank”
 For all three dimensions discussed
earlier the decision on scoping is
based on the answer to the
How does a strategist following questions:

decide whether the

firm should have Better Off Test: If two business
units from different markets are
broad scope or brought together, do they do better
narrow scope? than on their own

OwnershipTest: Does ownership

produce greater advantage than
any other alternative
arrangement?
Better Off Test
Cost Strategy:

E.g. Petroleum refinery

Revenue Strategy: one stop shopping convenience, cross selling

E.g. Investment advisory, investment management, banks

OWNERSHIP TEST

Tesla
B E N E F I T S O F N A R R O W S T R AT E G Y ?
 STRUCTURE,
GOVERNANCE &
INCENTIVES
WITHIN THE
C O R P O R AT I O N
Mother Earth
1. How did ME decide it's product mix, customer segment and geography in line with the
overall perspective of growth and sustainability?
2. How does the structure of the company align with the corporate level strategy of growth and
sustainability?
3. What will be the outcome of better off test and ownership test when you see their supply
chain structure?
4. Do people pay for green and good? Comment. Reconcile your argument with ME's strategy
of charging less.