CORPORATE LEVEL

STRATEGY
GROUP 4
• The corporate-level strategy
• is the corporate center's strategy for managing a
multi-business organization; it is concerned with
multiple business growth and development and,
therefore, works at a higher level than a single
business strategy.
• is the approach of a corporate center to manage a
multi-company group of organizations strategically.
Product Expansion Grid
• The product expansion grid or is the matrix used by Ansoff to display
four principal growth directions.
• Ansoff suggests for key ways to expand markets and goods of
enterprise, which he demonstrate in is product namely; market
penetration, market development, product development,
and diversification.
Product Expansion Grid
Market penetration means increasing the current company -
using the same range of products to maximize the
share of established markets in an enterprise.
• Of the four options, this is the least risky
strategy
• For example, an organization should be able to understand
its existing customers and exploit existing activities to
encourage them to buy more.
• It can also encourage prospective customers, who may
currently buy from rivals.
• Market development introduces an organization's
existing products and services into new markets.
• To move into new areas, active research and marketing
strategy are typically needed to provide an initial entry
and target segments.
• Existing and new markets will likely have significant
potential differences, so caution and understanding are
required.
• Product development introduces new products and
services to existing markets.

• Ideas for new products usually come from knowing

current customers ' expectations and behavior.

• However, if innovation is piloted or established with

existing customers, the possibility of new product failure is
minimized.
• Diversification involves new products and services
being introduced into new markets.
• This is the more risky option.
• A company must take time to build new tools and
consider consumer dynamics and emerging goods.
• Inorganic growth provides an attractive shape for large
organizations way forward to gain the necessary expertise
if investors support the move with new finance to cover
the costs of acquisitions.
• Prospectors
• These diversify a revolutionary approach and encourage
it.
• Organizational thinking, searching for new strategic roles,
is exploratory.
• Flexibility is what characterizes prospectors; coordination
and facilitation are essential.
• Planning is broad and sensitive to outside changes.
Prospectors will likely be first movers.
• Defenders
• They address a narrow audience and focus mainly on the
engineering issue of how to manufacture value-adding goods
and services.
• Continuous review and improvement are essential, and
organizations are committed to a core mission.
• Controls are centralized and responsive to internal conditions.
• Defenders are more functionally oriented, with the
supremacy of finance and development.
• Analyzers
• this uses market development, review, planning,
and strategically implementing projects.
• Their features are a combination of prospector and
defender approaches to avoid excessive risks and
deliver new products and services well.
• Analyzers are represented by more prominent
firms, covering a variety of markets and industries.
• Reactors
• These use market penetration, which tends to use
expediency and crisis management over the short term.
• The strategy is to avoid overcrowding. Their response to
change is typically incoherent and inappropriate since
there is a mismatch in the three fundamental issues.
• Often, reactors have little control over their environment
outside.
 Corporate level
strategy
The direction of integration: vertical and horizontal
• Vertical and horizontal integration are two ways in which
organizations expand their activities. Vertical integration involves
expanding up or down the distribution chain, while horizontal
integration involves acquiring rivals within the same part of the
supply chain. Backward vertical integration allows a company to
control inputs, while further vertical integration provides greater
control over fulfillment centers and retailers. Alternatively,
organizations can manipulate negotiating power by buying power to
regulate members of the supply chain. This strategy is preferred
when an organization wants to spread its risk across multiple
providers.
• Horizontal integration

involves the acquisition and combination of rival companies that offer similar or
complementary products and services. Over time, industries become more
concentrated as horizontal integration reduces the number of competitors.
Mergers and acquisitions (M&A) are a rapid way to increase operational scale and
market power. They can also enable organizations to enter new markets and
industries, particularly in the context of expanding branches and markets.
However, M&A outcomes often pose challenges. To succeed, a clear consolidation
strategy must be established prior to completing an acquisition. The integration
process should be swift and decisive to achieve coherence after the financial
transaction. It is crucial for the acquiring organization's senior management to
have a thorough understanding of the acquired organization. The most successful
mergers typically involve organizations with a pre-existing history of partnerships,
such as joint ventures or alliances.
• Strategic Interdependence in Acquisitions

• • Philippe Haspeslagh and David Jemison (1991) suggest strategic

interdependence depends on anticipated value.
• • Resource exchange at the organizational level is crucial, including
functional expertise transfer, information sharing, and manager transfers.
• • Extra value can be achieved by combining benefits from resource
leveraging.
• • Four approaches are suggested: absorption, preservation, symbiosis, and
retention.
• • Cultural fit is a significant element of M&A, ensuring the corporate culture
of the acquired organization is compatible.
• • Evaluation of strategic compatibility is straightforward, but cultural fit is
complex due to unique business practices and specific strategic capabilities.
Strategic Portfolio Analysis
- Corporate-level strategy defines the overall direction for a company, focusing on how to
manage its business units (or product portfolio) to maximize value for shareholders. It
involves deciding which businesses to enter, how to compete within those businesses,
and how to allocate resources between them.

- Strategic portfolio analysis is a key tool used to inform and implement this corporate-
level strategy. By analyzing the market attractiveness and business unit strength of each
investment or business unit, portfolio analysis helps answer crucial questions for
corporate strategy.
Imagine a company called ShoeCo that sells different types of shoes. They have a line of athletic shoes, a line of dress
shoes, and a new line of sandals.

● Market Attractiveness: How big is the market for each type of shoe? Are athletic shoes still growing in popularity,
or is the market saturated? Is there a lot of competition in the dress shoe market?

● Business Unit Strength: How well is ShoeCo doing in each market? Do they have a strong brand reputation for
athletic shoes? Are their dress shoes considered high-quality and stylish? What about their new line of sandals?
Do they have a unique design or advantage?

By analyzing these two factors, ShoeCo can categorize their products.

- Maybe athletic shoes are a Star and deserve the most investment.
- Perhaps dress shoes are a Cash Cow that bring in steady profits, but don't need a lot of extra resources.
- And the sandals, as a new product, might be a Question Mark. ShoeCo will need to decide if they want to invest more
and try to capture a bigger share of the sandal market.
Diversification

- An entry of an organization into a business which is new to an organization

either market wise or technology wise or both.

Types of diversification:

Concentric - involves adding similar products or services to the existing business.

Conglemerate - a growth strategy in which a company seeks to develop by

adding totally unrelated products and markets to its existing business.
- Diversified organizations’ strategic management is carried out primarily as a
portfolio of strategic business units. This is called strategic portfolio analysis,
which executives and central management use at a corporate level to assess the
performance of a corporate group of enterprises.

- The management of a set of distinct investments is primarily a corporate

framework. It is not intended to be a vehicle for the analysis of the company's
internal management, although it can be used to identify problem businesses,
leading to corporate interventions.
 GROWTH-SHARE MATRIX
In 1970, the Boston Consulting Group developed the
Growth-Share Model to categorize companies by their
total business growth and market share. The idea is to
rate and evaluate business output in an equivalent
manner to an investment portfolio. Many will be stable,
and others will be insecure and decline. A balance is
established between these: companies which have
potential tomorrow can be financed by moving the capital
from today 's productive breadwinners.
4 PARTS OF GROWTH-SHARE MATRIX
 CASH COW

In a slow-growing economy, companies known as cash cows have a

significant market share, usually in a mature sector. These will generate
more cash than the amount needed to invest in maintaining the company's
health, so any excess is creamed off to provide investment funds for stars
and question marks. A cash cow business is likely to be unhappy to see its
revenue shift if it is prevented from diversifying it into new business.
 STARS

Stars have a large share of the market and are in growing markets.
The expectation is that these companies will become tomorrow's
cash cows but are likely to be hungry for more investment funds
for the present than they can generate themselves. The principle is
to grow star businesses as fast as possible by eliminating resource
constraints, such as investing in capacity-added ahead of demand
 QUESTIONS MARK

Question mark companies have low market share but are in

fast-growing markets. Sometimes a question mark business
is called a problem child because it typically does not
generate investment funds, and the business' future is
uncertain.
 DOGS

Dog businesses have a low market share and are in markets with low
growth. They are divested or closed if they bring no value to the rest
of the company. These may be pet businesses in that once they made
a significant contribution to the corporation's success, sentimental
owners may find it difficult to close them down psychologically.
 STRATEGIC BUSINESS UNIT
(SBU)

- are entities within multinational companies

that have a high degree of strategic
independence from the corporate core.
Usually an SBU has a general manager
who is helped by a team that includes the
functional heads employed in the company
who are middle managers in the sense
whom they report to senior managers at
the head quarters or center.

The SBU portfolio structure's insularity means that

the corporate center can add or divest individual SBUs
without any significant knock-on effects on the other
SBUs' strategies and live cultures in the portfolio.
 A diversified corporation's primary benefit is
that it spreads risk as businesses are located in
multiple industries and markets.
 RELATED
DIVERSIFICATION
A company is likened to a tree. Its
competencies are the roots of the
organization, its core products are the
trunk, the corporate companies are
separate branches of the tree in their
various industries and markets, and the
leaves and fruits are its end products. A
corporate center can identify operational
synergies, distinctive skills, and specific
strengths when related to businesses in a
portfolio.
 Prahalad and Hamel use Canon 's example andthe use of optics
technological expertise as a core product to serve as diverse markets as
cameras,copiers, and semiconductor equipment. This is possible because
the people of Canon collaborateeffectively in conventional ways. Canon’s
competitive advantage is an internal capability not easilyseen or understood
by its rivals.
Goold and Campbell (1991) offer a three-sided typology of parenting –
financial control,strategic planning, and strategic control. Financial control
involves an approach to portfolios. Strategic planning emphasizeslinkages,
where strategy is coordinated and reviewed by the center. The center sets
tight financialand strategic targets. In order to create a competitive
advantage, there is some attempt to createties between the different
companies. Strategic control is based on core business management.