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Management > Strategic Management – Short Notes Using the 80/20 Method > Corporate Strategies

Corporate Strategies

Objective: Analyze various corporate-level strategies.
Focus (80/20): Prioritize understanding of the most impactful corporate strategies.

Corporate-level strategies play a pivotal role in shaping the overall direction and success of an organization. Understanding the various strategies and their impacts is essential for effective strategic management.

Introduction to Corporate Strategies:

Corporate-level strategies involve decisions and actions that determine an organization’s overall direction and scope. These strategies guide the allocation of resources across business units and address questions about the portfolio of businesses an organization should operate.

Types of Corporate Strategies:

  1. Diversification:
    • Related Diversification: Expanding into new businesses that are related to the existing portfolio.
      • Example: Disney diversifying from animation into theme parks and media.
    • Unrelated Diversification: Entering businesses with no direct connection to the current portfolio.
      • Example: General Electric, which historically operated in industries as diverse as finance and healthcare.
  2. Vertical Integration:
    • Backward Integration: Involves acquiring or merging with suppliers.
      • Example: An automobile manufacturer acquiring a steel production company.
    • Forward Integration: Involves acquiring or merging with distributors or retailers.
      • Example: An apparel manufacturer opening its own retail stores.
  3. Global Expansion:
    • Expanding operations into international markets to increase market share and access new opportunities.
    • Example: McDonald’s global presence with restaurants in various countries.

Merger and Acquisition Strategies:

  1. Merger:
    • Combining two companies to form a new entity.
    • Example: Exxon and Mobil merging to form ExxonMobil.
  2. Acquisition:
    • One company taking over another, resulting in the acquired company becoming part of the acquiring company.
    • Example: Facebook’s acquisition of Instagram.

Strategic Alliances:

  1. Joint Ventures:
    • Two or more companies collaborate to form a new entity for a specific business purpose.
    • Example: Sony and Ericsson forming a joint venture for mobile phones.
  2. Strategic Partnerships:
    • Collaborative agreements between companies for mutual benefit without forming a new entity.
    • Example: Starbucks and PepsiCo partnering to distribute bottled Starbucks beverages.

Real-World Examples:

  1. Procter & Gamble (P&G):
    • Corporate Strategy:
      • Diversification through a wide range of consumer goods.
      • Global expansion with operations in multiple countries.
  2. Alphabet Inc. (Google’s Parent Company):
    • Corporate Strategy:
      • Diversification through a portfolio of technology-related businesses.
      • Innovation and investment in emerging technologies.

Impactful Corporate Strategies:

  1. Portfolio Analysis:
    • Continuously assessing the performance of business units and adjusting the portfolio based on market dynamics.
  2. Innovation and R&D Investments:
    • Focusing on innovation to stay competitive and drive long-term growth.
  3. Strategic Alliances for Synergies:
    • Collaborating strategically to leverage complementary strengths and capabilities.

Resources:

das Nair, R., & Mondliwa, P. (2017). Excessive pricing under the spotlight: What is a competitive price? In J. Klaaren, S. Roberts, & I. Valodia (Eds.), Competition Law and Economic Regulation in Southern Africa: Addressing Market Power in Southern Africa (pp. 97–119). Wits University Press https://doi.org/10.18772/22017070909.10.

Droege, S. B. (Ed.). (n.d.). Strategy levels. Reference for Business. https://www.referenceforbusiness.com/management/Sc-Str/Strategy-Levels.html

Kaleka, A., & Morgan, N. A. (2017). Which Competitive Advantage(s)? Competitive Advantage–Market Performance Relationships in International Markets. Journal of International Marketing, 25(4), 25–49. http://www.jstor.org/stable/44873823

Mitchell, R. C. (n.d.). Formulating strategy. In Strategic management. California State University, Northridge. http://www.csun.edu/~hfmgt001/writing.htm