Strategy Content

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Strategy Content

• Part IV
• Business and Corporate Strategies

2
The form of strategy

• Typical form might include
• Select the right business to be in
• Understand what drives success
• Constantly innovate
• Maintain financial flexibility to seize
  opportunities
• Measure success in creating shareholder value

Source Mahoney and McCue (1999)
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Definitions

• Corporate Strategy
• Nature and scope of the enterprise as a whole
• Outlines general purposes and core values
• Main activities or the principles on which
  activities are chosen
• Business Strategy
• One for each business activity within the
  enterprise
• Describes how that business will compete in its
  marketplace
• No distinction from corporate strategy in single
  business enterprises
• Functional Strategies
• One for each major function
• e.g. Marketing, Human resources, Information
  technology
• Coherent with corporate and business strategies

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Figure 13.2 Examples of Strategy Documentation
Business Strategies One for each
business Products or offerings Markets Sources
of competitive advantage
Functional Strategies One for each major function
Corporate Strategy One Only Scope, Nature,
Purpose Choice of Businesses
Business Plans
Corporate Plan
Functional Plans
Budgets
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Content of a business strategy document

• Statement of strategic intent
• Principal findings of strategic assessment
• Strategic choices mad and rationale
• Statement of goals and objectives
• Outline of strategic initiatives

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Major drivers of Business Strategy

• Meeting the real needs of customers
• Exploiting genuine competence of the enterprise
• Providing sustainable competitive advantage
• Laying the ground for implementation

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Figure 15.1 How Concepts of Corporate Strategy
have Developed
Issues Concepts Corp. Strategies
1950 Overload at centre Decentralization Divisio
nalization 1960 Quest for growth General Mgmt.
skills Diversification 1970 Resource
Allocation Portfolio Planning Balanced
Portfolios 1980s Value gaps/raiders Value
based planning Restructuring Poor performance
Stick to the knitting of diversification
1990s Defining the core Dominant
logic Manageable Portfolio business Core
competencies Linked portfolios Lasting basis for
Parenting advantage Managing portfolio
to corporate strategy maximize value
creation 2000s Shareholder value Exceeding cost
of capital Focus on value/divest in all
businesses if value being destroyed
Adapted from Goold,M., Campbell,A Alexander,
M. (1994) Corporate-level Strategy Wiley
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Impact of financial markets on corporate strategy

• Shareholder value is key measure
• Share price a key element of shareholder value
• Analysts views (based on perceptions) influence
  p/e ratios and hence share value
• Result is pressure for mergers (and to a lesser
  extent demergers)
• Corporate strategies often become dominated by
  mergers and acquisitions

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Documenting corporate strategy

• Strategic intent and values
• Business scope
• Structure, systems, and processes
• How the corporate centre is to add value