公司策略和发展

CorporateStrategyandDevelopmentLecture807/17/20011MainIssuesIngeneral,corporatestrategybecomesrelevantand/orsalientinamultibusinesscompany.Illustrationofsinglebusinessvs.multiplebusinesses,i.e.businessvaluechainandportfolioplanningCorporatestrategiesVerticalintegrationvs.outsourcing/verticalcooperationDiversificationInternalventuringAcquisitionJointventureStrategicalliancesRestructuringandTurnaround2ConcentrationonaSingleBusinessAdvantagesOperationalfocusonasinglefamiliarindustryormarket.Currentresourcesandcapabilitiesaddvalue.Growingwiththemarketbringscompetitiveadvantage.DisadvantagesNodiversificationofmarketrisks.Verticalintegrationmayberequiredtocreatevalueandestablishcompetitiveadvantage.Opportunitiestocreatevalueandmakeaprofitmaybemissed.3ValueChainonasinglebusiness(Example:PersonalComputerIndustryEnduserDistributionAssemblyIntermediate

manufacturerRawmaterialsExamples:DowChemical

UnionCarbide

KyoceraExamples:

Intel

Seagate

MicronExamples:

Apple

Compaq

DellExamples:

ComputerWorld

OfficeMax4CorporatePortfolioPerspectiveonMultibusinesscompaniesBostonConsultingGroup(BCG)matrix:IdentifyingtheStrategicBusinessUnits(SBUs)bybusinessareaorproductmarketAssessingeachSBU’sprospects(usingrelativemarketshareandindustrygrowthrate)relativetootherSBUsintheportfolio.DevelopingstrategicobjectivesforeachSBUMcKinsey/GEmatrix 5TheBCGMatrixSource:Perspectives,No.66,“TheProductPortfolio.”AdaptedbypermissionfromTheBostonConsultingGroup,Inc.,1970.6TheBCGMatrixStarsHighrelativemarketsharesinfastgrowingindustries.QuestionmarksLowrelativemarketsharesinfastgrowingindustries.CashcowsHighrelativemarketsharesinlow-growthindustries.DogsLowrelativemarketsharesinlow-growthindustries.7TheStrategicImplicationsoftheBCGMatrixStarsAggressiveinvestmentstosupportcontinuedgrowthandconsolidatecompetitivepositionoffirms.QuestionmarksSelectiveinvestments;divestitureforweakfirmsorthosewithuncertainprospectsandlackofstrategicfit.CashcowsInvestmentssufficienttomaintaincompetitiveposition.Cashsurplusesusedindevelopingandnurturingstarsandselectedquestionmarkfirms.DogsDivestiture,harvesting,orliquidationandindustryexit.8TheMcKinsey/GEMatrix9LimitationsonPortfolioPlanningFlawsinportfolioplanning:TheBCGmodelissimplistic;considersonlytwocompetitiveenvironmentfactors–relativemarketshareandindustrygrowthrate.Highrelativemarketshareisnoguaranteeofacostsavingsorcompetitiveadvantage.Lowrelativemarketshareisnotalwaysanindicatorofcompetitivefailureorlackofprofitability.MultifactormodelssuchasMcKinsey/GEmatrixarebetterthoughimperfect.10VerticalIntegrationforasinglebusinessIntegrationbackwardintosupplierfunctionsAssuresconstantsupplyofinputs.Protectsagainstpriceincreases.IntegrationforwardintodistributorfunctionsAssuresproperdisposalofoutputs.Capturesadditionalprofitsbeyondactivitycosts.Integrationchoiceisthatofwhichvalue-addingactivitiestocompeteinandwhicharebettersuitedforotherstocarryout.11FullandTaperIntegrationFullIntegrationTaperIntegration12CreatingValueThroughVerticalIntegrationAdvantagesofaverticalintegrationstrategy:Buildsentrybarrierstonewcompetitorsbydenyingtheminputsandcustomers.Facilitatesinvestmentinefficiency-enhancingassetsthatsolveinternalmutualdependenceproblems.Protectsproductqualitythroughcontrolofinputqualityanddistributionandserviceofoutputs.Improvesinternalscheduling(e.g.,JITinventorysystems)responsestochangesindemand.13CreatingValueThroughVerticalIntegrationDisadvantagesofverticalintegrationCostdisadvantagesofinternalsupplypurchasing.Remainingtiedtoobsolescenttechnology.Aligninginputandoutputcapacitieswithuncertaintyinmarketdemandisdifficultforintegratedcompanies.14BureaucraticCostsandtheLimitsofVerticalIntegrationThecostsofrunninganorganizationrisewithintegrationdueto:Thelackofanincentiveforinternalsupplierstoreducetheiroperatingcosts.Thelackofstrategicflexibilityintimesofchangingtechnologyoruncertaindemand.Bureaucraticcostsreducethevalueofverticalintegration.15AlternativestoVerticalIntegration:CooperativeRelationshipsandStrategicOutsourcingShort-termcontractsandcompetitivebiddingStrongcompetitorsattempttocontrolsuppliercostswithminimal-lengthcontracts.Poortreatmentofsuppliersraisescompetitorinputcosts.Strategicalliancesandlong-termcontractingLong-termcontractsfostercooperativerelationships.Alliancesreducetheneedforverticalintegration.16BuildingLong-TermCooperativeRelationshipsHostagetakingBothpartiesarrangetobecomemutuallydependentoneachother,fosteringacooperativerelationship.CrediblecommitmentsAbelievablecommitmenttosupportthelong-termrelationship.Maintainingmarketdisciplinerequires:Periodicrenegotiationofthecontractualrelationship.Developingaparallelsourcingpolicywithtwosuppliersforcriticalinputs.17StrategicOutsourcingandtheVirtualCorporationOutsourcingAllowingsubcontractorstoperformvaluecreationactivities.OutsourcingadvantagesEfficientsubcontractorsreduceoverallcosts.Betterproductdifferentiation.Allowsfortheconcentration

ofavailableresources.Firmbecomesmoreflexibleandresponsive.OutsourcingdisadvantagesFailuretolearnfromoutsourcedactivity.Toomuchdependenceonasinglesupplier.Dangerofoutsourcingvaluecreationactivitiesleadingtocompetitiveadvantage.18DiversificationintomultiplebusinessesRelateddiversificationEntryintonewbusinessactivitybasedonsharedcommonalitiesinthecomponentsofthevaluechainsofthefirms.UnrelateddiversificationEntryintoanewbusinessareathathasnoobviousrelationshipwithanyareaoftheexistingbusiness.19RelatedVersusUnrelatedDiversificationComparingRelatedandUnrelatedDiversificationStrategyWaysofCreatingValueSourceofBureaucraticCostsRelateddiversificationRestructuringTransferringofskillsEconomiesofscopeNumberofbusinessesCoordinationamongbusinessesUnrelateddiversificationRestructuringNumberofbusinesses20CreatingValueThroughDiversification:sharingskillsTransferringcompetencies:Lowersthecostofvaluecreationactivitiesinthediversifiedbusinesses.Createsopportunitiesfordifferentiationandpremiumpricingvaluecreationactivities.Addsvaluewherecommonalitiesimportanttocompetitiveadvantageexist.Createsvaluebyapplyingskillsforonebusinessopportunityandapplyingthemtoanother.21CreatingValueThroughDiversification:sharingactivitiesEconomiesofscopeSharingofresourcesandfunctionsbybusinessunitscreatesvalueinhighassetutilizationandloweroperatingcosts.Economiesofscopeandscalearecloselyrelated.Greateroperationalcapacityandlargermarketscanhelpacompetitorattainlow-costposition.Resourcesharingcreatessignificantcompetitiveadvantagewhenitoutweighscoordinationcosts.22CreatingValueThroughDiversification:RestructuringSuperiorinternalgovernancePlacebusinessunitsinself-containeddivisions.Managedivisionsinadecentralizedmanner.Linkperformancetoincentivepay.AcquisitionandrestructuringstrategyReplacenonperformingtopmanagementteam.Disposeofunproductiveassets.Establishperformancegoalsrequiringsignificantimprovementsinoperatingefficiency.23BureaucraticCostsandtheLimitsofDiversificationNumberofbusinessesInformationoverloadcanleadtopoorresourceallocationdecisionsandcreateinefficiencies.CoordinationamongbusinessesAsthescopeofdiversificationwidens,controlandbureaucraticcostsincrease.Resourcesharingandpoolingarrangementsthatcreatevaluealsocausecoordinationproblems.LimitsofdiversificationTheextentofdiversificationmustbebalancedwithitsbureaucraticcosts.24StructureofaCompanySharingMarketingBetweenTwoBusinessUnits25DiversificationThatDissipatesValueDiversificationtopoolrisksAnineffectiveattempttooffsetthecyclicaleffectsofbusinessesbymergingtheirincomestreams.Downturnsinonebusinessareintendedtobeoffsetbyupturnsinanotherbusiness.DiversificationtoachievegreatergrowthConceptfocusesongrowth(whichisnormallyaby-productofdiversification)andnotvaluecreation.Usuallythechoiceof“empirebuilders”.26StrategicAllianceasAnAlternativetoDiversificationAdvantagesAvoidsbureaucraticcostsofdiversification.Sharedcostsandrisks.Usescomplementaryskillsofeachpartner.Createsvaluethrougheconomiesofscope.DisadvantagesProfitsmustbeshared.Disclosureofcriticalknow-howtopotentialcompetitor.27TheCorporationasaPortfolioofCoreCompetenciesEstablishingaCoreCompetenceAgendaSource:G.HamelandC.K.Prahalad,CompetingfortheFuture(Cambridge,Mass.:HarvardBusinessSchoolPress,1994),p.227.28InternalNewVenturing(I)Internalnewventuringisattractivewhen:Enteringasascience-basedcompany.Enteringanemergingindustrywithnoestablishedcompetitors.Pitfallsofnewventuring:Scaleofentry–Low-scaleentrycanreducetheprobabilityoflong-termsuccess.Commercialization–Failuretodevelopaproductthatmeetsbasiccustomerneeds.PoorImplementation–Using“shotgun”approach,notsettingclearstrategicobjectives,abandoningprojectstoosoon.29ScaleofEntry,Profitability,andCashFlow30InternalNewVenturing(II)Guidelinesforsuccessfulnewventuring:AdoptastructuralapproachwithclearstrategicobjectivessettingR&Ddirection.FostercloselinksbetweenR&Dandmarketing.Useprojectteamstoreducedevelopmenttime.Useaselectionprocesstopickventureprojectswiththehighestprobabilityofsuccess.Monitorprogressofventuresingaininginitialmarketsharegoals.Large-scaleentryisimportantforventuresuccess.31AcquisitionsasanEntryStrategyAcquisitionisanattractivestrategywhen:Competenciesimportantinanewbusinessareaarelackingintheenteringfirm.Speedofentryisconsideredimportant.Acquisitionisperceivedasalessriskyformofentry.Barrierstoentrycanbeovercome

byacquisitionofafirminthe

industrytargetedforentry.32PitfallsofAcquisitionsasanEntryStrategyFailingtofollowthroughonpostacquisitionintegrationoftheacquiredfirm.Overestimatingtheeconomic

benefitsoftheacquisition.Underestimatingtheexpense

ofanacquisition.Failingtoproperlyscreencandidates

beforeacquisition.33GuidelinesforsuccessfulacquisitionsProperlyidentifyacquisitiontargetsandconductathoroughpreacquisitionscreeningofthetargetfirm.Useabiddingstrategywithpropertimingtoavoidoverpayingforanacquisition.Followthroughonpostacquisitionintegrationsynergy-producingactivitiesoftheacquiredfirm.Disposeofunwantedresidualacquisitionassets.34JointVenturesasanEntryStrategyAttractionsSharingnewprojectcostsandrisks.Increasingtheprobabilityofsuccess

inestablishingthenewbusiness.DrawbacksRequiresasharingofcontrolwithpartnerfirms.Requiresthatpartnerfirmsshareprofits.Risksgivingawaycriticalknowledge.Riskscreatingapotentialcompetitor.35RestructuringWhyrestructure?Pull-backfromoverdiversification.Attacksbycompetitorsoncore

businesses.Diminishedstrategicadvantagesof

verticalintegrationanddiversification.ExitstrategiesDivestment–spinoffsofprofitableSBUstoinvestors;managementbuyouts(MBOs).Harvest–haltinginvestment,maximizingcashflow.Liquidation–Ceaseoperations,writeoffassets.36TurnaroundStrategyThecausesofcorporatedeclinePoormanagement–incompetence,neglectOverexpansion–empire-buildingCEO’sInadequatefinancialcontrols–noprofitresponsibilityHighcosts–lowlaborproductivityNewcompetition–powerfulemergingcompetitorsUnforeseendemandshifts–majormarketchangesOrganizationalinertia–slowtorespondtonew