ch 9 interrelationships among business units
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CH 9
Interrelationships among businessunits.
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Objectives:
Growing importance of horizontalstrategy
Interrelationships among businessunits
Tangible, intangible & competitorinterrelationships.
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Horizontal strategy:
Horizontal strategy is a concept ofgroup, sector & corporate strategybased on competitive advantage
Wider term as compared to financialstrategies
2 main types:
Existing business unitsDiversification strategy to enter into newbusiness.
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Importance of horizontal strategy:
Diversification philosophy is changing
Emphasis is shifting from growth toperformance
The strength of potentialinterrelationships within the group.
Portfolio & resource management.
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Interrelationships among businessunits:
Tangible interrelationships
Intangible interrelationships
Technological changesMultipoint competition
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Sharing & cost:
Material impact
Greater complexity
Learning sensitivityPattern of capacity utilization
Competitors interrelationships.
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Sharing & competitive advantage:
Increases uniqueness: e.g.: IBM &Intel
Automation: manual to online. E.g.:banking
Sharing order processes of relatedproduct lines.
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Sharing & differentiation:
Leads to product development
Enhances compatibility
Lowers the cost of uniquenessAffects product designing
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Costs of sharing:
Costs of coordination: e.g.:scheduling, setting priorities
Cost of compromise: e.g.: consistentperformance for optimum utilization
Cost of inflexibility:
Potential difficulty
Exit barriers
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Difficulty of matching:
Duplication of interrelationships
Adopting & other means of matching:realize & search for other ways ofimproving position.
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Identifying tangibleinterrelationships
Market interrelationships
Production interrelationships
Procurement interrelationshipsTechnological interrelationships
Infrastructure interrelationships
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Intangible interrelationships:
Same generic strategy
Same type of buyer
Similar configuration of value chainSimilar important value activities.
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Competitors interrelationships:
Functional differences
Potential multipoint competitor
Single point competitors with differentpatterns of interrelationships
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Multipoint competitors in unrelatedindustries:
Forecast possible retaliation in alljointly contested industries
Beware of smaller positions
Opportunities to exploit
Establish blocking positions for
defensive purposes.
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Competitors with different patternsof interrelationships:
Both an opportunity & a threat
Ability of firm to achieveinterrelationships
Different forms of interrelationships
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Forecasting potential competitors:
Identifying all possibleinterrelationships
Logical analysis & identification ofrelated industries
Suggestion of possibleinterrelationships
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