Corporate Level Strategy

Prf. Aslam Logade

Corporate Level Strategy :

Action taken by Corporate

In order to gain competitive advantages

Through a mixture of business and product

In order to competing in several industries and product market

TATA GROUP DIVERSIFICATION

HOTELS : TAJ GROUP STEEL : TATA STEEL AUTOMOBILE : TATA AUTO POWER : TATA POWER IT : TCS RETAIL : MORE CHEMICALS : TATA

CHEMICALS

REVENUE DISTRIBUTION FOR TATA GROUP :

1.Low Level : Focus on single or dominant business. Ex… Wrigley Company generate revenue 95% of the total sales from chewing gum market.

2. Moderate to High LevelA. Related Diversification : 70% revenue from dominant business and business shared product, technology and distribution linkage.

TATA example .. Tata Motor and Tata Steel , Tata Foundry Related Diversification

Level of Diversification:

TATA STEEL

TATA MOTOR

TATA FOUNDRY

C. High Level Of Diversification:Unrelated : Less than 70% of revenue comes from

dominant business and no link between other business

Reason for Diversification:

RELATED DIVERSIFICATION :

Motives to enhance strategic competitiveness.Economy of Scope :Cost saving attributed to transferring the capabilities and competencies developed in one business to new business. Use of Tangible and intangible resources

Market Power : When firm is able to sell its products above existing competitive level or reduce the cost of it’s primary and support activity. ex.. Two or more firm compete in same area or geographic market.Tata Power,Mobile Vs. Reliance Energy, Mobile

Vertical Integration: [Foreword and Backword ]When company is producing it’s own inputs or it’s own source of output.

UNRELATED DIVERSIFICATION :

1. Financial Economies: Allocation of Financial resources based oninvestment inside and outside the firm

2. Restructuring:Focuses exclusively on buying and selling other firms assets in the external market.Selling underperforming division & restructuring another business.

Incentives to Diversify :

A. Antitrust regulation : Govt. Policies and tax laws…

B. Uncertain future cash flow:

C. Risk Reduction

D. Resources available tangible and intangible

Diversification Incentives & Resource

SKILLS

STAFF

SHARED

VALUES

STRATEGY

STRUCTURE

STYLE

SYSTEMS

Seven S Model of Implementation

7’s Strategy :

Strategy – Plan or course of action leading to the allocation of firm’s resources to reach identified goals.

Structure – The ways people and tasks relate to each other. The basic grouping of reporting relationships and activities. The way separate entities of an organization are linked.

Shared Values – The significant meanings or guiding concepts that give purpose and meaning to the organization.

Systems – Formal processes and procedures, including management control systems, performance measurement and reward systems, and planning and budgeting systems, and the ways people relate to them.

Skills – Organizational competencies, including the abilities of individuals as well as management practices, technological abilities, and other capabilities that reside in the organization.

Style – The leadership style of management and the overall operating style of the organization. A reflection of the norms people act upon and how they work and interact with each other, vendors, and customers.

Staff – Recruitment, selection, development, socialization, and advancement of people in the organization

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