Strategic Management BUSM 3200
These Lecture Slides summarize the key points covered in the respective chapters in your
recommended text; these slides do NOT substitute, at all, the required reading of the assigned
chapter from the text. These slides also may contain additional supplementary material extracted
from other texts and sources outside your text book.
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BUSM 3200- Strategic Management (Jan 2013) GDS
Strategic choices
Figure II.i Strategic choices
Chapter Seven
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BUSM 3200- Strategic Management (Jan 2013) GDS
Learning outcomes for Chapter 7
Identify alternative strategy options, including market penetration, product development, market development and diversification.
Distinguish between different diversification strategies (related and conglomerate diversification) and evaluate diversification drivers.
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Learning outcomes for Chapter 7
Assess the relative benefits of vertical integration and outsourcing.
Analyse the ways in which a corporate parent can add or destroy value for its portfolio of business units.
Analyse portfolios of business units and judge which to invest in and which to divest.
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6–5 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
STRENGTHENING A COMPANY’S MARKET POSITION VIA ITS SCOPE OF OPERATIONS
Range of its
activities
performed
internally
Breadth of its
product and
service offerings
Extent of its
geographic
market
presence and
mix of
businesses
Size of its
competitive
footprint on
its market
or industry
Defining the Scope of
the Firm’s Operations
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Copyright ©2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442528680/Hubbard &
Beamish/Strategic Management/4th edition
Levels of strategy
Business Strategy
Corporate Strategy Wesfarmers Limited
Forest Products
Chemicals
& Fertilisers
Supermarkets
Hardware
Insurance
Industrial &
Safety Energy
Functional Strategy Sales & Marketing Operations Finance
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Copyright ©2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442528680/Hubbard &
Beamish/Strategic Management/4th edition
What is corporate strategy?
Corporate strategy deals with issues related to the portfolio mix of businesses held by a multi-business organisation/corporation.
Issues such as:
What the portfolio of businesses is or should be within the corporation
the rationale behind the design of the portfolio
allocation of resources to the various businesses
performance and returns required of the businesses
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Strategic directions and corporate-level strategy
Figure 7.1 Strategic directions and corporate-level strategy
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Some additional notes on the concept of diversification
Before we move into the Ansoff model discussion, it is important that you understand the concept of diversification
Diversification is an important topic and almost always appears in the exam paper
You need to know about the types of diversification, the motives for diversification and the advantages and disadvantages of diversification strategy
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Copyright ©2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442528680/Hubbard &
Beamish/Strategic Management/4th edition
What is diversification?
Multi-business corporations have diversified beyond a single business.
Diversification is defined as:
‘the entry of a firm or business unit into new lines of activity, either by processes of internal business development or acquisition, which entail changes in its administrative structure, systems and other management processes.’
Two types of diversification:
into ‘related’ businesses and industries
Into ‘unrelated’ businesses and industries
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Copyright ©2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442528680/Hubbard &
Beamish/Strategic Management/4th edition
Reasons for diversification
General environment becomes unattractive
Industry’s competitive environment becomes unattractive
Strategic intent of the organisation covers more than one business
Surplus capabilities or capability gaps
Diversification achieves managerial goals
Aggressive managerial goals
Defensive managerial goals
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8–12 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
WHEN TO DIVERSIFY
♦ A firm should consider diversifying when:
● It can expand into businesses whose technologies
and products complement its present business.
● Its resources and capabilities can be used as
valuable competitive assets in other businesses.
● Costs can be reduced by cross-business sharing or
transfer of resources and capabilities.
● Transferring a strong brand name to the products of
other businesses helps drive up sales and profits of
those businesses.
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8–13 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
BUILDING SHAREHOLDER VALUE: THE ULTIMATE JUSTIFICATION FOR DIVERSIFYING
The industry
attractiveness
test
The cost-of-entry
test
The better-off
test
Testing Whether a Diversification
Move Will Add Long-Term
Value for Shareholders
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Beamish/Strategic Management/4th edition
Advantages and disadvantages of diversification
Advantages
Efficient capital allocation
Trains general managers
Spreads risk
More strategic options
Good control systems
Disadvantages
Shareholders have no say in capital allocation process
May not align with shareholder risk profile
Easier to hide poorly performing businesses
Performance measures usually concentrate on financial returns
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8–15 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Testing Whether Diversification Will Add Value for Shareholders
♦ The Attractiveness Test:
● Are the industry’s returns on investment as
good or better than present business(es)?
♦ The Cost of Entry Test:
● Is the cost of overcoming entry barriers so
great that profitability is too long delayed?
♦ The Better-Off Test:
● How much synergy will be gained by
diversifying into the industry?
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Beamish/Strategic Management/4th edition
Development of corporate strategy
Synergy and the resource-based view (RBV)
Corporations have capabilities that can be
transferred from one business to another
These core capabilities were the basis of competitive
advantage
Similar businesses could develop synergies by
sharing core capabilities
This view leads to related diversification not
unrelated conglomerates
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8–17 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Better Performance through Synergy
Evaluating the
Potential for
Synergy
through
Diversification
Firm A purchases Firm B in
another industry. A and B’s
profits are no greater than
what each firm could have
earned on its own.
Firm A purchases Firm C in
another industry. A and C’s
profits are greater than what
each firm could have earned
on its own.
No
Synergy
(1+1=2)
Synergy
(1+1=3)
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8–18 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIES FOR ENTERING NEW BUSINESSES
Acquisition Internal new
venture (start-up) Joint venture
Diversifying into
New Businesses
These topics will be covered in Chapter 10 :
Mergers, Acquisitions and Alliances
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Copyright ©2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442528680/Hubbard &
Beamish/Strategic Management/4th edition
Development of corporate strategy
Internationalisation
Continued internationalisation of business has
encouraged businesses to ‘stick to their knitting’
by accessing foreign markets instead of
unrelated domestic growth strategies
International expansion often financed by
divestment of unrelated businesses
Covered in next lecture on
International Strategy
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Corporate strategy directions
Figure 7.2 Corporate strategy directions Source: Adapted from H.I. Ansoff, Corporate Strategy, Penguin, 1988, Chapter 6. Ansoff originally had a matrix with four separate boxes, but in practice strategic directions involve
more continuous axes. The Ansoff matrix itself was later developed – see Reference 1
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Ansoff
Matrix
BUSM 3200- Strategic Management (Jan 2013) GDS
Market penetration
Market penetration refers to a strategy of increasing share of current markets with the current product range.
This strategy: strategic capabilities; builds on established
scope is unchanged; means the organisation’s
increased power; leads to greater market share and with buyers and suppliers;
economies of scale; and provides greater and experience curve benefits.
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Constraints of market penetration
Retaliation
from
competitors
Legal
constraints
Economic
Constraints
(recession or
funding
crisis)
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2013) GDS
Consolidation & retrenchment
Consolidation refers to a strategy by which an organisation focuses defensively on their current markets with current products.
Retrenchment refers to a strategy of withdrawal from marginal activities in order to concentrate on the most valuable segments and products within their existing business.
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Product development
Product development refers to a strategy by which an organisation delivers modified or new products to existing markets.
This strategy :
involves varying degrees of related diversification (in terms of products);
can be an expensive and high risk
may require new strategic capabilities
typically involves project management risks.
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Market development (1)
Market development refers to a strategy by which an organisation offers existing products to new markets
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Market development (2)
This strategy involves varying degrees of related diversification (in terms of markets) it; may also entail some product development (e.g. new styling or
packaging);
can take the form of attracting new users (e.g. extending the use of aluminium to the automobile industry);
can take the form of new geographies (e.g. extending the market covered to new areas – international markets being the most important);
must meet the critical success factors of the new market if it is to succeed;
may require new strategic capabilities especially in marketing.
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Diversification
Diversification involves increasing the range of products or markets served by an organisation.
Related diversification involves diversifying into products or services with relationships to the existing business.
Conglomerate (unrelated) diversification involves diversifying into products or services with no relationships to the existing businesses.
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See later discussion on this topic
BUSM 3200- Strategic Management (Jan 2013) GDS
Conglomerate diversification
Conglomerate (or unrelated) diversification takes the organisation beyond both its existing markets and its existing products and radically increases the organisation’s scope.
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Drivers for diversification
Exploiting economies of scope – efficiency gains through applying the organisation’s existing resources or competences to new markets or services.
Stretching corporate management competences.
Exploiting superior internal processes.
Increasing market power.
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Synergy
Synergy refers to the benefits gained where activities or assets complement each other so that their combined effect is greater than the sum of the parts.
N.B. Synergy is often referred to as the
‘2 + 2 = 5’ effect.
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Value-destroying diversification drivers
Some drivers for diversification which may involve value destruction (negative synergies): Responding to market decline, Spreading risk and N.B. Despite these being common
justifications for diversifying, finance theory suggests these are misguided.
Managerial ambition.
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So which is better?
Related Diversification
Unrelated Diversification
The following set of slides explain the differences in detail
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8–33 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
CHOOSING THE DIVERSIFICATION PATH: RELATED VERSUS UNRELATED BUSINESSES
♦ Related Businesses
● Have competitively valuable cross-business
value chain and resource matchups.
♦ Unrelated Businesses
● Have dissimilar value chains and resource
requirements, with no competitively important
cross-business relationships at the value
chain level.
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Beamish/Strategic Management/4th edition
Related diversification
Businesses need to be ‘related’ in some way for synergy to occur. If no synergy, no value in having the combination within the corporation.
Related diversification strategies:
Capability-based diversification
Product-market diversification
Vertical integration
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8–35 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
CHOOSING THE DIVERSIFICATION PATH: RELATED VERSUS UNRELATED BUSINESSES
Related
Businesses
Unrelated
Businesses
Both Related
and Unrelated
Businesses
Which Diversification
Path to Pursue?
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Copyright ©2011 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442528680/Hubbard &
Beamish/Strategic Management/4th edition
What is ‘relatedness’?
‘Relatedness’ concerns degree of similarity or fit between the businesses held within the corporation
What appears to be related to one observer, may seem to be quite unrelated to another
There is no hard and fast definition of relatedness
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8–37 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIC FIT AND DIVERSIFICATION INTO RELATED BUSINESSES
♦ Strategic Fit Benefits
● Occur when the value chains of the different
businesses present opportunities for:
Transfer of resources among businesses.
Lowering of costs in combining related value
chain activities or resource sharing.
Use of a potent brand name across businesses.
Cross-business collaboration to build stronger
competitive capabilities.
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8–38 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Related Businesses Provide Opportunities to Benefit
from Competitively Valuable Strategic Fit
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8–39 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Identifying Cross-Business Strategic Fit along the Value Chain
R&D and
Technology
Activities
Supply Chain
Activities
Manufacturing-
Related Activities
Distribution-
Related Activities
Customer
Service Activities
Sales and
Marketing
Activities
Potential
Cross-Business Fits
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8–40 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Strategic Fit, Economies of Scope, and Competitive Advantage
Transferring
specialized and
generalized
skills and\or
knowledge
Combining
related value
chain activities
to achieve
lower costs
Leveraging
brand names
and other
differentiation
resources
Using cross-
business
collaboration
and knowledge
sharing
Using Economies of Scope to Convert
Strategic Fit into Competitive Advantage
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8–41 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Economies of Scope Differ from Economies of Scale
♦ Economies of Scope
● Are cost reductions that flow from cross-
business resource sharing in the activities
of the multiple businesses of a firm.
♦ Economies of Scale
● Accrue when unit costs are reduced due
to the increased output of larger-size
operations of a firm.
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8–42 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
From Competitive Advantage to Added Profitability and Gains in Shareholder Value
Builds more
shareholder
value than
owning a stock
portfolio
Is only possible
via a strategy
of related
diversification
Yields value in
the application
of specialized
resources and
capabilities
Requires that
management
take internal
actions to
realize them
Capturing the Cross-Business Benefits
of Related Diversification
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8–43 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
DIVERSIFICATION INTO UNRELATED BUSINESSES
Evaluating the
acquisition of a
new business or
the divestiture of
an existing
business
Can it meet corporate targets
for profitability and return on
investment?
Is it is in an industry with
attractive profit and growth
potentials?
Is it is big enough to contribute
significantly to the parent firm’s
bottom line?
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8–44 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Building Shareholder Value via Unrelated Diversification
Astute Corporate
Parenting by
Management
Cross-Business
Allocation of
Financial
Resources
Acquiring and
Restructuring
Undervalued
Companies
Using an Unrelated Diversification
Strategy to Pursue Value
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8–45 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Building Shareholder Value via Unrelated Diversification
Astute Corporate
Parenting by
Management
• Provide leadership, oversight, expertise, and guidance.
• Provide generalized or parenting resources that lower
operating costs and increase SBU efficiencies.
Cross-Business
Allocation of
Financial
Resources
• Serve as an internal capital market.
• Allocate surplus cash flows from businesses to fund
the capital requirements of other businesses.
Acquiring and
Restructuring
Undervalued
Companies
• Acquire weakly performing firms at bargain prices.
• Use turnaround capabilities to restructure them to
increase their performance and profitability.
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8–46 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
The Path to Greater Shareholder Value through Unrelated Diversification
Actions taken by
upper management
to create value and
gain a parenting
advantage
Do a superior job of diversifying into
businesses that produce good
earnings and returns on investment.
Do an excellent job of negotiating
favorable acquisition prices.
Provide managerial oversight and
resource sharing, financial resource
allocation and portfolio management,
and restructure underperforming
businesses.
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8–47 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
The Drawbacks of Unrelated Diversification
Pursuing an
Unrelated
Diversification
Strategy
Limited
Competitive
Advantage
Potential
Demanding
Managerial
Requirements
Monitoring and
maintaining
the parenting
advantage
Potential lack of
cross-business
strategic-fit
benefits
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8–48 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Inadequate Reasons for Pursuing Unrelated Diversification
Seeking
reduction of
business
investment risk
Pursuing rapid
or continuous
growth for its
own sake
Seeking
stabilization to
avoid cyclical
swings in
businesses
Pursuing
personal
managerial
motives
Poor Rationales for
Unrelated Diversification
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8–49 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
A Company’s Four Main
Strategic Alternatives
After It Diversifies
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Diversification and performance
Figure 7.3 Diversity and performance
6-50 BUSM 3200- Strategic Management (Jan 2013) GDS
Vertical integration
Vertical integration describes entering activities where the organisation is its own supplier or customer.
Backward integration refers to development into activities concerned with the inputs into the company’s current business.
Forward integration refers to development into activities concerned with the outputs of a company’s current business.
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6–52 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
VERTICAL INTEGRATION STRATEGIES
♦ Vertically Integrated Firm
● Is one that participates in multiple segments
or stages of an industry’s overall value chain.
♦ Vertical Integration Strategy
● Can expand the firm’s range of activities
backward into its sources of supply and/or
forward toward end users of its products.
6–53 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Vertical Integration Strategies
Full
Integration
Partial
Integration
Tapered
Integration
Vertical Integration
Choices
6–54 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Vertical Integration Strategies
♦ Full Integration
● A firm participates in all stages
of the vertical activity chain.
♦ Partial Integration
● A firm builds positions only in selected
stages of the vertical chain.
♦ Tapered Integration
● Involves a mix of in-house and outsourced
activity in any stage of the vertical chain.
6–55 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Backwards Integration Towards Suppliers
♦ Integrating Backwards By:
● Achieving the same scale economies as outside
suppliers—low-cost based competitive advantage.
● Matching or beating suppliers’ production efficiency
with no drop-off in quality—differentiation-based
competitive advantage.
♦ Reasons for Integrating Backwards:
● Reduction of supplier power
● Reduction in costs of major inputs
● Assurance of the supply and flow of critical inputs
● Protection of proprietary know-how
Diversification and integration options
Figure 7.4 Diversification and integration options: car manufacturer example
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6–57 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Integrating Forward to Enhance Competitiveness
♦ Reasons for Integrating Forward:
● To lower overall costs by increasing channel
activity efficiencies relative to competitors.
● To increase bargaining power through control
of channel activities.
● To gain better access to end users.
● To strengthen and reinforce brand awareness.
● To increase product differentiation.
6–58 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Disadvantages of a Vertical Integration Strategy
♦ Increased business risk due to large capital investment.
♦ Acceptance of technological advances or more efficient
production methods.
♦ Loss of operating flexibility through dependence on
internally self-produced parts and components.
♦ Less flexibility in meeting buyer preferences if they
require non-internally produced parts and components.
♦ Internal production levels and capacity matching
problems may not allow for economies of scale.
♦ Requirements for new skills and business capabilities.
6–59 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Weighing the Pros and Cons of Vertical Integration
♦ Can vertical integration enhance the performance of
strategy-critical activities in ways that lower cost, build
expertise, protect proprietary know-how, or increase
differentiation?
♦ What is the impact of vertical integration on investment
costs, flexibility and response times, and the
administrative costs of coordinating operations across
more vertical chain activities?
♦ How difficult it will be for the company to acquire the set
of skills and capabilities needed to operate in another
stage of the vertical chain.
6–60 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Benefits of Increasing Horizontal Scope
♦ Increasing a firm’s horizontal scope strengthens
its business and increases its profitability by:
● Improving the efficiency of its operations
● Heightening its product differentiation
● Reducing market rivalry
● Increasing the firm’s bargaining power over
suppliers and buyers
● Enhancing its flexibility and dynamic capabilities
Outsourcing
Outsourcing is the process by which activities previously carried out internally are subcontracted to external suppliers.
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6–62 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
OUTSOURCING STRATEGIES: NARROWING THE SCOPE OF OPERATIONS
♦ Outsourcing
● Involves farming out value chain activities to outside vendors.
♦ Outsource an Activity When It:
● Can be performed better or more cheaply by outside specialists.
● Is not crucial to achieving sustainable competitive advantage and
does not hollow out the firm’s core competencies.
● Improves organizational flexibility and speed time to market.
● Reduces risks due to new technology and/or buyer preferences.
● Assembles diverse kinds of expertise speedily and efficiently.
● Allows a firm to concentrate on its core business, leverage key
resources, and do even better what it does best.
To outsource or not?
The decision to integrate or subcontract rests on the balance between two distinct factors:
Relative strategic capabilities:
Does the subcontractor have the potential to do the work significantly better?
Risk of opportunism:
Is the subcontractor likely to take advantage of the relationship over time?
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6–64 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
The Risks of Outsourcing Value Chain Activities
♦ Hollowing out the resources and capabilities that
the firm needs to be a master of its own destiny.
♦ Loss of control when monitoring, controlling, and
coordinating activities of outside parties by means
of contracts and arm’s-length transactions.
♦ Lack of incentives for outside parties to make
investments specific to the needs of the
outsourcing firm’s value chain.
Value-adding activities
Envisioning Coaching and
facilitating
Providing central
services and
resources
Intervening
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2013) GDS
Value-destroying activities
Adding management costs
Adding bureaucratic complexity
Obscuring financial performance
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2013) GDS
Corporate rationales (1)
Figure 7.5 Portfolio managers, synergy managers and parental developers Source: Adapted from M. Goold, A. Campbell and M. Alexander, Corporate Level Strategy, Wiley, 1994
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Corporate rationales (2)
The portfolio manager operates as an active investor in a way that shareholders in the stock market are either too dispersed or too inexpert to be able to do.
The synergy manager is a corporate parent seeking to enhance value for business units by managing synergies across business units.
The parental developer seeks to employ its own central capabilities to add value to its businesses.
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Portfolio matrices
Growth/Share (BCG) Matrix
Directional Policy (GE-McKinsey) Matrix
Parenting Matrix
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Management (Jan 2013)
GDS
The growth share (or BCG) matrix (1)
Figure 7.6 The growth share (or BCG) matrix
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The growth share (or BCG) matrix (2)
A star is a business unit which has a high market share in a growing market.
A question mark (or problem child) is a business unit in a growing market, but it does not have a high market share.
A cash cow is a business unit that has a high market share in a mature market.
A dog is a business unit that has a low market share in a static or declining market.
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The growth share (or BCG) matrix (3)
Problems with the BCG matrix:
definitional vagueness,
capital market assumptions,
motivation problems,
self-fulfilling prophecies and
possible links to other business units.
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The directional policy (GE–McKinsey) matrix (1)
Figure 7.7 Directional policy (GE–McKinsey) matrix
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The directional policy (GE–McKinsey) matrix (2)
Figure 7.8 Strategy guidelines based on the directional policy matrix
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The parenting matrix (1)
Figure 7.9 The parenting matrix: the Ashridge Portfolio Display Source: Adapted from M. Goold, A. Campbell and M. Alexander, Corporate Level Strategy, Wiley, 1994
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The parenting matrix (2)
1. Heartland business units - the parent understands these well and can add value. The core of future strategy.
2. Ballast business units - the parent understands these well but can do little for them. They could be just as successful as independent companies.
If not divested, they should be spared corporate bureaucracy.
3. Value-trap business units are dangerous. There are attractive opportunities to add value but the parent’s lack of feel will result in more harm than good The parent needs new capabilities to move value-trap businesses into the heartland. It is easier to divest to another corporate parent which could add value.
4. Alien business units are misfits. They offer little opportunity to add value and the parent does not understand them. Exit is the best strategy.
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Summary (1)
Many corporations comprise several, sometimes many business units. Decisions and activities above the level of business units are the concern of what in this chapter is called the corporate parent.
Organisational scope is considered in terms of related and unrelated diversification.
Corporate parents may seek to add value by adopting different parenting roles: the portfolio manager, the synergy manager or the parental developer.
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Summary (2)
There are several portfolio models to help corporate parents manage their businesses, of which the most common are: the BCG matrix, the directional policy matrix and the parenting matrix.
Divestment and outsourcing should be considered as well as diversification, particularly in the light of relative strategic capabilities and the transaction costs of opportunism.
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PRACTICE ESSAY QUESTIONS
IMPORTANT NOTE: →
These questions are provided for your reference only – they are only INDICATIVE of the standard of questions you might expect in the final exam.
DO NOT use these questions to “spot”
The RMIT examiner will post advice on the exam on the Learning Hub closer to the exam; you are required to pay attention to that advise
The questions here show the range of topics that could be tested from this lecture; they are NOT exhaustive
To score a high grade it is important to LINK the theory to applications and examples. Where from?
You have been assigned specific cases to read from the text. Each case study will show you the kinds of strategic decisions the case company needs to make. You can draw from these examples.
You have selected a case company for your project; you may use examples from there.
You are supposed to read widely from the business press about local, regional and international companies strategies. You can use examples from there as well.
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Sample essay question
Discuss the benefits and risks associated with related and unrelated diversification strategy.
Use specific examples from one of the cases studied in this course to illustrate how potential risks might be managed effectively for a firm to achieve sustainable competitive advantage.
6-80 BUSM 3200- Strategic Management (Jan 2013) GDS
Sample essay question
Discuss the advantages and disadvantages associated with related and unrelated diversification strategy for international expansion. Illustrate your answer with examples from one case studied in this course.
Hint: Question is tricky: need to LINK two chapter content, one on diversification (Chapter 7) and one on international strategy (Chapter 8)
6-81 BUSM 3200- Strategic Management (Jan 2013) GDS
Sample essay questions
Explain using examples, how a company can implement a diversification strategy for long term advantage.
Consider an alternative approach that might have been more successful and discuss why such a company might not have adopted this approach.
6-82 BUSM 3200- Strategic Management (Jan 2013) GDS
Sample essay questions
Explain the three corporate rationales of diversification and discuss their logic, strategic requirements and organizational requirements. Can more than one rationale co-exist in a particular organization?
6-83 BUSM 3200- Strategic Management (Jan 2013) GDS
Sample essay question
Synergy is often said to be important in the selection of a corporate level strategy. Is synergy necessary to ensure corporate success? Your answer must address the three corporate parenting roles associated with corporate strategy and give examples whenever necessary to illustrate the points.
6-84 BUSM 3200- Strategic Management (Jan 2013) GDS
Sample essay question
There are broad three ways or rationales for corporate headquarters to add value. Explain these three corporate rationales and discuss their logic, strategic requirements and organisational requirements. Can more than one rationale co-exist in a particular corporation? Use Wesfarmers case as an example to support your argument.
6-85 BUSM 3200- Strategic Management (Jan 2013) GDS