Transcript Strategic Management: Text and Cases

战略规划
北京银行
Definitions
• SBU is the abbreviation for Strategic Business
Unit
• What we have studied so far are SBUs,
because each has a unique SBU Strategy
based on its own resources, value chain
activities, and markets.
• Corporations are made up of multiple SBUs, so
Corporate Strategy is concerned with acquiring
and managing its SBUs.
• Corporate Strategy often is called
Diversification Strategy.
Corporate Management
Original
Business
A
B
C
D
E
(Strategic Business Units (SBUs), each with own strategy)
F
Making Diversification Work
• What businesses should a corporation
compete in?
• How should these Strategic Business
Units (SBUs) be managed to jointly
create more value than if they were
freestanding units?
Diversification should
add value
Combined
Businesses
Original
Business
+
New
Business
Creating Value through Diversification
1.
2.
3.
Diversify into Related SBUs to lower average costs & increase aggregated revenues by:
1.
Leveraging (Sharing) Core Competences
2.
Sharing Activities
Diversify into Related SBUs to get market power by:
1.
Pooling Negotiating Power
2.
Vertically Integrating
Diversify into Unrelated SBUs to use skills in parenting, restructuring, & managing portfolios
1.
Parenting Subsidiary Business Units
2.
Restructuring Subsidiary Business Units
3.
Managing A Portfolio of Business Units
1.1 Leveraging (Sharing) Core Competencies
• SBU core competencies are an individual
strategic business unit’s strengths
• Corporate core competencies are the top
administration’s strengths in acquiring,
managing and divesting its SBUs.
• New SBUs may bring their own strengths
which benefit the current organization, or
may be able to benefit from the current
organization’s strengths.
1.1 Three Criteria for Valuable Core Competencies
Superior
Customer
value
• Three criteria for core competenciesthat
lead to the creation of value
• Core competencies must enhance
competitive advantage(s) by creating
superior customer value
• Develop strengths relative to
competitors
• Build on skills and innovations
• Appeal to customers
1.1 Three Criteria for Valuable Core Competencies
Superior
Customer
value
Businesses
similar in way
related to core
competency
• Three criteria (of core competencies)
that lead to the creation of value and
synergy
• Different businesses in the firm must
be similar in at least one important
way related to the core competence
• Not essential that products or
services themselves be similar
• Is essential that one or more
elements in the value chain
require similar essential skills
• Brand image is an example
1.1 Three Criteria for Valuable Core Competencies
Superior
Customer
value
Businesses
similar in way
related to core
competency
Difficult to
imitate or find
substitutes for
• Three criteria (of core competencies)
that lead to the creation of value and
synergy
• Core competencies must be difficult
for competitors to imitate or find
substitutes for
• Easily imitated or replicated core
competencies are not a sound
basis for sustainable advantages
• Specialized technical skills
acquired only in company work
experience are an example
1.2 Sharing Value Chain Activities
• Corporations can also achieve added value by
sharing value chain activities across their
business units
• Common manufacturing facilities
• Distribution channels
• Sales forces
• Sharing value chain activities provide two payoffs
• Cost savings
• Revenue enhancements
1.2 Cost Savings through Sharing Value Chain Activities
• Most common type of sharing
• Savings obtained through
• Eliminating duplicate jobs
• Eliminating duplicate facilities
• Eliminating related expenses
• Savings may be offset by
• Greater costs of coordinating shared activities
• Costs of compromising design or performance of a
shared activity
1.2 Enhancing Revenue through Sharing Activities
• Acquiring firm and its target may achieve a
higher level of sales growth together than either
could have achieved on its own
• Combined distribution channels can escalate sales
of the acquiring company’s products
• Enhanced effectiveness of differentiation strategies
• Can have a negative effect on a given
business’s differentiation
2. Related Diversification: Market Power
Two principal means to add value through
market power
2.1 Pooled negotiating power
2.2 Vertical integration (we will not discuss)
Pooled Negotiating Power
Bargaining
Bargaining
Bargaining
power
powerpower
Business
1
Business
2
• Similar businesses
working together can
have stronger bargaining
position relative to
• Suppliers
• Customers
• Competitors
• Abuse of bargaining
power may affect
relationships with
customers, suppliers and
competitors
3.
Diversifying into Unrelated Businesses
(Unrelated Diversification)
3.1 “Parenting” Subsidiary Business Units
3.2 Restructuring Subsidiary Business Units
3.3 Managing A Portfolio of Business Units
3.1 Corporate Parenting
Corporate
office
• Parenting—creating
value within business
units
• Experience of the
corporate office
• Plans
• Budgets
• Support of the corporate
• Procurement
• Legal functions
office
• Financial functions
• Human resource management
Business
unit
Business
unit
Business
unit
3.2 Corporate Restructuring
Corporate
office
• Find poorly performing
firms
• With unrealized
potential
• Sell off parts
• Reduce payroll
• On threshold of
• Change strategies
• Change management
significant positive
• Infuse new technologies
• Reduce unnecessary expenses change
Business
Business
unitunit
Business
Business
unit
unit
Business
Business
unitunit
3.2 Corporate Restructuring
•
Corporate management must
•
Have insight to detect undervalued companies or
businesses with high potential for transformation
•
Have requisite skills and resources to turn the
businesses around
•
Restructuring can involve changes in
•
Assets
•
Capital structure
•
management
3.3 Portfolio Management
Key
Each circle
represents one of
the firm’s
business units
Size of circle
represents the
relative size of the
business unit in
terms of revenue
3.3 Portfolio Management
• Creation of synergies and shareholder value by portfolio
management and the corporate office
• Allocate resources (cash cows to stars and some question
marks)
• Expertise of corporate office in locating attractive firms to
acquire
• Provide financial resources to business units on favorable
terms reflecting the corporation’s overall ability to raise funds
• Provide high quality review and coaching for units
• Provide a basis for developing strategic goals and
reward/evaluation systems
Unrelated Diversification Activities Also Can Be
Applied to Related Strategic Business Units
1.3 “Parenting” Related SBUs
1.4 Restructuring Related SBUs
1.5 Managing A Portfolio of Related SBUs
Means to Achieve Diversification
• Acquisitions (or mergers)
• Internal development: New business units
• New products
• New markets
• New technology
• Joint ventures or strategic alliances
• I will only address the last one
Strategic Alliances and Joint Ventures
Entering new
markets
• Introduce successful product
or service into a new market
• Lacks requisite marketing
expertise



Doesn’t understand customer
needs
Doesn’t know how to promote the
product
Doesn’t have access to proper
distribution channels
Strategic Alliances and Joint Ventures
Entering new
markets
Reducing
costs in value
chain
• Join other firms to reduce
manufacturing (or other) costs
in the value chain
• Pool capital
• Pool value-creating activities
• Pool facilities
• Economies of scale
Strategic Alliances and Joint Ventures
Entering new
markets
Reducing
costs in value
chain
Developing
diffusing new
technology
• Develop or diffuse new
technologies
• Use expertise of two or more
companies
• Develop products
technologically beyond the
capability of the companies
acting independently
Discuss What Citibank did, or could have done, in each of these
areas. Tell whether it used internal development, acquisitions,
mergers, joint ventures, or strategic alliances.
1.
2.
3.
•
Diversify into Related SBUs to lower average costs & increase aggregated revenues by:
1.
Leveraging (Sharing) Core Competences
2.
Sharing Activities
Diversify into Related SBUs to get market power by:
1.
Pooling Negotiating Power
2.
Vertically Integrating
Diversify into Unrelated SBUs to exploit skills in parenting, restructuring, & managing portfolios
1.
Parenting Subsidiary Business Units
2.
Restructuring Subsidiary Business Units
3.
Managing A Portfolio of Business Units
Diversify into Related SBUs to exploit skills in parenting, restructuring, & managing portfolios
•
Parenting Subsidiary Business Units
•
Restructuring Subsidiary Business Units
•
Managing A Portfolio of Business Units
That’s All, Folks!