Transcript CORPORATE-LEVEL STRATEGY

CORPORATE-LEVEL STRATEGY
THREE KEY ISSUES FACING THE CORPORATION…
• THE FIRM’S ORIENTATION TOWARD GROWTH, STABILITY,
AND RETRENCHMENT (Directional Strategy)
• THE INDUSTRIES OR MARKETS IN WHICH THE FIRM
COMPETES (Portfolio Strategy)
• THE MANNER IN WHICH MANAGEMENT COORDINATES
ACTIVITIES AND TRANSFERS RESOURCES AND CULTIVATES
CAPABILITIES AMONG PRODUCT LINES AND BUSINESS
UNITS (Parenting Strategy)
Corporate headquarters must play the “parent” as it deals with its
various lines of business (children).
CORPORATE GROWTH STRATEGIES
CONCENTRATION
1.
HORIZONTAL INTEGRATION
•
GEOGRAPHIC EXPANSION
–
•
2.
Local, Regional, National, Global
INCREASING THE RANGE OF PRODUCTS and/or SERVICES
VERTICAL INTEGRATION
•
BACKWARD
Long-Term Contracts
Quasi-integration
Tapered Integration
Full Integration
•
FORWARD
DIVERSIFICATION
1.
CONCENTRIC
Related
2.
CONGLOMERATE
Unrelated
GROWTH-ENTRY STRATEGIES
DOMESTIC ENTRY
INTERNAL DEVELOPMENT & EXPANSION
EXTERNAL ACQUISITIONS & MERGERS
STRATEGIC ALLIANCES & PARTNERSHIPS
Licensing, Franchises, Joint Ventures
INTERNATIONAL ENTRY
EXPORTING
LICENSING
FRANCHISING
JOINT VENTURES
ACQUISITIONS
GREEN-FIELD DEVELOPMENT
PRODUCTION SHARING
TURNKEY OPERATIONS
MANAGEMENT CONTRACTS
WHEN ARE GROWTH STRATEGIES LOGICAL?
COMPETITIVE POSITION
WEAK
STRONG
---------------------------------------------
RAPID
REFORMULATE
HORIZ & VERTICAL
INTEGRATION
DIVERSIFICATION
SELL-OUT/DIVEST
MARKET
GROWTH RATE
HORIZONTAL
INTEGRATION
VERTICAL
INTEGRATION
CONCENTRIC
DIVERSIFICATION
---------------------------------------------
DIVERSIFICATION
INTERNATIONAL
EXPANSION
CAPTIVE FIRM/MERGE
DIVERSIFICATION
ABANDONMENT
SLOW
JOINT VENTURE
---------------------------------------
WHEN IS DIVERSIFICATION LOGICAL?
DON’T DIVERSIFY UNLESS…
SYNERGY IS ACHIEVED
SHAREHOLDER VALUE IS BUILT
CONCENTRIC DIVERSIFICATION
FINDING A SYNERGISTIC “FIT”
Marketing
Operations
Management
MERGING THE FUNCTIONS
CONGLOMERATE DIVERSIFICATION
FIND FIRMS WHOSE ASSETS ARE UNDERVALUED
FIND FIRMS THAT ARE FINANCIALLY DISTRESSED
FIND FIRMS WITH BRIGHT PROSPECTS BUT ARE SHORT ON $$$
CONGLOMERATE (UNRELATED) DIVERSIFICATION
PROS…
1--BUSINESS RISK IS SCATTERED OVER MANY INDUSTRIES
2--CAN INVEST CAPITAL IN WHATEVER OFFERS THE BEST PROFIT PROSPECTS
3--PROFITABILITY IS MORE STABLE BECAUSE HARD TIMES IN ONE INDUSTRY CAN BE
PARTIALLY OFFSET BY GOOD TIMES IN ANOTHER
4--IF CORPORATE MANAGERS ARE GOOD AT SPOTTING BARGAIN-PRICED FIRMS WITH BIG
UPSIDE PROFIT POTENTIAL, SHAREHOLDER WEALTH WILL BE ENHANCED
CONS…
1--TOP MANAGEMENT COMPETENCE
Can they tell a good acquisition from a bad one?
Can they select good managers to run each business?
Do they know what to do if a business unit stumbles?
2--DIVERSIFICATION DOES NOTHING TO ENHANCE THE COMPETITIVE STRENGTH OF
INDIVIDUAL BUSINESS UNITS
Each business unit is on it own
No corporate synergy can be achieved
3--ARE THE FIRM’S PROFITS MORE STABLE?
Do the “up and down” cycles cancel out?
4--HOW MUCH DIVERSITY CAN THE FIRM MANAGE SUCCESSFULLY?
How broad should our portfolio be?
COMBINATION DIVERSIFICATION STRATEGIES
ONE MAJOR CORE BUSINESS
…With a modest diversified portfolio (1/3 or less)
NARROWLY DIVERSIFIED
…With a few (2-5) related core business units
…With a few (2-5) unrelated business units
BROADLY DIVERSIFIED
…With many related business units
…With many business units in mostly unrelated industries
A MULTI-BUSINESS FIRM
…With several unrelated groups of related businesses
POST-DIVERSIFICATION STRATEGIES
MAKE NEW ACQUISITIONS
Related or Unrelated?
DIVEST SOME BUSINESS UNITS
Poor Performers?
Poor Strategic “Fit?”
RESTRUCTURE THE WHOLE PORTFOLIO
NARROW THE DIVERSIFICATION BASE
BECOME A DIVERSIFIED MULTINATIONAL, MULTI-INDUSTRY
COMPANY (DMNC)
CORPORATE STABILITY STRATEGIES
PROFIT
“Keep milking the cow, but don’t feed it”
Artificially supporting profits by cutting costs
Keeping up appearances that everything is still OK
A temporary strategy for a worsening environment
PAUSE
Consolidate after recent rapid growth
A temporary strategy to “catch your breath”
PROCEED WITH CAUTION
Environment looks scary…wait to see what happens
NO-CHANGE
A very predictable environment…nothing uncertain ever happens
Why tamper with success? What firms did before WalMart came…
CORPORATE RETRENCHMENT STRATEGIES
OFTEN TRIGGERED BY…
DISAPPOINTING PERFORMANCE
ECONOMIC DOWNTURN
EXCESSIVE DEBT
ILL-CHOSEN ACQUISITIONS
TURNAROUND
Help subsidiaries become profitable
Belt-tightening and consolidation
CAPTIVE COMPANY
Give up independence for security…sell mostly to one large customer “angel”
Can scale back on some functions, like marketing
SELL-OUT/DIVEST
Sell the entire operation to someone as an ongoing business
Divest a healthy firm that doesn’t fit our portfolio…or a low-producing business
LIQUIDATION
The last resort…no one wants to buy the entire business
The assets are worth more than the business…so they’re sold piece by piece
EVALUATING DIVERSIFIED PORTFOLIOS
THE BCG GROWTH-SHARE MATRIX
(Boston Consulting Group)
DIMENSIONS
Industry Growth Rate
Compared to GDP
Relative Market Share
Uses ratios instead of absolute market shares
CLASSIFICATIONS
Question Marks (or Problem Children or Wildcats)
Stars
Cows
Dogs
ADVANTAGES & IMPLICATIONS
It is quantifiable and easy to use
Easy to remember terms and their meaning when referring to business units
Assumes large market shares => economies of scale => cost leadership
Each business unit moves across the matrix in predictable ways over time
Focuses attention on cash flows and needs
THE BCG GROWTH-SHARE MATRIX
RELATIVE MARKET SHARE
HIGH
LOW
1.0
---------------------------------------------
HIGH
INDUSTRY
GROWTH RATE
1.0
STARS
---------------------------------------------
COWS
LOW
QUESTION
MARKS
DOGS
---------------------------------------------
RELATIVE MARKET SHARE
Your market share divided by largest rival’s share
INDUSTRY GROWTH RATE
Industry growth percentage compared to GDP
SIZE OF CIRCLES
The significance (revenues) of each SBU to the firm
WEAKNESSES IN THE BCG GROWTH-SHARE MATRIX
TOO SIMPLISTIC—IT ONLY HAS A FOUR-CELL MATRIX
WHERE DO “AVERAGE” BUSINESSES BELONG?
PREJUDICIAL CLASSIFICATION SCHEME
DOGS & PROBLEM CHILDREN v. STARS & COWS…VERY BIASED TERMS
THE TRENDS & MOVEMENTS OF THESE UNITS SEEM MORE IMPORTANT
IS HIGH INDUSTRY GROWTH ALWAYS GOOD?
DOES HIGH MARKET SHARE ALWAYS MEAN HIGH PROFITABILITY?
FIRMS CAN LOSE MONEY WHILE HOLDING A LARGE MARKET SHARE
LOW-SHARE BUSINESSES CAN ALSO BE PROFITABLE
ONLY CONSIDERS RELATIONSHIP TO THE MARKET LEADER—WHILE OTHERS
ARE IGNORED
WHAT ABOUT SMALL COMPETITORS WITH FAST-GROWING MARKET SHARES?
GROWTH RATE IS ONLY ONE ASPECT OF INDUSTRY ATTRACTIVENESS
MARKET SHARE IS ONLY ONE ASPECT OF OVERALL COMPETITIVE POSITION
THE GE BUSINESS SCREEN
THE INDUSTRY ATTRACTIVENESS / BUSINESS STRENGTH MATRIX
TWO DIMENSIONS
(McKinsey & Co)
Industry Attractiveness
MARKET SIZE & GROWTH RATE
INDUSTRY PROFITABILITY
INTENSITY OF COMPETITION
BARRIERS TO ENTRY / EXIT
SEASONALITY / CYCLICALITY
TECHNOLOGICAL & PRODUCT CONSIDERATIONS
CAPITAL REQUIREMENTS
EMERGING OPPORTUNITIES & THREATS
SOCIAL, ENVIRONMENTAL, & POLITICAL FACTORS
STRATEGIC FIT WITH OTHER CURRENT LINES OF BUSINESS
Business Strength / (Competitive Position)
RELATIVE MARKET SHARE
RELATIVE PRICE, QUALITY, & SERVICE v. RIVALS
PROFIT MARGINS and COST POSITION v. RIVALS
KNOWLEDGE OF CUSTOMERS & MARKETS
TECHNOLOGICAL CAPABILITY & LEADERSHIP
FINANCIAL & PHYSICAL RESOURCES
CALIBER OF MANAGEMENT & STAFF
COMPETENCIES MATCH KEY SUCCESS FACTORS
THE GE BUSINESS SCREEN
BUSINESS STRENGTH / COMPETITIVE POSITION
STRONG
AVERAGE
WEAK
---------------------------------------HIGH
LONG-TERM
INDUSTRY
WINNER
WINNER
QUESTION
MARK
---------------------------------------AVERAGE
WINNER
ATTRACTIVENESS
AVERAGE
BUSINESS
LOSER
---------------------------------------LOW
PROFIT
PRODUCER
LOSER
LOSER
---------------------------------------INDIVIDUAL PRODUCT LINES
Identified by letter
SIZE OF EACH CIRCLE
Represents the total revenues in the industry
PIE SLICES
Represents your share of that market
PROS & CONS OF THE GE BUSINESS SCREEN
STRENGTHS
USES MORE COMPREHENSIVE MEASURES / VARIABLES IN ASSESSING INDUSTRY
ATTRACTIVENESS AND BUSINESS STRENGTH / COMPETITIVE POSITION
DOESN’T LEAD TO AS SIMPLISTIC CONCLUSIONS AS THE BCG GRID
NINE CELL APPROACH ALLOWS FOR INTERMEDIATE RANKINGS BETWEEN HIGH/LOW AND
STRONG/WEAK
STRESSES CHANNELING OF RESOURCES TO AREAS WITH THE GREATEST PROBABILITY OF
ACHIEVING COMPETITIVE ADVANTAGE AND SUPERIOR PERFORMANCE
WEAKNESSES
PROVIDES NO REAL GUIDANCE ON THE SPECIFICS OF WHAT STRATEGY TO FOLLOW … IT’S
TOO GENERAL
CAN’T SPOT UNITS THAT ARE ABOUT TO BECOME WINNERS BECAUSE THEIR INDUSTRIES
ARE ENTERING THE TAKEOFF STAGE
USE OF NUMERIC ESTIMATES SEEMS OBJECTIVE, BUT IS REALLY VERY SUBJECTIVE
SHOULD THE WEIGHTS & FACTORS USED TO ASSESS INDUSTRY ATTRACTIVENESS AND
BUSINESS POSITION BE USED GENERICALLY, OR ADJUSTED DEPENDING ON THE
INDUSTRY UNDER INVESTIGATION?
THE HOFER LIFE-CYCLE MARKET EVOLUTION
MATRIX
TWO DIMENSIONS
(Charles Hofer & A. D. Little, Co)
Stage of Industry / Market Evolution
EARLY DEVELOPMENT
RAPID GROWTH / TAKE-OFF
SHAKE-OUT
MATURITY / SATURATION
DECLINE / STAGNATION
Business Strength / (Competitive Position)
SAME DIMENSIONS AS USED IN THE GE BUSINESS SCREEN
ADVANTAGES
Can be used to identify and track developing winners
Illustrates how the firm’s businesses are distributed across the stages of industry
evolution
THE HOFER LIFE-CYCLE MARKET EVOLUTION
MATRIX
BUSINESS STRENGTH / COMPETITIVE POSITION
STRONG
EARLY
AVERAGE
WEAK
------------------------------
DEVELOPMENT
------------------------------
STAGE OF
RAPID GROWTH /
TAKE-OFF
INDUSTRY / MARKET
------------------------------
SHAKE-OUT
EVOLUTION
-----------------------------MATURITY /
SATURATION
-----------------------------DECLINE /
STAGNATION
-----------------------------ONLY ONE DIMENSION IS DIFFERENT FROM THE GE BUSINESS SCREEN
Except for the Stage of Market Evolution, this model is identical to the GE Business Screen
IN SUMMARY: USING PORTFOLIO ANALYSIS
PROS AND CONS
STRENGTHS
ENCOURAGES TOP MANAGEMENT TO EVALUATE EACH LINE OF BUSINESS SEPARATELY, AND
TO SET OBJECTIVES AND ALLOCATE RESOURCES TO EACH.
IT STIMULATES THE USE OF EXTERNALLY-ORIENTED DATA TO SUPPLEMENT
MANAGEMENT’S JUDGMENT
RAISES THE ISSUE OF CASH FLOW AVAILABILITY FOR USE IN EXPANSION AND GROWTH
GRAPHICALLY COMMUNICATES THE MIX OF BUSINESSES THE FIRM HAS INVESTED IN
WEAKNESSES
DEFINING PRODUCT / MARKET SEGMENTS IS DIFFICULT
IT SUGGESTS STANDARD STRATEGIES THAT CAN MISS OPPORTUNITIES OR BE IMPRACTICAL
PROVIDES AN ILLUSION OF SCIENTIFIC RIGOR, WHEN POSITIONS ARE REALLY BASED ON
SUBJECTIVE JUDGMENTS
VALUE-LADEN TERMS (cow, dog) LEAD TO SIMPLISTIC STRATEGIES AND SELF-FULFILLING
PROPHESIES
ITS NOT ALWAYS CLEAR WHAT MAKES AN INDUSTRY ATTRACTIVE OR WHERE A PRODUCT IS
IN ITS LIFE CYCLE
NAIVELY FOLLOWING PORTFOLIO PRESCRIPTIONS MAY REDUCE PROFITS –DOGS CAN MAKE
MONEY!
HOW TO APPLY PORTFOLIOS IN YOUR ANALYSIS
THE NON-QUANTITATIVE APPROACH
COMPARING INDUSTRY ATTRACTIVENESS
ATTRACTIVENESS OF EACH INDUSTRY IN THE PORTFOLIO
Is this a good industry for our organization to be in?
EACH INDUSTRY’S ATTRACTIVENESS RELATIVE TO THE OTHERS
Which industries are the most / least attractive?
ATTRACTIVENRSS OF ALL THE INDUSTRIES AS A GROUP
How appealing is the mix of industries? Is the portfolio a “good” one?
TO DETERMINE INDUSTRY ATTRACTIVENESS
1--USE GE BUSINESS SCREEN METHODOLOGY
2--SUBJECTIVELY CLASSIFY EACH INDUSTRY FACTOR INTO ONE OF THREE
CATEGORIES…
HIGHLY ATTRACTIVE
AVERAGE
NOT ATTRACTIVE
EVALUATING INDUSTRY ATTRACTIVENESS
(UNWEIGHTED)
INDUSTRY FACTOR
CLASSIFIED AS
MARKET SIZE & GROWTH RATE
AVERAGE
INDUSTRY PROFITABILITY
ATTRACTIVE
INTENSITY OF COMPETITION
UNATTRACTIVE
BARRIERS TO ENTRY/EXIT
UNATTRACTIVE
SEASONALITY/CYCLICALITY
AVERAGE
TECHNOLOGY & PRODUCT CONSIDERATIONS
AVERAGE
CAPITAL REQUIREMENTS
UNATTRACTIVE
EMERGING OPPORTUNITIES & THREATS
AVERAGE
SOCIAL, REGULATORY, & POLITICAL FACTORS
AVERAGE
STRATEGIC FIT WITH OTHER CURRENT LINES OF BUSINESS
ATTRACTIVE
OVERALL EVALUATION = AVERAGE
EVALUATING INDUSTRY ATTRACTIVENESS
(NUMERIC, UNWEIGHTED)
ASSIGN A NUMBER TO EACH INDUSTRY FACTOR USING THE FOLLOWING SCHEME…
UNATTRACTIVE = 0, 1, 2, 3 AVERAGE = 4, 5, 6 ATTRACTIVE = 7, 8, 9, 10
--------------------------------------------------------------INDUSTRY FACTOR
ASSIGNED NUMBER
MARKET SIZE & GROWTH RATE
INDUSTRY PROFITABILITY
INTENSITY OF COMPETITION
BARRIERS TO ENTRY/EXIT
SEASONALITY/CYCLICALITY
TECHNOLOGY & PRODUCT CONSIDERATIONS
CAPITAL REQUIREMENTS
EMERGING OPPORTUNITIES & THREATS
SOCIAL, REGULATORY, & POLITICAL FACTORS
STRATEGIC FIT WITH OTHER LINES OF BUSINESS
6
9
2
3
6
5
1
5
4
8
OVERALL EVALUATION = 49/10 = 4.9 = AVERAGE
EVALUATING INDUSTRY ATTRACTIVENESS
(NUMERIC, WEIGHTED)
1--ASSIGN WEIGHTS TO EACH INDUSTRY FACTOR (Must add up to 100%)
2--THEN ASSIGN NUMBERS TO EACH FACTOR USING THE FOLLOWING SCHEME…
UNATTRACTIVE = 0 - 3
AVERAGE = 4 - 6
ATTRACTIVE = 7 - 10
3--MULTIPLY WEIGHTS BY NUMBERS TO DETERMINE THE WEIGHTED SCORE
-----------------------------------------------------------WEIGHT
.10
.10
.15
.05
.05
.08
.12
.10
.10
.15
INDUSTRY FACTOR
ASSIGNED NUMBER
MARKET SIZE & GROWTH RATE
INDUSTRY PROFITABILITY
INTENSITY OF COMPETITION
BARRIERS TO ENTRY/EXIT
SEASONALITY/CYCLICALITY
TECHNOLOGY & PRODUCT CONSIDERATIONS
CAPITAL REQUIREMENTS
EMERGING OPPORTUNITIES & THREATS
SOCIAL, REGULATORY, & POLITICAL FACTORS
STRATEGIC FIT WITH OTHER LINES OF BUSINESS
OVERALL EVALUATION = 4.87 = AVERAGE
6
9
2
3
6
5
1
5
4
8
EVALUATING BUSINESS STRENGTH /
COMPETITIVE POSITION
(UNWEIGHTED)
USE THE FOLLOWING SCHEME TO CLASSIFY EACH BUSINESS STRENGTH FACTOR…
STRONG
AVERAGE
WEAK
--------------------------------------------------------------BUSINESS STRENGTH FACTOR
OUR RELATIVE MARKET SHARE
OUR RELATIVE PRICE v. RIVALS
OUR QUALITY & SERVICE v. RIVALS
OUR RELATIVE COST POSITION v. RIVALS
OUR PROFIT MARGINS v. RIVALS
KNOWLEDGE OF CUSTOMERS & MARKETS
TECHNOLOGICAL CAPABILITY / LEADERSHIP
FINANCIAL & PHYSICAL RESOURCES
CALIBER OF MANAGEMENT & STAFF
COMPETENCIES MATCH KEY SUCCESS FACTORS
CLASSIFIED AS
STRONG
AVERAGE
AVERAGE
STRONG
STRONG
AVERAGE
WEAK
AVERAGE
STRONG
AVERAGE
OVERALL EVALUATION = AVERAGE to STRONG
EVALUATING COMPETITIVE BUSINESS STRENGTH
(NUMERIC, UNWEIGHTED)
ASSIGN NUMBERS TO EACH BUSINESS STRENGTH FACTOR …USE THE FOLLOWING…
WEAK = 0, 1, 2, 3
AVERAGE = 4, 5, 6
STRONG = 7, 8, 9, 10
--------------------------------------------------------------INDUSTRY FACTOR
ASSIGNED NUMBER
RELATIVE MARKET SHARE
RELATIVE PRICE v. RIVALS
QUALITY & SERVICE v. RIVALS
RELATIVE COST POSITION v. RIVALS
PROFIT MARGINS v. RIVALS
KNOWLEDGE OF CUSTOMERS & MARKETS
TECHNOLOGICAL CAPABILITY & LEADERSHIP
FINANCIAL & PHYSICAL RESOURCES
CALIBER OF MANAGEMENT & STAFF
COMPETENCIES MATCH KEY SUCCESS FACTORS
7
5
6
8
8
5
2
4
8
6
OVERALL EVALUATION = 59/10 = 5.9 = AVERAGE
EVALUATING COMPETITIVE BUSINESS STRENGTH
(NUMERIC, WEIGHTED)
1--ASSIGN WEIGHTS TO EACH COMPETITIVE FACTOR (Must add up to 100%)
2--THEN ASSIGN NUMBERS TO EACH FACTOR USING THE FOLLOWING SCHEME…
WEAK = (0 – 3)
AVERAGE = (4 – 6)
STRONG = (7 – 10)
3--MULTIPLY WEIGHTS BY NUMBERS TO DETERMINE THE WEIGHTED SCORE
-----------------------------------------------------------WEIGHT
.08
.08
.15
.12
.06
.15
.05
.10
.06
.15
COMPETITIVE BUSINESS STRENGTH
ASSIGNED NUMBER
RELATIVE MARKET SHARE
RELATIVE PRICE v. RIVALS
QUALITY & SERVICE v. RIVALS
RELATIVE COST POSTION v. RIVALS
PROFIT MARGINS v. RIVALS
KNOWLEDGE OF CUSTOMERS & MARKETS
TECHNOLOGICAL CAPABILITY / LEADERSHIP
FINANCIAL & PHYSICAL RESOURCES
CALIBER OF MANAGEMENT & STAFF
COMPETENCIES MATCH KEY SUCCESS FACTORS
OVERALL EVALUATION = 5.93 = AVERAGE
7
5
6
8
8
5
2
4
8
6
COMPARING BUSINESS UNIT PERFORMANCE
WHICH BUSINESS UNITS HAVE THE BEST/WORST PERFORMANCE?
ASSESS THE TRENDS RE:
Sales Growth
Profit Growth
Contribution to Company Earnings
Return on Capital Invested in the Business (ROA)
Cash Flow Generated
STRATEGIC FIT ANALYSIS
STRATEGIC ATTRACTIVENESS
Does this business have cost-sharing or skills-transfer opportunities?
FINANCIAL ATTRACTIVENESS
Does this business contribute to corporate performance objectives?
RANK THE BUSINESS UNITS ON INVESTMENT PRIORITY
Which units should get the highest priority regarding financial support?
COMPARING BUSINESS UNIT PERFORMANCE
A SIMPLE EXAMPLE
UNIT A
UNIT B
UNIT C
UNIT D
.018
.032
.068
.062
.102
.103
.071
.044
$ 70
.072
$234
$554
.124
$611
$ 29
.088
$ 28
$237
.096
$342
STRATEGICALLY ATTRACTIVE
No
Yes
Yes
No
FINANCIALLY ATTRACTIVE
Yes
Yes
No
Yes
INVESTMENT PRIORITY
4
1
2
3
SALES GROWTH
GROWTH IN PROFITS
CONTRIBUTION TO CORP
EARNINGS (Omit 000s)
RETURN ON ASSETS
GENERATED CASH FLOWS
(Omit 000s)
CRAFTING A CORPORATE STRATEGY
BY EVALUATING YOUR PORTFOLIO MATRIX
1.
DOES THE PORTFOLIO HAVE ENOUGH BUSINESSES IN
ATTRACTIVE INDUSTRIES?
2.
DOES THE PORTFOLIO CONTAIN TOO MANY MARGINAL
BUSINESSES OR QUESTION MARKS?
3.
DOES THE CORPORATION HAVE ENOUGH CASH COWS TO
FINANCE THE STARS AND EMERGING WINNERS?
4.
DO THE CORE BUSINESSES GENERATE DEPENDABLE PROFITS OR
CASH FLOWS?
5.
IS THE PORTFOLIO VULNERABLE TO SEASONAL OR
RECESSIONARY INFLUENCES?
6.
DOES THE PORTFOLIO CONTAIN BUSINESSES THAT THE
CORPORATION DOESN’T NEED TO BE IN?
7.
IS THE CORPORATION BURDENED WITH TOO MANY BUSINESSES
IN AVERAGE-TO-WEAK COMPETITIVE POSITIONS?
8.
DOES THE MAKEUP OF THE PORTFOLIO PUT THE CORPORATION
IN A GOOD POSITION FOR THE FUTURE?
STEPS IN THE STRATEGIC ANALYSIS OF
DIVERSIFIED FIRMS
A SUMMARY
1.
IDENTIFY THE PRESENT CORPORATE STRATEGY
2.
CONSTRUCT BUSINESS PORTFOLIO MATRICES
3.
PROFILE THE INDUSTRY AND COMPETITIVE ENVIRONMENT OF
EACH BUSINESS UNIT
4.
EVALUATE THE COMPETITIVE STRENGTH OF EACH INDIVIDUAL
BUSINESS
5.
COMPARE PERFORMANCE RECORDS OF EACH BUSINESS UNIT
6.
HOW WELL DOES EACH BUSINESS UNIT “FIT” WITH CURRENT
CORPORATE STRATEGY?
7.
RANK THE UNITS FROM HIGHEST TO LOWEST IN INVESTMENT
PRIORITY
8.
CRAFT A SERIES OF MOVES TO IMPROVE OVERALL CORPORATE
PERFORMANCE