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Chapter 08
Chapter 8—Corporate-Level Strategy

Chapter 8: Corporate-Level Strategy
CHAPTER SUMMARY
This chapter focuses on the use of corporate-level strategies to define the arenas in which organizations will participate. Diversification strategy is the primary vehicle used at the corporate level to create value for a portfolio of businesses that exceeds the value potential of the individual businesses under different ownership. Diversification is examined at various levels of connectedness amongst the individual businesses within a corporation.
Value-creating reasons for firms to use corporate-level strategies are explored, with a look at vertical integration as a means to gain power over competitors.
Value-neutral and value-reducing reasons for diversifying are also presented, along with the design of organizational structure that facilitates implementation for each type of corporatelevel strategy discussed.

CHAPTER OUTLINE
Levels of Diversification
Low Levels of Diversification
Moderate and High Levels of Diversification
Reasons for Diversification
Diversification and the Multidivisional Structure
Related Diversification
Operational Relatedness: Sharing Activities
Using the Cooperative Form of the Multidivisional Structure to Implement the Related
Constrained Strategy
Corporate Relatedness: Transferring of Core Competencies
Using the Strategic Business-Unit Form of the Multidivisional Structure to Implement the
Related Linked Strategy
Market Power through Multimarket Competition and Vertical Integration
Simultaneous Operational Relatedness and Corporate Relatedness
Unrelated Diversification
Efficient Internal Capital Market Allocation
Restructuring
Using the Competitive Form of the Multidivisional Structure to Implement the
Unrelated Diversification Strategy
Value-Neutral Diversification: Incentives and Resources
Incentives to Diversify
Resources and Diversification
Value-Reducing Diversification: Managerial Motives to Diversify
Summary

KNOWLEDGE OBJECTIVES
1. Define

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