Corporate Strategy
Chapter 6 Corporate-Level Strategy
Colorado State University Copyright © 2004 South-Western All rights reserved.
R. Dennis Middlemist
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Knowledge Objectives
• Studying this chapter should provide you with the strategic management knowledge needed to:
Define corporate-level strategy and discuss its importance to the diversified firm. Describe the advantages and disadvantages of single- and dominant- business strategies. Explain three primary reasons why firms move from singleand dominant-business strategies to more diversified strategies. Describe how related diversified firms create value by sharing or transferring core competencies.
Copyright © 2004 South-Western. All rights reserved.
6–2
Knowledge Objectives (cont’d)
• Studying this chapter should provide you with the strategic management knowledge needed to:
Explain the two ways value can be created with an unrelated diversification strategy. Discuss the incentives and resources that encourage diversification. Describe motives that can encourage managers to overdiversify a firm.
Copyright © 2004 South-Western. All rights reserved.
6–3
The Strategic Management Process
Figure 1.1
Copyright © 2004 South-Western. All rights reserved. 6–4
The Role of Diversification
• Diversification strategies play a major role in the behavior of large firms • Product diversification concerns:
The scope of the industries and markets in which the firm competes How managers buy, create and sell different businesses to match skills and strengths with opportunities presented to the firm
Copyright © 2004 South-Western. All rights reserved.
6–5
Two Strategy Levels
• Business-level Strategy (Competitive)
Each business unit in a diversified firm chooses a business-level strategy as its means of competing in individual product markets
• Corporate-level Strategy (Companywide)
Specifies actions taken by the firm to gain a competitive advantage by selecting and
Colorado State University Copyright © 2004 South-Western All rights reserved.
R. Dennis Middlemist
PowerPoint slides by:
Knowledge Objectives
• Studying this chapter should provide you with the strategic management knowledge needed to:
Define corporate-level strategy and discuss its importance to the diversified firm. Describe the advantages and disadvantages of single- and dominant- business strategies. Explain three primary reasons why firms move from singleand dominant-business strategies to more diversified strategies. Describe how related diversified firms create value by sharing or transferring core competencies.
Copyright © 2004 South-Western. All rights reserved.
6–2
Knowledge Objectives (cont’d)
• Studying this chapter should provide you with the strategic management knowledge needed to:
Explain the two ways value can be created with an unrelated diversification strategy. Discuss the incentives and resources that encourage diversification. Describe motives that can encourage managers to overdiversify a firm.
Copyright © 2004 South-Western. All rights reserved.
6–3
The Strategic Management Process
Figure 1.1
Copyright © 2004 South-Western. All rights reserved. 6–4
The Role of Diversification
• Diversification strategies play a major role in the behavior of large firms • Product diversification concerns:
The scope of the industries and markets in which the firm competes How managers buy, create and sell different businesses to match skills and strengths with opportunities presented to the firm
Copyright © 2004 South-Western. All rights reserved.
6–5
Two Strategy Levels
• Business-level Strategy (Competitive)
Each business unit in a diversified firm chooses a business-level strategy as its means of competing in individual product markets
• Corporate-level Strategy (Companywide)
Specifies actions taken by the firm to gain a competitive advantage by selecting and