Corporate Strategy Module Session 5-6 Corporate Strategy Framework Session 7-8 Corporate Strategy In...
-
Upload
branden-skinner -
Category
Documents
-
view
221 -
download
0
Transcript of Corporate Strategy Module Session 5-6 Corporate Strategy Framework Session 7-8 Corporate Strategy In...
Corporate Strategy Module
Session 5-6 Corporate Strategy FrameworkSession 7-8 Corporate Strategy In ActionSession 9-10 Related and Unrelated DiversificationSession 11-12 Vertical IntegrationSession 13-14 Merger and AcquisitionSession 15-16 DivestitureSession 17-18 Strategic AllianceSession 19-20 Group Presentation (Final Exam)
Graduate School of Business AdministrationIndonesian Institute of Management Development (IPMI)
Course Objectives-Outline-ScheduleCourse Objectives-Outline-Schedule
Understand strategy measurement tools and evaluation issues
15May[am] Session 1-2: Balance Score Card (Case: Mobil A1) Alex
22May[am] Session 3-4: Measuring Strategy Execution (Case Mobil A2/B) & Strategy Map (Case Serono) Alex
Differentiate between business and corporate strategy
29May[am] Session 5-6: Corp Strategy Framework (Case Walt Disney) Manggi
05Jun[am] Session 7-8: Corp Strategy in Action (Case GE) Manggi
Course Objectives-Outline-ScheduleCourse Objectives-Outline-Schedule
Familiarize with diversification and integration 12Jun[pm] Session 9-10: Related & Unrelated
Business (Cases: Porsche/PepsiCo & Masco/Berkshire) Manggi
19Jun[pm] Session 11-12: Vertical Integration (Case: Arauco) Mustafa
Familiarize with corporate actions 26Jun[am] Session 13-14: Merger & Acquisition
(Cases: HP-Compaq/Newell) Mustafa
03Jul[pm] Session 15-16: Divestiture (Cases: Prudential Securities and AT&T) Mustafa
24Jul[am] Session 17-18: Strategic Alliance (Cases: IBM and Linux/Laura Ashley and Fedex) Mustafa
07Aug[am] Session 19-20: Group Term Project prez
Course Assignment & Grading Individual class participation [30%] Individual and Group Assignment [30%]
Hand in hard copy of Group presentation after each class (session)
One page (3 bullet pts) on lessons learnt for session 5-18: due thru email: 24-26 Jul 2010
Group Term Project [40%] Group Term Project will be assigned on July 24 to be
presented and hard copy submitted in class on 7Aug2010.
Session 5-6: Corporate Strategy Framework
Corporate Strategy
Graduate School of Business AdministrationIndonesian Institute of Management Development (IPMI)
BS CS
What is Bus & Corp Strat Difference?What is Bus & Corp Strat Difference?Simple draw single bus and multi-busSimple draw single bus and multi-bus
• Tactics and approaches, e.g. EOQ level, double-shift, 24-hour operations
• Business process, Standards and Procedures
Levels of StrategyLevels of StrategyCreating synergy Creating synergy difficult difficult
Business Unit Strategy
Functional Strategy
• Business portfolio & scope: diversification, merger & acquisition, divestitures
• Creating synergy: corporate advantage, skill transfer, sharing assets, holding company
• Detailed strategic positioning and initiatives by function, e.g. marketing, sales, finance, operations, HR, IT
• Link to business strategy
• Where to compete: Positioning, strategic intent
• How to compete: Strategic initiatives, strategic options
• Link to corporate strategy
Multi-business, Corporate advantage
Single business,Competitive advantage
Detailedstrategy
OPERATIONS
Corporate Srategy
Corporate Strategy Corporate Strategy DefinitionDefinition
How to generate sustainable corporate advantage by choosing and managing an appropriate:
• business mix (configuration), • ownership (HQ and control) structure • organizational design to best allocate and share resources (coordination)
that optimizes corporation resources
Corporate Srategy
• Generate corporate value from the membership of each business unit (the sum is more than its parts)
• Create more value than the cost of corporate overhead
• Add more value than other corporation (“competitors”)
Corporate StrategyCorporate StrategyUltimate ObjectivesUltimate Objectives
CORPORATE STRATEGY IS
NOT JUST COMPETITIVE ADVANTAGE, IT IS ABOUT CORPORATE ADVANTAGE
Corporate Srategy
Corporate Strategy Elements
Vision & Objectives (Consistent and Feasible) Vision: LTerm purpose and mission and Goals &
Objectives: STerm concrete targets Resources (Skill transfer and Sharing assets)
Hard and soft assets that are sources of corporate advantage
Business Mix (Portfolio strategies) Corporate HQ role (Shared activities and control)
Deploying corp resources and decentralized decn mkg
Corporate affairs, legal, financial and tax Structure n SOP to control and coordinate multi-
businesses
Corporate Strategy FrameworkCorporate Strategy Framework
BIZ MIX(industry, biz strategy, ownership)
CORP HQ ROLE(organization,
control, process)
RESOURCES(assets, skill, competence)
VISION
OBJECTIVE
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
CORPORATE ADVANTAGE
• __________• __________
PORTFOLIO: high when a lot of acquisition / divestiture by HQ
STRATEGIC: high if HQ is active in developing, approving,, monitoring, or supervising strategy of business units (Bus)
SKILL TRANSFER: high if a lot of transfer skill and people competence among BUs either technical or managerial, can be represented also in rotation or knowledge management system
SHARED ACTIVITIES: high if a lot of similar business process is used by different BUs
TIGHT CONTROL: high when stringent budgetary or investment control (financial relate) is exercised by HQSHARING ASSETS: high when tangible*
(plant, equipment, patent, product) or intangible assets (brand, reputation) is being shared by BUs
Corporate Strategy in ActionCorporate Strategy in Action
H
M
L
*Note: tangible assets does not include financial (tight control) and people (skill transfer)
Relative Market Share of Company / Business Unit
Market Growth of Industry
DOG
Low High
High
Low
STARPROBLEM CHILD
CASH COW
USED FOR:• Business
selection• Investment
plan
Managing a Portfolio of BusinessesManaging a Portfolio of Businesses Market Growth / Market Share Matrix (BCG)Market Growth / Market Share Matrix (BCG)
Case: Walt Disney Situational analysis [end-2000]
Eisner’s successful turnaround [84-93] losing steam [94-95 turmoil n transition]. After acquiring ABC, financials decline [98-99] ABC acquisition expensive (22xPE) Resulting in heavy debt burden Difficult creating synergy thru vertical
integration vs non-exclusive strategic alliance Integration problems (different corporate
cultures, Disney’s tendency to micro manage)
Walt Disney’s business Media Network (Rev: $9.6bn up, OM: 25%):
Broadcast [ABC]; Cable Network [ESPN, Disney Ch, etc]
Studio Entertainment ($6.0bn down, 2%): Films [WDisney, Touchstone, Miramax]; Buena Vista Home entertainment; Buena Vista Music Group; TV production
Theme Park n Resorts ($6.8bn up, 24%): Attractions [Disneyland, Disney World Resort, Vacation Club]; Anaheim Sports [Mighty Ducks, Angels]
Consumer Products ($2.6bn down, 17%): Merchandising; Disney Store; Publishing
Internet n Direct Mktg ($0.4bn up, loss): Disney Online; ESPN Internet; ABC Internet; GO Network
Disney Financial Performance
1983 19902000
Rev($bn) 1.3 5.8 25.4 Net Inc($bn) 0.1 0.8 0.9 Asset($bn) 2.4 8.0 45.0 RoA(%) 4.0 10.0 2.0 OptgM(%) 14 22 13 Debt/Assets19% 20% 22% Disney stock 100 906 3,226
Corp Strat Framework: DisneyCorp Strat Framework: DisneyCorporate Strategic Priorities: 1984 - 1993Corporate Strategic Priorities: 1984 - 1993
BIZ MIX
CORPORATE HQ
RESOURCES
VISION
OBJECTIVE
CORPORATE ADVANTAGE
• Disney characters (Mickey Mouse, Aladdin, etc.)
• Disney brand• Creativity and skills
in each business units
• Property
• Focus on movie and theme parks, expand into new region & segment, done both organic or through acquisition
• Diversify into new (but related) business, become vertically integrated entertainment corporation
• Strong intervention on business units strategy by Eisner’s combination of volume, performance (profit) and creative management (technology)
• Each biz unit has its own process, sharing in marketing/promotion and event coordination
• HQ step in only when necessary, transfer pricing. While Eisner demand s high performance , spending readily approved if deemed necessary
• Disney characters• Disney brand• Creativity• Eisner leadership
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIO STRATEGIC
SKILL TRANSFER
SHARED ACTIVITIES
TIGHT CONTROL
SHARING ASSETS
Corp Strategy in Action: DisneyCorp Strategy in Action: DisneyCorporate Strategy 1984 - 1993Corporate Strategy 1984 - 1993
M
H
H
MH M
M
PORTFOLIO: Enhanced core business of movie making and theme parks with new services and to new regions/segments. Expanded to related entertainment biz STRATEGIC: Eisner involved in almost all BU’s strategic decision (hands-on). Performance oriented mgmt balanced with “creativity mgmt” SKILL TRANSFER: A lot
of shared training, to improve synergy among BUs and encourage creativitySHARED ACTIVITIES: Frequent shared
promotional events
TIGHT CONTROL: Eisner is very hands on
SHARING ASSETS: Very strong in using Disney characters to all business units. Also capitalize on Disney’s brand
Business Matrix: DisneyBusiness Matrix: DisneyGrowth / Share Matrix: 1993Growth / Share Matrix: 1993
Movie studio (adult)Movie studio (animation)TV program/shows
Movie distrib (BVHV)Merch.licensing
Disney Store
PublishingNHL/Hockey clubMusic recordingTheater
Theme parks (including hotel, resort)
ESPN (Cable)
Relative Market Share
MarketGrowth
Disney Channel (cable)
Disney Strategic Issues Managing Synergies
Leverage brand and create synergies Synergy training (boot camp) Synergy Group at Corporate level Merged Touchstone and ABC
Managing Brand Limits of traditional wholesome image
ABC’s Ellen controversy Managing Creativity
Managing creativity thru conflict Money vs creativity
Key Questions: Disney
Was Disney becoming too large for Eisner’s autocratic and combative mgmt style?
Was Disney’s strategy coherent for its business mix?
Did Eisner’s 20% growth target make sense?
What happened? Eisner was moved out Sep 2005 after 21 years
at Disney Robert Iger takes over and has been able to
grow revenue and profits in all of its major business groups
More disciplined acquisitions Financially ok $8.9bn 4Q07 sales (annualized
$35.6bn), driven by strong ESPN and theme park performance. Studio performance, however, was weak.
Case: DisneyCase: DisneyLessons LearnedLessons Learned
• Disney’s utmost corporate advantage lies on ability to share assets (character) to various business units. It’s the synergy of businesses within Disney Corp.
• Creativity in producing the new character, and non-character entertainment products/services are also important for Disney
• “Strategic” and hands-on corporate HQ culture under Eisner is important in 1984 – 1993 period as business unit performance is lagging. Further hands-on without strong COO/Business Unit heads leads to autocracy of Eisner’s dominance
• During 1994 – 2000, extended “tight control” impact creativity and resulted in loss talent/competence of middle managers and less performance growth
• Rebalancing the corporate strategy is a mandatory action to be taken by Eisner in 2000, i.e. skill vs portfolio vs tight control