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The great commander knows when to attack and when to stand down. Never fight a battle when nothing is gained by winning.
- General George S. Patton
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Corporate-Level Strategy
Corporate-Level Strategy should allow a company, or its
business units, to perform the value-creation functions at lower cost or in a way that allows for differentiation and premium price.
Corporate strategy is used to identify: 1. Businesses or industries that the company should compete in 2. Value creation activities that the company should perform in those businesses 3. Method to enter or leave businesses or industries in order to maximize its long-run profitability
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Horizontal Integration
The process of acquiring or merging with industry competitors
Vertical Integration
Expanding operations backward into an industry that produces inputs for the company or forward into an industry that distributes the companys products
Strategic Outsourcing
Letting some value creation activities within a business be performed by an independent entity
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Focus resources
Its total managerial, technological, financial and functional resources and capabilities are devoted to competing successfully in one area.
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Full Integration
Company produces all of a particular input from its own operations. Disposes of all of its completed products through its own outlets.
Taper Integration
In addition to company-owned suppliers, the company will also use other suppliers for inputs or independent outlets in addition to company-owned outlets.
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Demand is unpredictable. Creates risk in vertical integration investments. Vertical integration can weaken business model when:
Company-owned suppliers lack incentive to reduce costs Changing demand or technology reduces ability to be competitive
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Strategic Outsourcing
Strategic Outsourcing allows one or more of a companys
value-chain activities or functions to be performed by independent specialized companies that focus all their skills and knowledge on just one kind of activity.
Virtual Corporation
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Benefits of Outsourcing
1. Reducing the cost structure
The specialist company cost is less than what it would cost to perform the activity internally. The quality of the activity performed by the specialist is greater than if the activity were performed by the company. Distractions are removed. The company can focus attention and resources on activities important for value creation and competitive advantage.
2. Enhanced differentiation
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Coke can grow faster by forming alliances that give it access to research and other expertise.
- Douglas Daft, Chairman, Coca-Cola
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