CORPORATE LEVEL STRATEGY

Lina Widyatama Ronald M. Sutedjo Yunior Liem

READING 6.1 Strategy and the business portfolio

As a result of an existence competitor in a high market share segment, business must able to develop the lowest cost position and hence most stable and highest profit. The important of growth in shaping strategy: Business growth, hence cost->gain market share Opportunity to investment In low-growth business: tend to require an actual volume reduction in competitor sales. In high-growth business: securing largest share of growth in the business.

BCG Growth share matrix

Portfolio
Strategy involves striking a balance in portfolio such that the cash generated by cash cows sufficient to support the company s stars and to fund the selected question marks through to dominance. Stars: Maintain market share, Cash cow: current profitability, Dogs: yield cash, ?: increase market share or managed for cash. To reduce vicious circle of decline select only few question marks through careful analysis and finance those.

READING 6.2 The Core Competence of the Corporation

Company s competitiveness derives from the price/performance attributes of current products, but in long term it s from the ability to build at lower cost and more speedily than competitors, the core competencies that spawn unanticipated products. Core competence is about harmonizing streams of technology, organization of work and delivery of value, communication, involvement and deep commitment, do not dimmish with use. Identify core competencies:
It provides potential access to a wide variety of markets. (Casio: watch, remote TV) Should make a significant contribution to perceived customer benefits of the end product. (Honda) Difficult for competitors to imitate.

Core products is the tangible link between core competencies and end products. (physical embodiments)

Two concepts of the corporation

SBU Basis for competition Corporate structure Status of the business unit Resources allocation Competitiveness of today s products Portfolio of business related in product-market terms Autonomy is sacrosanct; the SBU owns all resources other than cash Core competence Interfirm competition to build competencies Portfolio of competencies, core products and business SBU is a potential reservoir of core competencies

Discrete businesses are the unit Businesses and competencies of analysis; capital is allocated are the unit of analysis: top business by business management allocates capital and talent Optimizing corporate returns through capital allocation trade-offs among business Enunciating strategic architecture and building competencies to build the future

Value added of top management

Case: DANONE Digestive problems..?

DANONE
Mission:
Bring the health through tasty, nutritious, & affordable food and beverage products.

Positioning as:
Bottled water
Evian, Badoit, Volvic, Bonafont, Aqua

Baby food
Bldina

Danone has opened exclusive talks to sell its biscuit and cereal division to Kraft Foods to sharpen its business focus on the health and nutrition segments

Medical nutrition
Activia, Actimel, Crush

Source: http://www.nutraceuticalsworld.com/contents/view_online-exclusives/2007-07-01/danone-acquires-royal-numico/

NUMICO
Who?
Specialist in healthy baby food and healthcare nutrition Leader in baby products as number one in Western Europe and Eastern Europe, number two in Asia and number three in Australia, Africa and the Middle East

Positioning as:
Oral nutrition
Nutridrink, Fortimel and Fortisip

Tube nutrition
Nutrison

Targeted nutrition
Infatrini and Nutrini, Diasip and Diason

Special needs nutrition

Neocate, Lophlex LQ

DANONE - NUMICO
Danone acquired Numico (July 2007)
Danone agreed to pay 55 euros a share, or 12.3 billion euros ($16.8 billion), or a 44% premium over Numico's average share price in the last three months

Overpaid??

NO!!
Numico was the most sought-after target in the sector and also..
Source: http://www.reuters.com/article/2007/07/10/us-danone-numico-idUSL1087495920070710

DANONE - NUMICO
Danone acquired Numico (July 2007)
The reason behind:
Danone has sharpen its business segment Numico has the in-line products with Danone business focus (health & nutritious) Numico s strength in the infant nutrition segment will boost Danone s sizable dairy market presence The collaboration in R&D of Danone (Probiotics) & Numico (Prebiotics) The form of business culture is close to Danone s own

Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf

DANONE - NUMICO

Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf

DANONE - NUMICO
Baby Product (Formerly Numico)

Medical Nutrition (Formerly Numico)

Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf

DECENTRALIZE

Source: http://www.danone.de/download/Danone-Economic-Social-Report.pdf

Binus Business School 2012

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