Creating Corporate Advantage

Group D
Sonali Kale (061) Devdatta Mahajan (072) Mitali Nanavaty (095) Harmanjeet Parmar (106) Cyrus Pavri (111) Pranjali Polekar (115)

 Competitive Advantage v/s Corporate Advantage What is Corporate Advantage Elements of Corporate Advantage The Resource Continuum (Newell, Sharp and Tyco Case Examples) Conclusion

Competitive Advantage v/s Corporate Advantage

Competitive Advantage:
At the level of individual businesses: executives very successful

Corporate Advantage:
Across multiple businesses: success not encouraging

What is Corporate Advantage?

The way a company creates value through the configuration and coordination of its multibusiness activities. It is the factor which differentiates truly great corporate strategies from the merely average or adequate ones. The Triangle of Corporate Strategy
All the elements must be aligned with one another, with resources being the unifying thread which determines the success of other elements.
Competitive Advantage

Organisation
Coordination Control

The Resource Continuum

Resources provide the basis for corporate advantage and range along a continuum from the highly specialized at one end to the very general at the other end. The firms position on this continuum determines its business direction and design.

New businesses must be ventured into based on the similarity of resources rather than products since it is the resources that contribute to corporate advantage.

general

nature of resources

specialized

wide

scope of business

narrow

transferring

coordination of mechanisms sharing

financial

control system

operating

small

corporate office size

large

TYCO
Creates value for its businesses through a set of general management skills and a system of corporate governance

NEWELL
Build on what we do best

SHARP
Invest in technologies that will be the nucleus of the company in the future

Nature of resources

general
Broad applicability of resources. Draws on common resources like relationship with discount retailers, efficient high volume manufacturing, superior servicing, program merchandising.

specialised
Specialised optoelectronics technologies that contributes to the competitive advantage of the companys core business. For e.g. Liquid crystal displays

TYCO
Creates value for its businesses through a set of general management skills and a system of corporate governance

NEWELL
Build on what we do best

SHARP
Invest in technologies that will be the nucleus of the company in the future

Scope of businesses

wide
Fields of operation: Fire protection, flow control, disposable medical products, packaging materials, speciality products. Competes in mature, stable, low-tech businesses. Executives held accountable for limited financial measures Unrelated products Products: Propane torches, hair barrettes, office products.

narrow
Restricted set of businesses. Television and video systems, communications and audio systems, appliances, information systems and electronics components

TYCO
Creates value for its businesses through a set of general management skills and a system of corporate governance

NEWELL
Build on what we do best

SHARP
Invest in technologies that will be the nucleus of the company in the future

Coordination mechanisms

transferring
Encourages division presidents to act like entrepreneurs within their groups and focus on expanding scope and profitability of the units. Advanced data management system for efficient logistics, billing, and collection. Done by corporate office.

sharing
Divided into functional units. Shared activities: R&D unit Sales force

TYCO
Creates value for its businesses through a set of general management skills and a system of corporate governance

NEWELL
Build on what we do best

SHARP
Invest in technologies that will be the nucleus of the company in the future

Control systems

financial
Financial controls, good incentive programs, employees highly motivated by incentives. Operating controls which focuses on 30 critical operating variables.

operating
Operating control system that focuses behavioural aspects rather than on short term financial goals. Promotion is most powerful incentive.

TYCO
Creates value for its businesses through a set of general management skills and a system of corporate governance

NEWELL
Build on what we do best

SHARP
Invest in technologies that will be the nucleus of the company in the future

Corporate office size

small
$12 billion annual revenue 6 divisions 50 people at Corporate HQ $3 billion annual revenue 20 divisions 375 people at Corporate HQ

large
$14 billion annual revenue 5 divisions 1,500 people at Corporate HQ

Conclusion
There is no one right strategy. Successful strategies are the ones which are tailored according to the firms resources and opportunities. Benchmarking can be used as an effective tool by looking at companies with successful strategies built around similar types of resources as that of the firm. The companys businesses must not be worth more to another owner.