Corporate Level Strategy

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Presented By Sreekumar M B

CORPORATE
Group of companies incorporated under one head. It is concerned with the choice of business, product and services. Corporate-level strategies address the entire strategic scope of the enterprise. This is the "big picture" view of the organization and includes deciding in which product or service markets to compete and in which geographic regions to operate.
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Corporates in India

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Corporate Strategy
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It pertains the organization as whole and the combination of business units and product lines that make up the corporate entity. It addresses the overall strategy that an organization will follow. For multi-business firms, the resource allocation process and distribution is typically established at the corporate level.
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Key Questions - Strategy

What business the firm should be in, in terms of range of products and its suppliers? What should be the optional geographic spread of activities for the firm? What range of vertically linked activities should the firm encompass?
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Process of Corporate Strategy

Grand Strategy

Types of Business

Portfolio Strategy
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Advantages of Corporate Strategy

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Bridge the gaps

Identify the strategic planning gaps and bridge them through appropriate strategies.
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Exploit the opportunities

Identify the areas and counter the threats posed by competitive forces.
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Develop core competencies

Grand Strategy

It is the general plan of major action by which a firm intends to achieve its long term goals . It provides basic direction for the strategic actions of a firm. Most firms begin their operations as singlebusiness units. Some firms continue to thrive due to their specialized operations and exclusive focus on a limited business arena. 3/26/12

Examples of Grand Strategy

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Strategic Alternatives

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Growth / Expansion Strategy

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Organizations generally seek growth in sales, market share or some other measures as a primary objective. When growth becomes a passion of and organizations try to seek sizeable growth, it takes the shape of an expansion strategy.

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Growth / Expansion
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Intensification

Market Penetration Market Development Product Development Diversification

B. Diversification Horizontal

Concentric Conglomerate Forward Backward

Vertical

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Ansoffs Product Market Expansion Grid

Current Products Current Markets Market Penetration New Products

Product Development

New Markets
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Market Development

Diversification

Diversification Strategies

Diversification is said to be minimize risks associated with confining the business to one or very few products. The company can enter new lines of business to preempt potential competitors or to gain superiority over competitors entering the market at an early stage.
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Types of Diversification

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Concentric Diversification
It occurs when an organization diversifies into a related, but distinct business. In this context, the new business can be related to existing business through business, products, technology.

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Diversification in India
Johnson & Johnson
Dental Products Oral contraceptives Wound care products Prescription Drugs Hospital Products Diapers

Gillette
Razors & Blades Toiletries Electrical shavers, Curlers Toothbrushes, alarm clocks, coffee makers, Stationery Products And Writing instruments

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Conglomerate Diversification
It take place when an organization diversifies into areas that are unrelated to its current business. The decision is to diversify into unrelated areas is generally undertaken by firms in volatile industries that are subject to rapid technological change.

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ITCs Diversification Strategy

ITC was established by UK-based tobacco major BAT. It initially set up the Peninsular Tobacco Company (Peninsular). In 1910, it set-up a fully fledged sales organization named the imperial. In 1971, they diversified into marine products export division.
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Continued

In 1977, ITC also set up Bhadrachalam paperboards. In 1981, ITC diversified into cement business in India. In 1986, ITC established Hotel Divisions, It also entered in the financial services by setting up ITC Classic Finance.
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Stability Strategy

A Stability strategy involves maintaining the status quo or growing in a methodical, but slow, manner. The firm follows a safety-oriented, status-quotype strategy without efficiency any major changes in its present operations. The resources are put on existing operations to 3/26/12 achieve, moderate, incremental growth.

Reasons for stability strategy

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Why rock the boat ? Why not stop for a while? Why to swallow risk? Where are the resources?
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Types of Stability Strategies

Stability

Incremental Growth Profit Sustainable Growth Pause Strategy

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Continued
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Incremental Growth

The firm following this strategy concentrates on one product line at a time, growing steadily.
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Profit/Harvesting Strategy

This is followed when the primary goal of the firm or any of its strategic business units is to generate cash so as to ensure steady growth of business.
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Continued
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Sustainable Growth Strategy

This strategy is followed when the firm perceives that the external environment is not favorable due to certain critical resource constraints.
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Stability as a pause strategy

After organization have undergone a turbulent period of rapid growth, mangers often pause for a while to integrate strategic business units, etc, pause for 3/26/12 and prepare themselves for another big a while

Retrenchment Strategy

Retrenchment strategy is a corporate level, defensive strategy followed by a firm when it its performance is disappointing or when its survival is at stake for a variety of reasons. Economic recessions, production inefficiencies, and innovative breakthrough by competitors are only three causes.

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Types of Retrenchment Strategy

Retrenchment Strategy

Divestment Turnaround Liquidation Bankruptcy

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Divestment Strategy

It involves the sale of those units or parts of a business that no longer contribute to or fit the firms distinctive competence. The firm simply gets out of certain business and sells off units or divisions for various reasons.

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Reasons for Divestment

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Strong Focus Unlock Critical Funds Invest in emerging technologies A maker of policy From red to black Unviable projects

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Turnaround Strategies

A turnaround is designed to reverse a negative trend and bring the organization back to normal health and profitability. The basic purpose of a turnaround is to transform the corporation into leaner and more efficient firm.

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Nissans Turnaround Story

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In 1933, Jidosha Seizo Co. Ltd., was established in yokohama. In 1934, the company was changed name into Nissan Motor Co. Ltd. In 1945, diversified to development of textile machinery. In 1958, Nissan started exporting passenger cars to the US.

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Continued
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Nissan started showing the signs of decline from the early 1990s. The top management at Nissan failed to notice of changing trends. Nissan took steps during 1992-1998 to turn the company around .

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CARLOS GHOSN

Lack of clear profit orientation Insufficient focus on customers Lack of cross functional lines of work Lack of a sense of urgency

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Nissan Revival Plan (NRP)

Reducing operating costs by I trillion yen. Reducing number of suppliers Reducing net debt from 1.3 trillion to 700 billion by FY 2002. Introduction of around 22 new products by 2002. Reducing the assembly plants from seven to four in japan.

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Combination Strategies
Large, diversified organizations generally use a mixture of stability, expansion or retrenchment strategies either simultaneously (at the same time in various business) or sequentially (at different times in the same business.

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Types of Combination Strategies

Combination

Joint Ventures Strategic Alliances Consortia

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Corporate Restructuring
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It involves destroying old paradigms, old technology, old paradigms, old technology, old ways of doing things and starting all over afresh.

It demands a strong cultural willingness to make a clear beginning taking a realistic look at ones company and deciding to reshape the whole place to remain continuously competitive. 3/26/12

Process of Restructuring

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Canon India : Restructuring to Survive

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Canon India was established in 1997. Canon focusing on selling mid-range and high end copiers. In 1988, the company introduced Canon Cameras. Canon India faced problems in both the office 3/26/12 automation and camera sectors

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The restructuring initiatives was focused on revamping the companys product, brand building, promotion, sales and distribution, and customer service strategies. In early 2001, Canon India replaced its national distribution model with a regional distribution model. In January 2002, the company began a new retail initiative, Canon Retail Solutions to promote its products. In early 2002, Canon India announced its intension to open 3/26/12

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Restructuring Philips

Philips poor performance could not be blamed on weak markets alone. Competition from aggressive Asian companies like Sony was intensifying especially in Europe. Philips corporate culture set rigid boundaries on employee responsibilities and discouraged employees from stepping outside these 3/26/12 boundaries.

Restructuring in Philips

Kliesterlee introduced Towards One Philips(TOP), and through it, he is aimed to make philips work as a single, unified company. As part of its TOP initiative, Philips also began developing a range of new technologies using its traditional strength in technology research.
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Mergers & Acquisitions

A merger occurs when two or more organisation combine to become one through an exchange of stock or cash or both. Mergers can take place in two different ways:

Acquisition It is the purchase of firm by a firm that is considerably larger. Te firm that acquires is called the acquiring firm and the other, merging firm.

Consolidation If both firms dissolve their identity to 3/26/12 a new firm, it is called consolidation. create

Sony Columbia Pictures Sony envisioned the convergence of electronics and

entertainment devices in the early 1990s. Hence it felt that it made good business sense to merge the companys electronics division. Sonys decision to acquire Columbia was also driven by the companys previous experience of losing to Matsushita in the VCR business in the 1970s. Apart from this, Mortias dream of owning a hollywood film 3/26/12 studio was also one of the major factor.

Post Acquisition Blues

Corporate Governance Mismanagement Cultural Mismatch

Some analysts also felt that the vast difference between the Japanese and American cultures was also responsible for the failure of Sony to manage Columbia efficiently.
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Joint Ventures

Joint Ventures are a special case of consolidation where two or more companies form a temporary partnership for a special purpose. Once the purpose is achieved the joint venture is terminated, with all profits distributed to its members.

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Strategic Alliances

They are usually partnerships that exist for a definite period during which partners contribute their skills and expertise to a cooperative project. Equity Strategic Alliance are more effective at transferring know-how between firms because they are close to hierarchical control. Non Equity Strategic Alliance - are formed through contractual agreements given to a company 3/26/12

The TVS Suzuki Breakup

In September 2001, Sundaram Clayton (of the TVS group of companies) and japanese automobile major Suzuki Motor Corporation (SMC), partners in the joint ventures TVS Suzuki, Indias second largest motorcycle company, announced their decision to break-up. Their differences over the issues of management 3/26/12 control and ownership had become well known.

THANK YOU!!!
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