How can you tell if your company is really more than the sum of its parts? To create viable corporate strategy you can? t act independently within the different internal factors of the company company. Even if you work well at the company core competencies, or even if you do a great job restructuring its corporate portfolios or building learning organizations you might not succeed. In that case you would be only focusing on individual elements of corporate strategy: resources, businesses, or organization rather than turning those elements into an integrated whole.
That insight is the essence of corporate advantage – the way a company creates value through the configuration and coordination of its multibusiness activities. Ultimately, it is what differentiates truly great corporate strategies from the merely adequate. Great corporate strategies come in first instance from strength in each side of the triangle: high-quality rather than pedestrian resources, strong market positions in attractive industries and an efficient administrative organization.
But true corporate advantage requires a tight fit at each angle as well. When company’s resources are critical to the success of its businesses, the result is competitive advantage. When the organization is configured to leverage those resources into the businesses, synergy can be captured and coordination achieved. Finally, fit between a company’s measurement and reward systems and its businesses produces strategic control. There are many managers that think they are getting the alignment of their corporate strategies right, when in fact they are not.
They mistakenly enter businesses based on similarity in products rather than similarities of the resources that contribute to competitive advantage in each business. Moreover, instead of tailoring organizational structures and systems to the needs of a particular strategy, they create plain vanilla corporate offices and infrastructures as if there were on best practice that every company should follow. Newell Newells strats by identifying what itself really does well: manufacturing and distributing volume merchandise lines to the volume merchandisers.
The relatedness across its businesses comes not from similarities in the product themselves but from the common resources they draw on: Newell`s relationships with discount retailers, its efficient high-volume manufacturing, and its superior service, including national coverage, on time delivery, and program merchandising. Newell deliberately moves managers across business units and from the business to the corporate level. It enables to transfer experience and the benefits of its transfers can be fully realized because of the commonalities across its businesses.
They only activity shared is its advanced data-management system that is completely central and common to the whole Newell’s strategy. Determine the measures and rewards play an important role because when conducting an appropriate control system the corporate center can have the right perception to determine strategic decisions and influence performance in the individual businesses. 1. Corporate strategy is guided by a vision of how a firm, as a whole, will create value. 2.
Corporate Strategy is a system of interdependent parts and it depends essencially on how the different elements reinforce each others. 3. Corporate Strategy must invests and capitalize on opportunities outside the company 4. The benefits of corporate membership must be greater than the costs. Sharp Sharp is characterized by being a corporation with a consistent vision of technological creativity which has pushed it to the forefront of its industry. Sharp’s valuable resources are a set of specialized optoelectronics technologies that contributes to the competitive advantage of the company? core businesses. They have the amazing capability to multiply themselves across multiple products creating competitive advantage in those businesses based on its core technologies. Sharp’s basic structure is based on the fact that the research and manufacturing components occur in a single unit where scale economies can be exploited but which requires a need and a consequent coordination of the shared activities. Sharp invests such a time-intensive coordination to minimize the inevitable conflicts that arise when units share important activities.
Tyco What distinguish Tyco are its financial controls, goods incentive programs, strong manufacturing, and operating managers who are highly motivated by incentives and its autonomy such as the capability that the corporation have to operate in a wide range of businesses. Tyco uses the general resources of the corporation to encourage the division’s presidents to act like entrepreneurs within their groups, and to focus on expanding the scope and profitability of those units. No one right strategy – Many ways to suceed As brilliant as any strategy can be it doesn’t mean that it will fit nd work well for all companies. Every company starts at a different point, operates in a different context and has fundamentally different kinds of resources. There is no best prescription for all multibusiness corporations instead of these is the logic of internally firms consistence tailored to its resources and opportunities. We saw examples from tree different companies that followed different strategies based in different resources, capabilities and contingencies and they all have been performing notably well.
