MCR008 - Corporate Strategy Assignment

Assignment Task

Learning objectives

• Understand the nature of corporate-level strategy and be able to identify and explain various types of corporate strategies
• Identify the conditions under which diversification creates value for shareholders
• Evaluate the potential for sharing and transferring resources and capabilities within the diversified company
• Recognise the organizational and managerial issues arising from diversification and why diversification so often fails to realise its anticipated benefits
•  Assess the relative advantages of vertical and horizontal integration in organising related activities, understand the circumstances that influence these relative advantages, and advise a company whether a particular activity should be undertaken internally or outsourced

Introduction

1) Corporate-level strategy is about how and where a company, as a whole, competes.

2) Corporate-level strategy decisions define the scope of the company

3) Three aspects of this strategy include:

• Corporate parenting
• Business portfolios
• Portfolio matrices

Corporate-level Strategy

• The corporate parent is expected to grow the overall organisation by creating value for its individual businesses
• Organisations need to decide what new businesses should be added to the portfolio
• There is a need to approach this in a rational and systematic manner

Diversification strategy

• Diversification strategy refers to a company’s decision to expand its operations by adding new products and services, markets, or stages of production to the existing business
• The purpose of diversification is to allow the company to enter lines of business that are different from current operations
• There are two types of diversification: related and unrelated diversifications

Drivers of diversification

• Diversification has been driven by three major goals:
• Growth
• Risk reduction
• Profitability

Competitive advantage from diversification

1. What are the value creation linkages of diversification and how they are exploited are two key questions

2. The potential for diversification to enhance or exploit market power is influenced by many factors including:

• Economies of scope
• Tangible resources
• Intangible resources
• Organisational capabilities
• General management capabilities

Assessment

Identify a company that has undergone some major changes in its operations (for example, a major restructuring or takeover).

Evaluate the nature of these changes and how effectively the organisation has responded or is responding to these changes in the short and long term.

Determine what important lessons can be learned from this experience.

Students will have to demonstrate in-depth knowledge and practical applications of the business models covered during the course.

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