Corporate Strategy
BM499 Strategic Management
David J. Bryce
November 5, 2002
Corporate vs. Business Unit Strategy


Corporate Strategy

What business(es) should we be in?

How will we coordinate or integrate businesses to
create value?
Business Unit Strategy

To whom will we sell, for what price?

How will we source, manufacture, distribute, etc. our
product?
Adapted from M. Porter, 2001, HBR
Definition: Corporate Advantage

“The way a company creates value through
the configuration and coordination of its
multibusiness activities.”
-- Collis & Montgomery, 1998
Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998
Scope of the Firm
Prod./Ind. A
Prod./Ind. B
Prod./Ind. C
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
Input-products
Vertical Scope
output-products
Horizontal Scope
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
Newell
Prod./Ind. A
Prod./Ind. B
Prod./Ind. C
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
Input-products
Vertical Scope
output-products
Horizontal Scope
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
Wal-mart
Prod./Ind. A
Prod./Ind. B
Prod./Ind. C
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
Input-products
Vertical Scope
output-products
Horizontal Scope
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
GE
Horizontal Scope
Aircraft Engines
Prod./Ind. C
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
Input-products
Vertical Scope
output-products
Refrigerators
Sales
Sales
Sales
Distrib
Distrib
Distrib
Manuf.
Manuf.
Manuf.
...
The Triangle of Corporate Strategy
Competitive
Advantage
Coordination
Organization
Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998
Control
The Resource Continuum
Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998
The Resource Continuum (continued)
Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998
Coordination
“Public Goods”
“Private Goods”
May be used in a number of production
processes without dminishing their value
or availability; e.g. Brand names; knowhow
Usage diminishes
value or availability;
e.g. human resources,
machines, etc.
The Resource Continuum (continued)
Source: Creating Corporate Advantage, Collis & Montgomery, HBR, 1998
Control

Financial


Run the business by managing to a set of financial
measures; e.g. return on assets, growth in revenue,
profitability, etc.
Operational

Run the business by managing to a set of operational
measures; e.g. days in inventory; reject rates, delivery
lead times, book-to-bill ratios, etc.