Uploaded by hizircakir

MAN 301 Lecture 8 Brauer(1)

advertisement
Lecture
8: Corporate
strategy
Titel
der
Präsentation
Prof. Dr. oec. Matthias Brauer
Untertitel
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying,
recording, or otherwise – without the written permission of the copyright owner.
© Brauer - University of Mannheim
1
Course overview
Lecture
Date
Topic
1
09/03/2018
Introduction
2
09/10/2018
What is strategy and why is it important? (incl. vision, mission, objectives)
3
09/17/2018
Evaluating a company’s resources, capabilities and competitiveness
4
09/24/2018
Evaluating a company’s external environment
5
10/01/2018
The five generic competitive strategies
6
10/08/2018
Technology and innovation strategy
7
10/15/2018
Guest lecture, Dr. Klaus Peter Meier, CEO, FREUDENBERG HOME AND CLEANING SOLUTIONS GMBH
8
10/22/2018
Corporate strategy: Managing a group of businesses
9
10/29/2018
Global Strategy I: Market entry strategies
10
11/05/2018
Global strategy II: Managing MNEs
11
11/12/2018
Guest lecture, ANDERSCH AG: Digital Strategy I
12
11/19/2018
Guest lecture, BEIERSDORF AG: Digital Strategy II
13
11/26/2018
Strategy implementation
14
12/03/2018
Exam preparation (Q&A session)
© Brauer - University of Mannheim
2
Learning objectives
Understand the purpose and nature of corporate strategies
Understand the challenges associated with crafting a successful
corporate strategy
Understand the different diversification strategies
Become familiar with the tools companies can use to actively
manage their business portfolio
© Brauer - University of Mannheim
3
Agenda: Lecture 8: Corporate Strategy
1
Introduction
toas
diversification
Diversification
a corporate strategy
2
Motives and types of diversification
3
Outcomes of diversification
4
Managing business portfolio scope
© Brauer - University of Mannheim
4
Recap: The strategy process
Mission statement
Target planning
Environmental
analysis
Stage of
mission building
Corporate
analysis
Stage of
strategic analysis
Strategy formulation
• Corporate strategy
• Business unit strategy
• Functional strategy
• Project strategy
Stage of
strategy
formulation
Validation/Selection of a strategy
Strategy implementation/Operative planning
• Functional planning
• Project planning
• Budget planning
Stage of
strategy
implementation
Check on strategy
© Brauer - University of Mannheim
5
Recap: Business strategy vs. corporate strategy
Business strategy
Corporate strategy
• Key question of business level strategy:
How to create a competitive advantage
in specific, individual product markets
• Focus on a single industry:
1) Which customers to serve (who?) –
segmentation
2) Which customers needs to satisfy
(what?) – differentiation
3) Resources and value chain activities
necessary to satisfy customer needs
(how?) – “core competencies”
• Key question of corporate strategy:
How to create a competitive advantage
for the whole company
• Focus on multiple industry environments
and the development of a set of
business strategies:
1) What businesses should we be in?
2) How should these be managed?
3) How to create value for the
corporation as a whole?
Diversification is a corporate strategy
to create a corporate advantage!
© Brauer - University of Mannheim
6
Corporate strategy of Munich Re
Our aim is sustained profitable growth
Munich Re brings together what belongs together. Our integrated
business model realises synergies and economies of scope along the
whole value chain. This is propelled by our three business fields: primary
insurance, reinsurance and Munich Health as the third pillar for the
challenges of the global healthcare market. As a result, we build lasting
value for our clients, shareholders and staff.
Each of our fields of business is among the best in its class
Munich Re is one of the world’s leading players in the reinsurance
industry. Some 40 million clients in over 30 countries place their trust in
the services and security it provides. In Munich Re’s newest business field,
Munich Health, the Group draws on the experience it has gained
throughout the world in health insurance and reinsurance over a period
of more than 20 years. Munich Health represents Munich Re’s health
expertise and develops cutting-edge solutions for what is one of the
industry’s fastest-growing markets.
…
© Brauer - University of Mannheim
7
What is a good Corporate Strategy?
© Brauer - University of Mannheim
8
Evaluation criterion 1: Conglomerate Premium
“Corporate strategy is what makes the corporate whole
add up to more than the sum of its business unit parts.”
(Michael Porter, 1987)
© Brauer - University of Mannheim
9
Value added
The challenge of corporate strategy
Corporate surplus
Most of the larger companies are diversified
in different businesses. This makes only sense
if the company is able to create a “corporate
surplus”, what means that the value of the
company is higher than the sum of its parts.
Sum of the internal values of
SBU A-C
(“stand-alone-values”)
Costs
of the
corporate
level
© Brauer - University of Mannheim
Market
capitalization
10
Evaluation criterion 2: Parenting advantage
“Multi-business companies create value by influencing - or
parenting - the businesses they own. The best parent
companies create more value than any of their rivals
would if they owned the same businesses. Those
companies have what we call parenting advantage.”
(Michael Porter; Campbell, Goold, Alexander, 1995)
© Brauer - University of Mannheim
11
Competing corporate parents
Parenting
advantage
Corporate
surplus
Competing
corporate parents
Sum of the internal values of
SBU A-C
(“stand-alone-values”)
Costs
of the
corporate
level
Market
capitalization
© Brauer - University of Mannheim
Max. value of
a competing
parent
12
Parenting advantage (fictitious example)
Rival
Allianz
“Corporate parents”
(Corporate Center Munich)
Axa
(Corporate Center Paris)
Diversification into a new service:
People 50+ (“grey panther”):
Allianz Life
(Spain)
Key question::
Which corporate parent
creates more value
for its daughters?
Axa Life
(Spain)
Parenting
advantage
Stand
alone
Stand
alone
© Brauer - University of Mannheim
13
“Reality check”
Diversification/Conglomerate
The
problem
discount
Sum of the internal values of
SBU A-C
(“stand-alone-values”)
Costs
of the
corporate
level
© Brauer - University of Mannheim
Market
capitalization
14
Agenda: Lecture 8: Corporate Strategy
1
Diversification as a corporate strategy
2
Motives and types of diversification
3
Outcomes of diversification
4
Managing business portfolio scope
© Brauer - University of Mannheim
15
Why do firms diversify if the challenges are that high?
© Brauer - University of Mannheim
16
Motives for diversification
Conceptualization
Product development
Motives for diversification
Diversification
New
Growth
Existing
Products
Meeting
stakeholders’
expectations
Strategic
renewal
Motives
Firm
Market development
Existing
Spreading risks
New
Markets
Efficiency gains
Responding to
declining
markets
Diversification initiatives can be the recipe for long-term success!
© Brauer - University of Mannheim
17
Measuring the degree of product diversification
Basis: Standard Industrial Classification Code List (SIC)*
Total Entropy
Total Entropy captures the extent of diversity across a
firm’s Eactivities. It is calculated as follows:
1
∑Si ln(1/ Si)
E e =1 P
TE =
where Si is the share of a firm’s total sales in 4-digit
SIC industry and N is the number of 4-digit SIC
industries in which the firm operates. Total Entropy
equals zero for a single business firm and it rises with
the extent of diversity.
Herfindahl Index (HI)
The Herfindahl
Index of diversity is calculated as:
E
1
∑ (Si)^2
E e =1 P
HI =
where si is the share of a firm’s total sales in 4-digit
SIC segment i and N is the number of 4-digit SIC
industries in which the firm operates.
6411 Insurance adjusters
6411 Insurance advisory services
6411 Insurance agents
6411 Insurance brokers
6512 Insurance buildings, operation of
6321 Insurance carriers, accident
6321 Insurance carriers, health
6311 Insurance carriers, life
6331 Insurance carriers: fire, marine, and casualty
6411 Insurance claim adjusters, not employed by insurance companies
9651 Insurance commissions-government
6411 Insurance educational services
6411 Insurance information bureaus
6411 Insurance inspection and investigation services
6411 Insurance loss prevention services
6411 Insurance patrol services
8099 Insurance physical examination service, except by physicians
6411 Insurance professional standards services
6411 Insurance rate making services
6411 Insurance reporting services
6411 Insurance research services
6411 Insurance services
6321 Insurance, accident and health
6399 Insurance, bank deposit or share
6351 Insurance, credit or other financial responsibility
6351 Insurance, fidelity
6311 Insurance, life
6351 Insurance, surety
6361 Insurance, title protection
6331 Insurance: fire, marine, and casualty
© Brauer - University of Mannheim
18
Defining the “right” diversification scope
Steel
Energy
Building
Technology
Shipping
Tourism
18.53
Logistics and
Retail
Revenue Distribution in 1995 in billion EUR
Revenue Distribution in 2017 in billion EUR
Source: Thompson Financials; TUI Annual Report
© Brauer - University of Mannheim
19
Types of diversification
DIVERSIFICATION INTO RELATED BUSINESSES
•
DIVERSIFICATION
TYPES
Enhance shareholder value by capturing cross-business strategic fits:
• Transfer skills and capabilities from one business to another
• Share facilities or resources to reduce costs
• Leverage use of a common brand name
• Combine resources to create new strengths and capabilities
DIVERSIFICATION INTO UNRELATED BUSINESSES
•
•
Spread risks across completely different businesses
Build shareholder value by doing a superior job of choosing businesses to
diversify into and of managing the whole collection of businesses in the
company’s portfolio
DIVERSIFICATION INTO BOTH RELATED AND UNRELATED
BUSINESSES
Source: Thompson/ Strickland/ Gamble: Crafting and Executing Strategy, 17th edition, 2010, p. 245.
© Brauer - University of Mannheim
20
Diversification into related businesses
Value chain activities
Conceptualization
• Diversify into an industry because of
strategic reasons
• Involves diversifying into businesses
with
− Strategic fit
− Potential to leverage economies of
scope
− Meaningful value chain
relationships
− Unifying strategic theme
Source: Thompson/ Strickland/ Gamble: Crafting and Executing Strategy, 17th edition, 2010, p. 246.
© Brauer - University of Mannheim
21
Core concepts: Strategic fit and economies of scope
Strategic fit
•
Economies of scope
A strategic fit exists whenever one or
more activities in the value chains of
different businesses are sufficiently
similar to present opportunities for…
− Transferring expertise or technological
know-how from one business to
another
− Cross-business collaboration to create
competitively valuable resource
strengths and capabilities
− Combining performance of common
value chain activities to achieve lower
costs
− Using of a well-known brand name
•
Economies of scope are cost reductions
that result from operating in multiple
businesses
•
Stem directly from strategic fit efficiencies
along the value chains of related
businesses
•
Sources of economies of scope:
− Use of one or more common resources
(or inputs) in the production of both
outputs
− Spreading fix costs over more products
− Application of knowledge and core
capabilities to the production of several
outputs
© Brauer - University of Mannheim
22
Types of cross-business strategic fit along the value chain (1/2)
R&D and technology fits
•
•
•
•
•
Strategic fits in R&D and
technology:
Potential for sharing common
technology
Exploiting the full range of
business opportunities
associated with a particular
technology
Transferring technological know
how
Benefits:
− Cost-savings in technology and new
product R&D
− Shorter times in getting new
products to market
− Interdependence between resulting
products leads to increased sales
Supply chain fits
•
•
Strategic fits in supply chain
activities:
Potential for skill transfer
and/or cost reductions :
−
−
−
−
Procurement of materials
Greater bargaining power in
negotiating with common
suppliers
Benefits of added collaboration
with supply chain partners
Added leverage with shippers in
securing volume discounts on
incoming parts and components
© Brauer - University of Mannheim
Manufacturing fits
•
•
Manufacturing related strategic
fit
Transfer of a diversifier’s
expertise to another business
−
−
−
Quality manufacture
Cost efficient production
methods
Consolidation of production/
assembly activities to significantly
reduce overall production costs
23
Types of cross-business strategic fit along the value chain (2/2)
Distribution fits
•
•
Distribution-related strategic
fits
Potential for cost saving
opportunities via:
− Sharing of same distribution
facilities
− Sharing of wholesale distributors
and retail dealers to access
customers
Sales and Marketing fits
•
−
Strategic fits in sales and
marketing activities
Cost saving opportunities
through
− Single sales force and advertising
for related products
− Combined after-sale service and
repair
− Joint delivery, shipping, order
processing and billing
− Joint promotion tie-ins
− Transfer selling and advertising
skills
− Transfer of a strong company’s
brand name and reputation
© Brauer - University of Mannheim
Managerial support fit
•
Strategic fits in managerial and
administrative support activities
•
Different business units require
comparable types of
entrepreneurial, administrative
or operating know-how
•
Usage of same types of
administrative support facilities
e.g.:
− Customer data network
− Billing and customer accounting
systems
− Customer service infrastructure
24
Diversification into unrelated businesses
Value chain activities
Conceptualization
•
•
•
Diversification into businesses that allow
the company as a whole to grow its
revenues and earnings
Involves diversifying into businesses with
no meaningful strategic fit
Criteria:
− Businesses that meet corporate targets for
profitability and ROI
− Industries with attractive growth potentials
− Businesses that are big enough for
substantial contributions
− Required capital
− Union and labor situation
− Industry vulnerability to recession, inflation,
high interest rates, government regulations,
other potential negative factors
Source: Thompson/ Strickland/ Gamble: Crafting and Executing Strategy, 17th edition, 2010, p. 251.
© Brauer - University of Mannheim
25
Discussion of unrelated diversification
Advantages
1
Disadvantages
Business risk is spread over different
industries
•
The greater the number and diversity of
businesses, the more demanding the
managerial requirements
− Discern good acquisitions
2
− Select capable managers
Financial resources can be directed to
those industries offering best profit
prospects
3
If bargain-priced firms with big profit
potential are bought, share-holder
wealth can be enhanced
4
Stability of profits. Hard times in one
industry may be offset by good times in
another industry
− Judge strategies of business-units
− Know what to do if a business subsidiary
stumbles
•
The lack of cross-business strategic fits
offers no potential for competitive advantage
− Consolidated performance of unrelated
businesses tends to be no better than
individual businesses
− Promise of greater sales-profit stability over
business cycles is seldom realized
© Brauer - University of Mannheim
26
Example of unrelated diversification: Virgin Group
Product range
Virgin Group
1984: Virgin
Atlantic
2010: Virgin
Racing
2004: Virgin
Galactic
Developed Business Fields
1970: Virgin
Records
2007: Virgin
Money
2008: Virgin
Health
With a high willingness to take risks by constantly establishing new companies, Richard
Branson has created a conglomerate of global reach.
© Brauer - University of Mannheim
27
Agenda: Lecture 8: Corporate Strategy
1
Diversification as a corporate strategy
2
Motives and types of diversification
3
Outcomes of diversification
4
Managing business portfolio scope
© Brauer - University of Mannheim
28
Product diversification and firm performance
© Brauer - University of Mannheim
29
After more than 30 years of portfolio research…
Empirical findings on the advantageousness of different
degrees of diversification have remained equivocal.
Increasingly, scholars have begun to realize that it is not so
much the degree of diversification that matters but rather the
capability of a firm to actively manage the scope of
diversification.
© Brauer - University of Mannheim
30
Agenda: Lecture 8: Corporate Strategy
1
Diversification as a corporate strategy
2
Motives and types of diversification
3
Outcomes of diversification
4
Managing business portfolio scope
© Brauer - University of Mannheim
31
Managing the business portfolio
Smaller compared
to main competitor
Bigger compared to
main competitor
Question marks
Stars
Norm strategy:
selective behavior
Market
growth
Poor dogs
Norm strategy:
support, invest
Above
average
Cash cows
Norm strategy:
disinvest,
liquidate
Norm strategy:
hold position,
harvesting
Below
average
Relative market share
Source: Henderson, 1971
© Brauer - University of Mannheim
32
Portfolio management at Bayer AG
Source: Bayer AG
© Brauer - University of Mannheim
33
6-step evaluation process to manage a business portfolio
Step 1
Evaluate industry attractiveness
Step 2
Assess competitive strength of firm’s business unit
Step 3
Check competitive advantage of cross-business strategic fits
Step 4
Check whether firm’s resources fit requirements
Step 5
Rank performance prospects of business units and determine
priority for resource allocation
Step 6
Craft new strategic moves to improve overall company
performance
© Brauer - University of
Mannheim
34
Step 1: Evaluate attractiveness of industry
Strategic business unit’s (SBU)
attractiveness
Attractiveness of each
SBU in portfolio
Each SBU’s attractiveness
relative to the others
Attractiveness of all
SBUs as a group
© Brauer - University of
Mannheim
Industry attractiveness factors
•
Market size and projected growth
•
Intensity of competition
•
Emerging opportunities and threats
•
Presence of cross-industry strategic fits
•
Resource requirements
•
Seasonal and cyclical factors
•
Social, political, regulatory, and
environmental factors
•
Industry profitability
•
Degree of industry uncertainty and
business risk
35
Step 1: Calculating attractiveness scores for each industry
Step A
Select industry attractiveness factors
Step B
Assign weights to each factor (sum of weights = 1.0)
Step C
Rate each industry on each factor, using a scale of 1 to 10
Step D
Calculate weighted ratings; sum to get an overall industry
attractiveness rating for each industry
© Brauer - University of
Mannheim
36
Calculating weighted industry attractiveness scores
Source: Thompson/ Strickland/ Gamble: Crafting and Executing Strategy, 17th edition, 2010, p. 260.
© Brauer - University of
Mannheim
37
Interpreting industry attractiveness scores
Interpreting
industry attractiveness scores
•
Industries with a score much below 5.0 do not
pass the attractiveness test
•
If a company’s industry attractiveness scores are
all above 5.0, the group of industries the firm
operates in is attractive as a whole
•
To be a strong performer, a diversified firm’s
principal businesses should be in attractive
industries with
−
A good outlook for growth and
−
Above-average profitability
Difficulties
•
•
© Brauer - University of
Mannheim
Deciding on appropriate weights for industry
attractiveness factors
−
Different analysts have different weights
−
Different weights appropriate for
different companies
Gaining sufficient command of an industry to
assign objective ratings
−
Statistical data to assign objective ratings
is straightforward for e.g. market size,
growth rate, industry profitability
−
Assessing the intensity of competition
factor is more difficult due to the
different types of competitive influences
38
Step 2: Evaluate each business-unit’s competitive strength
Objectives
•
•
Competitive strength factors
Appraise how well each business is
positioned in its industry relative to rivals
Evaluate whether it is or can be
competitively strong enough to
contend for market leadership
© Brauer - University of
Mannheim
•
Relative market share
•
Costs relative to competitors
•
Beat rivals on key product attributes
•
Benefit from strategic fits with sister
businesses
•
Exercise bargaining leverage with key
suppliers or customers
•
Caliber of alliances and collaborative
partnerships
•
Brand image and reputation
•
Competitively valuable capabilities
•
Profitability relative to competitors
39
Calculating competitive strength scores for each business
Step A
Select competitive strength factors
Step B
Assign weights to each factor (sum of weights = 1.0)
Step C
Rate each business on each factor, using a scale of 1 to 10
Step D
Calculate weighted ratings; sum to get an overall strength rating for
each business
© Brauer - University of
Mannheim
40
Calculating weighted competitive strength scores
Source: Thompson/ Strickland/ Gamble: Crafting and Executing Strategy, 17th edition, 2010, p. 263.
© Brauer - University of
Mannheim
41
Interpreting competitive strength scores
Ratings
above 6.7
Business units are strong market contenders
Ratings
between
3.3 & 6.7
Businesses have moderate competitive strength vis-à-vis rivals
Ratings
below 3.3
Business units are in competitively weak market positions
Scores
above 5.0
All business units are fairly strong market contenders in their
respective industries
© Brauer - University of
Mannheim
42
Integrating industry attractiveness and competitive strength
Plotting procedure
•
Industry attractiveness
plotted on vertical axis
•
Competitive strength
plotted on horizontal axis
•
Each business unit appears
as a “bubble”: size of each
bubble is scaled to
percentage of revenues the
business generates relative
to total corporate revenues
Visualization in a nine-cell matrix
© Brauer - University of
Mannheim
43
Strategy implications of industry attractiveness – competitive
strength matrix
Businesses in
upper left corner
Businesses in
three diagonal
cells
Businesses in
lower right
corner
•
•
Accorded top investment priority
Strategic prescription – grow
and build
•
•
Given medium investment priority
Invest to maintain position
•
Candidates for harvesting or
divestiture
Potential candidates for an
overhaul and reposition strategy
•
© Brauer - University of
Mannheim
Overall consequences:
• Concentrate resources in
businesses with high industry
attractiveness and competitive
strength
• Make selective investments in
businesses with intermediate
positions
• Withdraw resources from
businesses low in attractiveness
and strength unless they offer
exceptional potential
44
Step 3: Check competitive advantage potential of crossbusiness strategic fits
Value chain activities
Identification of value chain
match-ups
• Identify businesses with value
chain match-ups offering
opportunities to
− Reduce costs
− Transfer skills / technology /
intellectual capital from one
business to another
− Share use of a powerful brand
name
− Create valuable new
competitive capabilities
Source: Thompson/ Strickland/ Gamble: Crafting and Executing Strategy, 17th edition, 2010, p. 267
© Brauer - University of
Mannheim
45
Step 4: Check resource fit
Companywide
performance
Does the business adequately contribute to achieving companywide
performance targets?
Financial strength
Does the company have adequate financial strength to fund its different
businesses and maintain a healthy credit rating?
Specific resource
strengths
Does the company have or can it develop the specific resource strengths and
competitive capabilities needed to be successful in each of its businesses?
Competitive
capabilities
Are recently acquired businesses acting to strengthen a company’s resource
base and competitive capabilities or are they causing its competitive and
managerial resources to be stretched too thin?
© Brauer - University of
Mannheim
46
Step 5: Rank business units based on performance and priority
for resource allocation
Sales growth
Industry and
business
strength ratings
Profit growth
Factors to consider in judging
business-unit performance
Cash flow
generation
Economic value
added
© Brauer - University of
Mannheim
Contribution to
company
earnings
Return on capital
employed in
business
47
Role appointments
Criteria for role
assignment
Growth driver
Cash-champion
Turnaround candidate
High contribution to growth of the
group.
Potential for positive future cash flow
from year 4 on and for RONOA > WACC.
Essential for company profitability.
Sources of cash to finance growth
drivers.
Stagnating or shrinking market growth.
Subcritical market position.
Sales growth > 1%.
Defense of market position.
Immediate action (e.g. asset sales) to
gain freedom of action.
Develop scenarios.
Has a portfolio of promising
technologies.
Hierarchy of
strategic goals
Sales growth > 8%.
Achievement of leading market
position: At least nr. 3.
Return clearly exceeds cost of capital
in the medium run.
Hierarchy of
financial goals
Control rules
NPV-Business Plan > 0.
Increase in profitability or exit.
RONOA > average group target >
target return.
Keep FCF > 0.
FCF optimization.
RONOA < RONOA in the case of cashchampions accepted.
From year 5 on expected: FCF > 0.
FCF (over 3-year average) > 0.
Optimization of FCF.
Payback investments < years.
Watchlist for growth.
CapEx > Operating cashflow.
CapEx < Operating cashflow.
Protection of a positive cash
contribution for the company.
Year 1-4: FCF < 0 accepted.
Realization of M&A to achieve leading
market position.
Payback Investments < 5 years.
M&A to defense market position.
Minimization of cash- and profitability
cost.
Restrictive investment planning.
No growth investments.
M&A only to achieve strategic
solutions.
Legend:
RONOA = Return on Net Operating Assets; WACC = Weighted Average Cost of Capital;
NPV = Net Present Value; FCF = Free cashflow; CapEx = Capital Expenditure
© Brauer - University of
Mannheim
48
Step 6: Craft new strategic moves to improve overall company
performance
Stick closely with
existing business lineup
and pursue
these opportunities
Pursue multinational
diversification, striving to
globalize operations of
business units
Broaden the business
scope by making new
acquisitions in
new industries
Strategic
options
Divest certain businesses
and retrench to a narrower
base of business operations
Restructure company’s
business lineup, putting a new
face on business makeup
© Brauer - University of
Mannheim
49
Portfolio scenarios at Linde (2003)
Scenario I
Scenario II
Scenario III
Scenario IV
Pure Gas
Pure
Engineering
Technology
Holding
Status Quo
Product orientation in gas
business (most profitable
division; would result in
higher industry multiple);
Would probably result in
the divestiture of the
forklift truck and
engineering business;
Possible need for a large
acquisition in order to
become Nr. 1;
Focus on gas as global
player.
Mutation to mechanical
engineering public limited
company;
Spread of the offer for the
existing customer group;
Divestiture of gas and
material handling;
Usage of revenues to
acquire a competitor (e.g.,
MAN or Heidelberger
Druck;
Focus on maintaining and
expanding market
position.
Flexible technology
group;
Maintaining of all four
business units;
Maintaining of gas and
material handling (and
possibly engineering);
Acquisition of further
technology companies;
Increasing productivity
in these business units;
Possible M&A in
material handling
business;
Focus on collecting a
portfolio of attractive
technologies and
technology companies.
No larger restructuring
activities required;
Maintaining of
conglomerate discount;
© Brauer - University of
Mannheim
Focus on improvement
of operational business.
50
Portfolio scenarios at Linde (2011-2020)
Source: Linde Group
© Brauer - University of
Mannheim
51
Learning objectives
Understand the purpose and nature of corporate strategies
Understand the challenges associated with crafting a successful
corporate strategy
Understand the different diversification strategies
Become familiar with the tools companies can use to actively
manage their business portfolio
© Brauer - University of
Mannheim
52
Contact
Prof. Dr. oec. Matthias Brauer
University of Mannheim
Chair of Strategic and International Management
L4, 1
D-68131 Mannheim
E-mail: sekretariat.brauer(at)bwl.uni-mannheim.de
© Brauer - University of
Mannheim
53
Download