Corporate Strategy Module Session 5-6 Corporate Strategy Framework Session 7-8 Corporate Strategy In Action Session 9-10 Related and Unrelated Diversification Session 11-12 Vertical Integration Session 13-14 Merger and Acquisition Session 15-16 Divestiture Session 17-18 Strategic Alliance Session 19-20 Group Presentation (Final Exam) Graduate School of Business Administration Indonesian Institute of Management Development (IPMI)
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Corporate Strategy Module Session 5-6 Corporate Strategy Framework Session 7-8 Corporate Strategy In Action Session 9-10 Related and Unrelated Diversification.
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Corporate Strategy Module
Session 5-6 Corporate Strategy FrameworkSession 7-8 Corporate Strategy In ActionSession 9-10 Related and Unrelated DiversificationSession 11-12 Vertical IntegrationSession 13-14 Merger and AcquisitionSession 15-16 DivestitureSession 17-18 Strategic AllianceSession 19-20 Group Presentation (Final Exam)
Graduate School of Business AdministrationIndonesian Institute of Management Development (IPMI)
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
CORPORATE ADVANTAGE
• __________• __________
PORTFOLIO: high when a lot of acquisition / divestiture by HQ
STRATEGIC: high if HQ is active in developing, approving,, monitoring, or supervising strategy of business units (Bus)
SKILL TRANSFER: high if a lot of transfer skill and people competence among BUs either technical or managerial, can be represented also in rotation or knowledge management system
SHARED ACTIVITIES: high if a lot of similar business process is used by different BUs
TIGHT CONTROL: high when stringent budgetary or investment control (financial relate) is exercised by HQSHARING ASSETS: high when tangible*
(plant, equipment, patent, product) or intangible assets (brand, reputation) is being shared by BUs
Corporate Strategy in ActionCorporate Strategy in Action
H
M
L
*Note: tangible assets does not include financial (tight control) and people (skill transfer)
Relative Market Share of Company / Business Unit
Market Growth of Industry
DOG
Low High
High
Low
STARPROBLEM CHILD
CASH COW
USED FOR:• Business
selection• Investment
plan
Managing a Portfolio of BusinessesManaging a Portfolio of Businesses Market Growth / Market Share Matrix (BCG)Market Growth / Market Share Matrix (BCG)
Case: Walt Disney Situational analysis [end-2000]
Eisner’s successful turnaround [84-93] losing steam [94-95 turmoil n transition]. After acquiring ABC, financials decline [98-99] ABC acquisition expensive (22xPE) Resulting in heavy debt burden Difficult creating synergy thru vertical
integration vs non-exclusive strategic alliance Integration problems (different corporate
cultures, Disney’s tendency to micro manage)
Walt Disney’s business Media Network (Rev: $9.6bn up, OM: 25%):
Broadcast [ABC]; Cable Network [ESPN, Disney Ch, etc]
Studio Entertainment ($6.0bn down, 2%): Films [WDisney, Touchstone, Miramax]; Buena Vista Home entertainment; Buena Vista Music Group; TV production
Theme Park n Resorts ($6.8bn up, 24%): Attractions [Disneyland, Disney World Resort, Vacation Club]; Anaheim Sports [Mighty Ducks, Angels]
Consumer Products ($2.6bn down, 17%): Merchandising; Disney Store; Publishing
Internet n Direct Mktg ($0.4bn up, loss): Disney Online; ESPN Internet; ABC Internet; GO Network
• Focus on movie and theme parks, expand into new region & segment, done both organic or through acquisition
• Diversify into new (but related) business, become vertically integrated entertainment corporation
• Strong intervention on business units strategy by Eisner’s combination of volume, performance (profit) and creative management (technology)
• Each biz unit has its own process, sharing in marketing/promotion and event coordination
• HQ step in only when necessary, transfer pricing. While Eisner demand s high performance , spending readily approved if deemed necessary
• Disney characters• Disney brand• Creativity• Eisner leadership
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIOSTRATEGICSKILL TRANSFERSHARED ACTIVITIESSHARING ASSETSTIGHT CONTROL
PORTFOLIO STRATEGIC
SKILL TRANSFER
SHARED ACTIVITIES
TIGHT CONTROL
SHARING ASSETS
Corp Strategy in Action: DisneyCorp Strategy in Action: DisneyCorporate Strategy 1984 - 1993Corporate Strategy 1984 - 1993
M
H
H
MH M
M
PORTFOLIO: Enhanced core business of movie making and theme parks with new services and to new regions/segments. Expanded to related entertainment biz STRATEGIC: Eisner involved in almost all BU’s strategic decision (hands-on). Performance oriented mgmt balanced with “creativity mgmt” SKILL TRANSFER: A lot
of shared training, to improve synergy among BUs and encourage creativitySHARED ACTIVITIES: Frequent shared
promotional events
TIGHT CONTROL: Eisner is very hands on
SHARING ASSETS: Very strong in using Disney characters to all business units. Also capitalize on Disney’s brand
• Disney’s utmost corporate advantage lies on ability to share assets (character) to various business units. It’s the synergy of businesses within Disney Corp.
• Creativity in producing the new character, and non-character entertainment products/services are also important for Disney
• “Strategic” and hands-on corporate HQ culture under Eisner is important in 1984 – 1993 period as business unit performance is lagging. Further hands-on without strong COO/Business Unit heads leads to autocracy of Eisner’s dominance
• During 1994 – 2000, extended “tight control” impact creativity and resulted in loss talent/competence of middle managers and less performance growth
• Rebalancing the corporate strategy is a mandatory action to be taken by Eisner in 2000, i.e. skill vs portfolio vs tight control