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Summary Corporate Strategy (Lectures, Articles and Book)
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Summary of the lectures, articles, and the relevant book chapters. All relevant information for the exam plus example questions.
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By: svevacandida • 2 year ago
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By: svevacandida • 2 year ago
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Corporate Strategy Lectures,Book and Articles
This summary contains an overview of all the topics discussed in the lectures as well as summaries of
the relevant book chapters and summaries of the mandatory article. All information needed to pass
the exam can be found in this summary.
,Lecture 1
Introduction to corporate strategy
Strategy all boils down to where you are right now, and where you want to go.
What you should bear in mind is that there are a lot of things that can be disruptive, e.g. Covid but
also state aid. State aid for instance could mean that if you get state aid but your competitor does
not, then you have an advantage.
Three logics that drive corporate strategy:
1. Business logic
The attractiveness of the market and competitive advantage
2. Added value logic/parenting logic
Adding value to the business via headquarters
3. Capital markets logic
State of the capital markets / Net present value of future cash flows
Planning vs. incrementalism
- There’s an intended strategy, which may or may not lead to a realized strategy. There’s
always uncertainty in the environment, which may or may not be disruptive.
Generic strategy
- Mission: why are we in business in the first place?
- Vision: what do we want the business to look like in five years?
- Strategy: how are we going to get there?
But this is not the same as a corporate strategy
Business-level strategy (Competitive strategy)
- One type of business at a time is considered
- Different strategies you can pursue to gain a competitive advantage:
Low cost
Differentiation
Integrated low cost/differentiation
Focused low cost
Focused differentiation
Corporate level strategy (company-wide strategy)
- How to create value for the corporation as a whole. Combining different business units,
being better together as a whole
, - Portfolio & parenting. What is the added value of the parent?
Essential question: why deal with multi-business firms in the first place? Why not just go for a single
business firm?
- Risk mitigation
- Synergy advantages
Advantages and disadvantages of a single business firm
Advantages
- The entire company focuses on the same objectives
- Greater control of business activities
- Greater agility in responding to industry changes
- Optimization of company resources
Disadvantages
- Putting all eggs in one basket (high risk)
Definition of corporate strategy: the way a company creates value through the configuration and
coordination of its multimarket activities.
Three important aspects in the definition:
- Value creation: the ultimate purpose of corporate strategy
- Configuration: focus on the multimarket scope of the corporation
- Coordination: emphasis on how the firm manages the activities and businesses that lie
within the corporate hierarchy
Framework for corporate strategy
1. Management coordinates resources within the boundaries of their firms
2. Management coordinates relationships with other companies across the boundaries of their
firms
3. Management decides which businesses belong within the boundaries of their firms and
which ones do not
, The traditional model of Bain
- Start by looking at the external environment.
- Choose an attractive industry
- You formulate a strategy
- You assemble assets and skills required
- Then implementing the strategy
- After this you should be able to achieve superior returns
Corporate coordination: parenting logic
- Product leadership
- Customer intimacy
- Operational excellence
Cross-selling benefits: acquisition of an insurance company by a bank means that there is the
potential to cross-sell products. E.g. Rabobank and Interpolis.
Agency also plays a role in corporate strategic decision-making. Agency theory assumes that
managers, instead of acting in the best interest of their firms, pursue their self-interests in their deck
decision-making
Lecture 2: Guest lecture (not relevant for the exam)
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