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Summary W2 - The quest for parenting advantage
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Strategy & Organization notes week 2
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Campbell, A., Goold, M., and Alexander, M. 1995. Corporate Strategy: The Quest for ParentingAdvantage.
Most chief executives today fail to address two questions
o What businesses should this company own and why?
o What organizational structure and philosophy will foster superior performance from its
business?
Most planning processes focus on developing business-level strategies
o They have proven inappropriate or impractical
The parenting framework
o provides a rigorous conceptual model as well as the tools needed for an effective corporate-
level planning process
o grounded in the economics of competitive strategy
o they create value by influencing (parenting) the businesses they own – when they create
value, they create parenting advantage.
o Focuses on the competences of the parent organization and on the value created from the
relationship between the parent and its business
o Intermediary between investors and businesses
Corporate-level managers assess whether a business fits the corporation
o If there is a match, value will be created
o If these is a mismatch, value will be destroyed
Fit assessment
1. Examine the critical success factors of each business
2. Document areas in the businesses in which performance can be improved
3. Test the judgments against the results that the businesses achieve under the influence of the parent
Success factors differ for every product or service
Parenting opportunity refers to the potential for improvement within a business
Identifying parenting opportunities
1. List the major challenges facing a business
2. Examine each challenge to see whether it contains a parenting opportunity
e.g. expanding capacity to meet customer demand or lower costs and improve purchasing.
The second challenge contains a parenting opportunity because business unit managers
have weak purchasing skills and never recruit a top purchasing manager. A parent would
be able to coach managers by helping them avoid pitfalls.
3. Look at the influence different parent companies have on similar businesses to see whether they
have discovered other parenting opportunities
Parenting characteristics fall into five categories
o The mental maps that guide parent managers
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