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This course addresses the challenges facing executives running multi-business firms and the way they develop strategies aimed at creating value across the businesses owned by the corporation.
One of the most significant changes that occurred during the last century was the emergence of conglomerates, diversified corporation which grow via acquistion and are characterized by a separate headquarters and relatively autonomous and discrete operating units. This economic form was subsequently challenged by new forms of economic organization such as private equity and multi-sided platforms.
Corporate strategy can be defined as the way a corporation seeks to create value through the configuration and coordination of its multi-market activities – how it generates and preserves corporate advantage. Corporate advantage can be defined as the extent to which a corporation enhances the competitive advantage of its businesses, over and above that of (the best) alternative ownership structure.
The central questions a corporate strategy revolve around the following issues:
- The firm’s scope – the mix of industries in which the firm competes; what businesses should we be in?
- The allocation of resources between businesses? Corporate advantage comes from corporate resources being brought to bear on the component businesses such that their competitive advantage is enhanced.
- The way a firm organizes itself; what is the appropriate level of coordination across the businesses and how should it occur? What is the appropriate role of the corporate office in the coordination of resources and the control of decentralized decision-making?
Intended learning outcomes
On completion of this subject, students should be able to:
On completion of this subject, students should have an appreciation of the impact of various corporate styles and the ‘role of the centre’ on the economic performance of diversified firms.
- distinguish between corporate and business strategy
- understand how value can be created through specific forms of corporate economics organisation and corporate capabilities
- appreciate of the way value can be added both through specific forms of corporate economics organisation and corporate capabilities
Last updated: 3 November 2022