An overview of corporate versus business strategy in an organizational arena

Change Management is the discipline that guides how we prepare, equip, and support individuals to successfully adopt a change to drive organizational success and outcomes
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Competitive strategy

The strategy is a plan to differentiate a business from its competitors profitably and sustainably (Bain & Co, 1994)

Strategy is a plan to create value by inducing your competitors not to invest where you intend to invest the most” (Bruce Henderson, 1970)

Competitive strategy is a plan to establish a profitable and sustainable position against the forces that determine industry competition. Two central questions underline the choice of strategy. The first is the attractiveness of industries for long term profitability. The second is the determinants of relative competitive position within an industry” (Michael Porter)

A winning strategy seeks advantage over competitors, but it also seeks ways to gain an advantage over other players in the industry chain (McKinsey Staff Papers 1991)

The Competitive strategy is a plan to differentiate a business from its competitors profitably and sustainably (Bain & Co, 1994)

Strategy is a plan to create value by inducing your competitors not to invest where you intend to invest the most” (Bruce Henderson, 1970)

“Competitive strategy is a plan to establish a profitable and sustainable position against the forces that determine industry competition. Two central questions underline the choice of strategy. The first is the attractiveness of industries for long term profitability. The second is the determinants of relative competitive position within an industry” (Michael Porter)

A winning strategy seeks advantage over competitors, but it also seeks ways to gain an advantage over other players in the industry chain (McKinsey Staff Papers 1991)

competitive strategy

  • Corporate strategy is about managing diversification (“who is the natural owner?”)
  • Business strategy is about building a sustained competitive strategy

Financial Frameworks

  • Explicitly measure the value of each business unit in the portfolio
  • Portfolio selection based on a comparison of the value created by each business unit (i.e.):

–Invest in high-value markets

–Improve performance of / or divest business units that are destroying value

  • Financial frameworks measure the difference between:

–ROE and Cost of Equity or

–ROCE and Cost of Capital

  • Neither framework identifies how the value of a business unit can be increased

Comprehensive Frameworks

  • Use variants of the market attractiveness / competitive position matrix to analyse the relative value of each business unit in the portfolio
  • Earlier frameworks use a single variable
  • More developed frameworks:
    1) incorporate other dimensions in the analysis (eg risk, the extent to which the company’s strengths match the critical success factors in the market)
    2) weight and rate a list of criteria
    Each framework recommends certain strategies depending on the position of the business unit in the matrix:
    1) Invest to grow
    2) Divest

You can see more of our competitive strategy management training, business, and marketing materials HERE.

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