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C o r p o r a t e - a n d B u s i n e
C o r p o r a t e H e a d q u a r
C o m p a n y - w i d e s t r a t
B u s i n e s s B U u n s i it n 1 e s s B U u n s i it n 2 e s s
C o m p e t i t i C v oe m A pd e v t a i t n i C v t a oe gm A e pd e v t a i t n i v t a
Strategy Formulation: Corporate Strategy
Diversification
Manage additional businesses - Apply excess
resources, capabilities, and core competencies that
have multiple uses
Strategy Formulation: Corporate Strategy
■ Corporate Strategy
– Directional Strategy – overall
orientation towards growth, stability,
retrenchment
– Portfolio Strategy– industries/markets
that the firm competes in through
products lines & business units
– Parenting Strategy – coordination and
transfer of resources between product
lines & business units
Strategy Formulation: Corporate
Strategy
Product Diversification:
Limited Diversification
Single Business
95% or more of corporate revenue come
from a single business unit
Limited Diversification
Related Diversification
General Electric
Strategy Formulation: Corporate Strategy
Unrelated Diversification
Vertical Integration:
■ Coordinating upstream activities (those closer to
the raw materials) with downstream activities
(those closer to the customer)
Horizontal Integration
Portfolio Analysis
Portfolio Analysis
Portfolio Analysis
Combined Revenues:
Do not achieve more than 2/3 of aggregate
Community-wide turnover in one member state, so
qualifies as having Community dimension.
Commission of the European Communities
Review of Proposed Merger
Competitive Assessment:
■ Relevant Product Markets – areas of product overlap
include pizzas, desserts, and ready-made meals.
■ Relevant Geographic Markets – areas of geographic
overlap for above-mentioned products include United
Kingdom and Ireland
■ Competitive Assessment – only market where parties’
products would have market share in excess of 25% is
the Irish market for frozen ready-made meals, where
parties achieve 30%.
■ However, merged entity will continue to face
competition from rapidly growing retailer brands (value
increased by over 50% over three years) that account for
30% of market.
■ Bird’s Eye has more than 10% and Nestle has more than
5% market share.