From Competitive Strategy to

Corporate Strategy
MICHAEL E. PORTER
Competitive and Corporate Strategy

 Two levels of strategy: Corporate and Competitive

 Competitive Strategy concerns with creating competitive advantages in each of the

business in which the company competes.

 Corporate Strategy is what makes the corporate whole add up to more than the sum of its
business unit parts.
A grim picture of diversification

 Measurement of the success of corporate strategy

 Short-term market reaction

 Studying the diversification programs of a company for a long period of time

Premises of Corporate Strategy

 Competition Occurs at the Business Unit Level

 Diversification inevitably adds costs and constraints on Business Units

 Shareholders can readily diversify themselves

Passing the Tests

 How attractive is the industry?

 What is the cost of entry?

 Will the business be better off?

Choosing a Corporate Strategy

 Identifying the relationship among the already existing business units

 Selecting core business that will be the foundation of Corporate Strategy

 Pursuing diversification opportunities that allow shared activities

 Diversification through the transfer of skills if opportunities for shared activities are
limited or exhausted
Thank you