Strategia di impresa
Transcript of Strategia di impresa
Topics
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Topic Readings
3. Corporate strategy: diversification
• READING PACKAGE, Cap. 3. Corporate Strategy.Why do firms diversify?
Diversification forms: related
and unrelated diversification
The impact of diversification on
performance
Evaluating diversification
strategy: Better-Off Test and
Best-Alternative Test
Cases
AOL-TimeWarner e-Learning-Unimib
Microsoft-Skype e-Learning-Unimib
The context: corporate strategy Mission and Scope
Business Diversification
Vertical integration
Geographical Diversification
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Diversification Types of diversification
Reasons for diversifying
Measures of diversification
The impact of diversification on performance
Evaluating diversification strategy: Better-Off
Test and Best-Alternative Test
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Business Diversification
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Entry in a new market, product area or line of business
(Ansoff 1957; Ramanujam and Varadarajan 1989)
Main steps:
Choosing the businesses and the entry mode
Exploiting cross-business value chain links and
strategic fit to obtain/increase competitive advantage
Establishing investment priorities and allocating
resources across business units
Ansoff – Mintzberg matrix
Current product New product
Current
mission
Market penetrationUber’s penetration of the US market
Development of
the productSamsung’s Galaxy S11 following Galaxy S10
……
New
mission
Development of the
marketVW in the US
DiversificationGoogle’s glasses and
driverless cars
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Diversification optionsSticking with the existing business and pursuing opportunities presented by these businesses
Broadening the current business scope by entering additional industries
Narrowing the business scope by divesting poorly performing businesses
Restructuring the entire firm by divesting some businesses and acquiring others to reshape the firm’s businesses portfolio
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Why do firms diversity?
Scarce opportunities to grow ◦ Limited possibility of re-investing in the original business (maturity,
stagnant demand)
◦ Changing industry conditions— technological innovation, substitute products, fast-shifting buyer preferences, or intensifying competition
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Why do firms diversity?Resource sharingPossibility of exploiting excess resources (competencies
and human resources, know-how …) generated in the current businesses in new businesses (Edith Penrose)
Two types of shared resources Shared specialized resources and capabilities across the value-
chain activities of related businesses
Shared generalized resources and capabilities (e.g., finance, corporate parenting) across different businesses
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Why do firms grow by adding new units, functions, markets and products?
Economies of scope by sharing resources (e.g. plants) across more than one product or business:
TC(q1, q2) < TC (q1,0) + TC(0, q2)
Difference with Economies of scale: AC reduction from increasing size of single operating units:
AC(q+)<AC(q)
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Other reasonsfinancial economies and risk reduction
managerial reasons ..
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Different types of diversificationRelated and unrelated diversification
Different motives
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Related diversification
To pursue strategic fit opportunities through:
Transferring specialized expertise, technological know-how, or other resources and capabilities from one business’s value chain to another’s
Sharing costs by combining related value chain activities into a single operation (e.g. manufacturing plant, logistics, distribution channels)
Example:
Google use of software engineers and IT specialists transferred from core business applications to Android mobile OS
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Related diversification
Exploiting common use of a well-known brand name
examples
Canon leveraged its brand name in photographic equip in the copyingequipment market;
Sony: from consumer electronics to videogames consoles (Playstation)
Besides brands, sharing other resources (e.g., supply chain management systems) that support corresponding value chain activities across businesses
Example
Dell Computers leveraged its network of PC input suppliers(microprocessors, disk drives, memory chips, flat-panel display) in the the LCD TV products
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Related diversification
Engaging in cross-business collaboration and knowledge sharing to create new competitively valuable resources and capabilities
Example
Cable TV firms entered high-speed Internet TV (via cablemodems) and developed new capabilities and new services(e.g. Voice over IP technology, VoP)
A case in point: Kingston Communications (UK)
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Related diversificationOther benefits (besides economies of scope/cost reduction)Product differentiation and greater customer’s
willingness to pay:
example - Google: a bundled offer of ad listings and cloud computing services
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Builds more shareholder value
than owning a stock portfolio
Yields value in the application
of specialized resources and
capabilities
Requires that management take internal
actions to realize them
Capturing the Cross-Business Strategic-Fit Benefits of Related Diversification
Kraft and Heinz merger (2015)
The third largest prepackaged food and beverages firm in North America
Strategic fit
Cross-business value chain activities and resourcesimilarities:Shared ingedients: Milk, sugar, salt …
Shared production and packaging operations
Complete integration of distribution channels and transportation net: Efficiency and speed
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Kraft-Heinz mergerKraft could use Heinz’s global distribution network and brand
Greater bargaining power with suppliers
Greater bargaining power with retail stores
Coordinated marketing campaigns
Combined R&D
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Unrelated diversification
Businesses are not similar … conglomerates
Unrelated diversification can create value to shareholders by leveraginggeneral resources and capabilities across diverse businesses
Reputation (umbrella brand)
Access to financial markets, governance mechanisms, top management expertise, budgeting and financial control systems, legaland administrative infrastructure, risk management
Business development skills, management development processes, HRM and incentive systems
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Corporate parenting capabilities
nurturing, guiding, governing diverse businesses
sharing or transferring general resources and capabilitiesacross businesses
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Examples
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GE umbrella brand GE Capital, GE medicaldiagnostics etc.
Virgin: from music to airlines, fitness centers and spacetourism
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Corporate parenting
Cross-business allocation of financial
resources
Acquiring and restructuring
undervalued companies
Using an Unrelated Diversification Strategy to Pursue Value
Diversification and restructuringRestructuring
Overhauling and streamlining the activities of a business:
combining plants with excess capacity
selling off underutilized assets
reducing unnecessary expenses, and otherwise improving the productivity and profitability of the firm.
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Limits of unrelated diversification
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Limited Competitive Advantage Potential
Demanding Managerial
Requirements
Monitoring and maintaining
the parenting advantage
Lack of cross-business
strategic-fit benefits
Unrelated Diversification
Strategy
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Financial economies
Risk reduction and
performance stability
Rapid GrowthPersonal
managerial motives
Typical motivations for Unrelated Diversification
Unrelated diversification, financialeconomies and portfolio planning
Firm as a ‘banker’
Internal capital market: financial capital (inefficient external market or credit rationing)
Informational advantage
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