Corporate Level Strategy
  Corporate Level Strategy
       A corporate-level strategy is an 
       action taken to gain a competitive 
       advantage through the selection 
       and management of a mix of 
       businesses competing in several 
       industries or product markets.
         What businesses should the firm be in?
         How should the corporate office 
         manage its group of businesses?
                           
            Corporate Level Strategy
            Corporate Level Strategy
            Vertical Integration
            Strategic Alliances
            Diversification (corporate 
            portfolio management)
           To add value, a corporate strategy should enable 
           a company,
           or one of its business units, to perform one or 
           more of the value creation functions at a lower 
           cost, or in a way which supports a 
           differentiation advantage.  Corporate 
           strategy is the way a company creates value 
                                
           through the configuration and coordination of  
           multi-market activities.
           Vertical Integration
           Vertical Integration
         Defining Vertical Integration
            The number of stages in a product’s or service’s 
            value chain that a particular firm engages in 
            defines that firm’s level of vertical integration.
             • Forward integration:  When Coca-Cola began 
              buying its previously franchised independent bottlers.
             • Backward integration:  When Home Box Office 
              began producing its own movies for screening on the 
              HBO Cable Channel.
                                  
           Understanding the Value Chain
      Raw Materials
       Bac
          kwa
             rd In
                tegr
                   atio     Manufacturing  Diversification
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                            Forw
                                ard 
                                   Inte
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                                         ion        Distribution
                                 
           Summary: Creating Value in Vertical 
                                       Activities
         Be Better Than Competitors
           (1)     In determining whether activities should be internal or external:
           External                   Internal Activities           External
           Supplier                                                 Customer
          (2)     In coordinating these activities along the value chain:
                                                                            Vertical Scope of the Firm 20
                                                                            Voigt, Fall, 1998