1、Copyright 2001 Houghton Mifflin Company. All rights reserved.Chapter 10Corporate Development: Building and Restructuring the CorporationStrategicCharles W. L. HillManagementGareth R. JonesFifth EditionPowerPoint Presentation by Charlie CookAn Integrated ApproachCopyright 2001 Houghton Mifflin Compan

2、y. All rights reserved.10-2Reviewing the Corporate PortfolioPortfolio Planning under the Boston Consulting Group (BCG) matrix:Identifying the Strategic Business Units (SBUs) by business area or product marketAssessing each SBUs prospects (using relative market share and industry growth rate) relativ

3、e to other SBUs in the portfolio.Developing strategic objectives for each SBU.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-3The BCG MatrixFIGURE 10.1Source: Perspectives, No. 66, “The Product Portfolio.” Adapted by permission from The Boston Consulting Group, Inc., 1970.Copyright

4、2001 Houghton Mifflin Company. All rights reserved.10-4The BCG MatrixStarsHigh relative market shares in fast growing industries.Question marksLow relative market shares in fast growing industries.Cash cowsHigh relative market shares in low-growth industries.DogsLow relative market shares in low-gro

5、wth industries.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-5The Strategic Implications of the BCG MatrixStarsAggressive investments to support continued growth and consolidate competitive position of firms.Question marksSelective investments; divestiture for weak firms or those w

6、ith uncertain prospects and lack of strategic fit.Cash cowsInvestments sufficient to maintain competitive position. Cash surpluses used in developing and nurturing stars and selected question mark firms.DogsDivestiture, harvesting, or liquidation and industry exit.Copyright 2001 Houghton Mifflin Com

7、pany. All rights reserved.10-6Limitations on Portfolio PlanningFlaws in portfolio planning:The BCG model is simplistic; considers only two competitive environment factors relative market share and industry growth rate.High relative market share is no guarantee of a cost savings or competitive advant

8、age.Low relative market share is not always an indicator of competitive failure or lack of profitability.Multifactor models (e.g., the McKinsey matrix) are better though imperfect. Copyright 2001 Houghton Mifflin Company. All rights reserved.10-7The McKinsey MatrixFIGURE 10.2Copyright 2001 Houghton

9、Mifflin Company. All rights reserved.10-8FIGURE 10.3The Corporation as a Portfolio of Core CompetenciesEstablishing a Core Competence AgendaSource: G. Hamel and C. K. Prahalad, Competing for the Future (Cambridge, Mass.: Harvard Business School Press, 1994), p. 227.Copyright 2001 Houghton Mifflin Co

10、mpany. All rights reserved.10-9Internal New VenturingInternal new venturing is attractive when:Entering as a science-based company.Entering an emerging industry with no established competitors.Pitfalls of new venturing:Scale of entry Low-scale entry can reduce the probability of long-term success.Co

11、mmercialization Failure to develop a product that meets basic customer needs.Poor Implementation Using “shotgun” approach, not setting clear strategic objectives, abandoning projects too soon.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-10Scale of Entry, Profitability, and Cash Fl

12、owFIGURE 10.4Copyright 2001 Houghton Mifflin Company. All rights reserved.10-11Internal New VenturingGuidelines for successful new venturing:Adopt a structural approach with clear strategic objectives setting R&D direction.Foster close links between R&D and marketing.Use project teams to reduce deve

13、lopment time.Use a selection process to pick venture projects with the highest probability of success.Monitor progress of ventures in gaining initial market share goals.Large-scale entry is important for venture success.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-12Acquisitions a

14、s an Entry StrategyAcquisition is an attractive strategy when:Competencies important in a new business area are lacking in the entering firm.Speed of entry is considered important.Acquisition is perceived as a less risky form of entry.Barriers to entry can be e by acquisition of a firm in the indust

15、ry targeted for entry.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-13Acquisitions as an Entry StrategyPitfalls of acquisitions:Failing to follow through on postacquisition integration of the acquired firm.Overestimating the economic benefits of the acquisition.Underestimating the

16、expense of an acquisition.Failing to properly screen candidates before acquisition.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-14Acquisitions as an Entry StrategyGuidelines for successful acquisitions:Properly identify acquisition targets and conduct a thorough preacquisition scr

17、eening of the target firm.Use a bidding strategy with proper timing to avoid overpaying for an acquisition.Follow through on postacquisition integration synergy-producing activities of the acquired firm.Dispose of unwanted residual acquisition assets.Copyright 2001 Houghton Mifflin Company. All righ

18、ts reserved.10-15Joint Ventures as an Entry StrategyAttractionsSharing new project costs and risks.Increasing the probability of success in establishing the new business.DrawbacksRequires a sharing of control with partner firms.Requires that partner firms share profits.Risks giving away critical kno

19、wledge.Risks creating a potential competitor.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-16RestructuringWhy restructure?Pull-back from overdiversification.Attacks by competitors on core businesses.Diminished strategic advantages of vertical integration and diversification.Exit st

20、rategiesDivestment spinoffs of profitable SBUs to investors; management buy outs (MBOs).Harvest halting investment, maximizing cash flow.Liquidation Cease operations, write off assets.Copyright 2001 Houghton Mifflin Company. All rights reserved.10-17Turnaround StrategyThe causes of corporate declinePoor management petence, neglectOverexpansion empire-building CEOsInadequate financial controls no profit responsi