Creating

Corporate
Advantage
Group 5
Triangle of Corporate Strategy
Resources
Business
Organization

Competitive Advantage
Control
Coordination
Resource Continuum

Nature of Resource: General or

Specialized
Scope of Business: Wide or narrow
Coordination Mechanism : Transfer or
Sharing
Corporate Office size : Large or small
Relatedness is about Resources and
not product

Mercury Measures
Product : Thermostats for industrial
purpose
Expansion in household use of product
where it lacked research and market
penetration
Should Corporate
resources be shared
or transferred
Basis Financial Control Operating
Control

Meaning Focuses on limited Recognizes all

output measures. sorts of events
outside managers
control.

Suitability Stable, mature Fast moving

companies and industries with
discrete business high levels of
units. uncertainty.

Interaction Less More than financial

between corporate
and business unit
managers
 SHARP CORPORATION
A 14 billion consumer electronics giant sits
near the specialized end of the spectrum.
Consistent pursuit of a vision of technological
creativity has pushed it to the forefront of its
industry.
It has a specialized set of optoelectronics
technologies as valuable resources and this
contributes to the competitive advantage of
the companys core businesses.
Its most successful technology is LCDs which
is a critical component in nearly all Sharps
products.
According to Atsushi Asada Sharp invests in
techonologies which will act as nucleus of the
company in the future.
Sharps set of business is fairly restricted. Television
and video components, communications and audio
systems, appliances , information systems, and
electronic components.
Sharps organization has various characteristics:
o Technological investments tend to be expensive.
o Advantage over lead time is short lived due to
imitation or short life cycle.
Sharp invests heavily in R&D and has approx 1500
people in corporate office.

COORDINATION
Sharp is divided into functional units unlike Newell.
Applied research and manufacturing of key
components takes place at a centralized place leading
to economies of scale.
 rp gave responsibility and not authority to the
agers to ensure that shared activities are optimally used.
rp invests in such time intensive coordination to minimize
nevitable conflicts that arise when units share
ortant activities.
h year one-third of Sharps corporate R&D budget is spent
10 to 15 gold badge projects.

CONTROL SYSTEM
Promotion rather than annual compensation is considered a
tter incentive to motivate employees in the organisation.
mployees are promoted on the basis of seniority and subtle
s exhibited over time.
TYCO INTERNATIONAL
Tyco is a $12 billion conglomerate built around
a set of very general resources that it leverages
into a wide range of businesses.
Creates value for its business through- general
management skills, system of corporate
governance.
Controls and Incentives at
Tyco
Carefully conceived and implemented strategy at the
far left of the continuum can create substantial amounts
of value proves wrong the negative view of
conglomerates
 Resources and Businesses:
Resources are general but financial controls, good
incentive programs, strong manufacturing
Wide range of businesses because of general
resources
Six operating groups: fire protection, flow control,
disposable medical products, Simplex Technologies,
packaging materials, and specialty products
Competes in mature, stable, low-tech businesses that
face less uncertainty and require considerably lower
levels of R&D spending
 Organization:
Companys structure similar to a capitalistic system
with "very little central planning
No rules, develop incentives for our people and no
caps on that
Highly disciplined financial control system and steep
incentive schemes
Company's unsparing, top-down budgeting process
holds divisional presidents accountable for the
financial performance
No One Right Strategy:

A brilliant strategy doesnt necessarily work well for

all companies
REASON : Every company starts at a different point,
operates in a different context, and has fundamentally
different kinds of resources
CORPORATE ADVANTAGE : internally consistent
corporate strategies tailored to a firm's resources and
opportunities
Example : Saatchi and Saatchi
Rose to fame in the 1970S and early 1980s,
reputation for creative advertising and its
championing of global advertisements
1986 : With acquisition of Ted Bates, Saatchi became
the world's largest advertising agency
Main mistakes :
Overpaying for acquisitions and not anticipating the
end of the 1980s advertising boom
Never established a boundary to its domain, reached
the limit in advertising
o Expanded into a number of businesses but never able
to leverage its most valuable resource- customer
relationships across businesses thus, having potential
competitive advantage
o Worst failure came on the control side - advanced
financial-control system for advertising agencies
o Cross Selling - potential synergy, never implemented
effective processes to capture it
MANY WAYS TO SUCCEED
o The acid test for any corporate strategy is: the
companys worth should not be worth more to another
owner.
o Process of continual upgrading.
o Creativity and intuition are hallmarks of great corporate
strategies along with discipline and and vigor.
o Ultimately, strategies that prevail are well constructed
systems that deliver tangible benefits.
THANK
YOU!!