Chapter 08 - Corporate Strategy: Diversification and the Multibusiness Company
Chapter 8 Lecture Note
Corporate Strategy: Diversification and the
Multibusiness Company
Chapter Summary
Chapter Eight moves up one level in the strategy-making hierarchy, from strategy making in a
single business enterprise to strategy making in a diversified enterprise. The chapter begins with
a description of the various paths through which a company can become diversified and
provides an explanation of how a company can use diversification to create or compound
competitive advantage for its business units. The chapter also examines the techniques and
procedures for assessing the strategic attractiveness of a diversified company’s business
portfolio and surveys the strategic options open to already-diversified companies.
Lecture Outline
I.Introduction
1.In most diversified companies, corporate level executives delegate considerable strategy-
making authority to the heads of each business, usually giving them the latitude to craf
a business strategy suited to their particular industry and competitive circumstances and
holding them accountable for producing good results. However, the task of crafing a
diversified company’s overall or corporate strategy falls squarely on the shoulders of top-
level corporate executives.
2.Devising a corporate strategy has four distinct facets:
a.Picking new industries to enter and deciding on the means of entry
b.Pursuing opportunities to leverage cross-business value chain relationships and
strategic fits into competitive advantage
c. Establishing investment priorities and steering corporate resources into the most
attractive business units.
d. Initiating actions to boost the combined performances of the corporation’s collection
of businesses.
II.When Business Diversification Becomes a Consideration
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