Corporate level strategies

It is about being in the right mix of business.

The overall corporate level strategy is concerned with the broad scope of
an organizations strategic activities. The overall strategy for a diversified company. This is the highest strategy and is concerned with what businesses the firm is in or should be in and how integrated these businesses should be with one another.

THREE KEY ISSUES FACING THE CORPORATION

The firms orientation toward growth, stability, and retrenchment (directional strategy) The industries or markets in which the firm competes (portfolio strategy)
The manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units (parenting strategy)

Classification of companies in terms of corporate level strategies

Single industry

Related diversified Unrelated diversified

Single industry
It operates in one line of business
A single business diversification strategy generates 95% or more of a firms sales revenue from its core business area Example:

Related diversified firm

It operates in several industries. Example :Procter & Gamble Business units in diapers,detergent,soap,toothpaste.

Unrelated business
It operates in business firms that are not related to each other. The connection between business units is purely financial. Example: Textron

High

Single industry

GRAPHICAL REPRESENTATION OF GENERIC CORPORATE STRATEGIES

Related diversification
Degree of relatedness

Unrelated diversification

Low

Extent of diversification

High

CORE COMPETENCE AND CORPORATE DIVERSIFICATION

RESEARCH HAS SHOWN Rank

1
2 3

TYPES
RELATED DIVERSIFIED FIRMS
SINGLE INDUSTRY FIRMS UNRELATED DIVERSIFIED FIRMS

A core competency is what a firm excels at.

Competency based growth and diversification therefore have significant potential for success.

EXAMPLE: HONDAS key core competency is its ability to design small engines

Business unit of a related diversified firm might be worse off if they were split up into separate companies. Unrelated diversified firms on the other hand do not possess operating synergies.

Corporate Level Strategies of MC DONALDS

Mc Donalds is a fast food restaurant operating on a global basis

Mc Donalds was opened for the first time in Cyprus, larnaka inJune 1997 and by now there are 16 Mc Donalds restaurants in Cyprus. Mc Donalds uses corporate level strategies like all other global basis corporations. MC Donalds is a business which only concentrates on a single task which is the fast food business industry

This will help the business to concentrate on a single task. MC Donalds diversifies its operations in many ways.

The firm uses related diversification which is to produce similar products.

Also it has opened MC cafes all around the world.

It can build a synergy by co-operating and coordinating together.

In 2001, McDonald's launched a new venture by opening two hotels in Switzerland. Example of an unrelated diversification because Mc Donalds is spreading the risks of its business from a single activity to many others. However, unrelated diversification is very difficult to manage . Mc Donalds business has been working since 1956 till now successfully and still operates under these corporate level strategies