Enterprises that own multiple businesses often have a flawed approach to strategy: They focus too much on the makeup of their portfolios and too little on enhancing the businesses in them. Strategies for adding value to a corporation's businesses fall on a continuum. On one end the businesses in the portfolio are completely unrelated; at the other they have many similarities. Each place on the continuum requires a different kind of organizational structure and specific management processes to support it. To succeed at execution, you need to determine where on the spectrum your business falls and then align your portfolio selection, structure, and processes with your vision of how to add value.
Between 1985 and 2007, Danaher has been one of the best-performing industrial conglomerates in the U.S. This case examines the corporate strategy of this diversified, global corporation. It describes the firm's portfolio strategy and the Danaher Business System-a systematic and wide-ranging set of organizational processes the firm has developed to drive growth and create value. In 2008, the firm confronts various challenges in sustaining its impressive historical performance. First, can it continue to balance organic and acquisition-led growth? Second, what will be the impact of increased competition from private equity players? Third, for how long can its strategy of "continuous improvement" continue?
In 2005 Craig Purse, the CEO of Videojet, a company recently acquired by the conglomerate Danaher, is dealing with the unexpected failure of a new high tech printer just launched in the market. The new product exemplified the first real instance in which the Videojet team had used the managerial processes of the Danaher Business System (DBS). Was the failure of the new printer a sign that the DBS was fundamentally inadequate for product development projects? Or was the failure instead a symptom that the Videojet team had not properly adopted the DBS? What should Purse do to correct the course of the company?
In 2005 Craig Purse, the CEO of Videojet, a company recently acquired by the conglomerate Danaher, is dealing with the unexpected failure of a new high tech printer just launched in the market. The new product exemplified the first real instance in which the Videojet team had used the managerial processes of the Danaher Business System (DBS). Was the failure of the new printer a sign that the DBS was fundamentally inadequate for product development projects? Or was the failure instead a symptom that the Videojet team had not properly adopted the DBS? What should Purse do to correct the course of the company?
This note provides an overview of strategies for multi-business firms. The note describes (i) what is meant by "corporate advantage", (ii) the different approaches that multi-business firms can pursue in order to create corporate advantage, (iii) the specific corporate level choices (portfolio, ownership, and organizational choices) that firms make, (iv) certain principles that characterize effective corporate level strategy, and (v) reasons why corporate strategies can fail. In its treatment and coverage of these issues, the note emphasizes similarities between the core principles of business unit strategy and of corporate level strategy.
On March 28, 2011, The New York Times website became a restricted site where most of the content was protected behind a "paywall." Users who exceeded the limit of 20 free articles per month were required to pay for either a digital or print subscription. The newspaper industry had been suffering from revenue declines over the past decade, and the transition to digital media was difficult to navigate. Revenues from online advertising were not sufficient to replace the loss of print revenue, and many publishers had explored charging readers for content, with mixed success, where specialized sources like The Wall Street Journal were successfully using the model, but several other general news sites had failed. Newspapers and content creators in general were very interested in understanding whether transitioning to the paywall at the most popular news website would succeed, and whether it could become a blueprint for future success as a sustainable business model. There were several difficult issues to examine in determining the digital strategy for The Times. Would consumers remain as engaged with a site protected by a paywall? Would advertisers react positively to such a move that walled off readers? Would readers value both the print and digital versions of the content, or would it become necessary to create new content? The Times had several choices in designing the paywall, including determining the digital content, pricing, as well as how to interface with readers of secondary news websites like blogs that posted links to news articles. Should they design a "leaky" paywall where determined users could easily slip through, or a "bulletproof" paywall like the Financial Times had done, where users had to pay before they could access any content? What choices would provide the foundation for a successful business model?
The case explores how Tata Motors, India's largest automobile company, developed the Nano, the world's cheapest car. The case focuses on the translation of Ratan Tata's (Chairman of Tata Motors) vision of a safe affordable car for the masses by Ravi Kant, Managing Director of Tata Motors into the Nano Project. The case raises questions around breaking the price - quality barrier and changing existing internal processes to accommodate revolutionary new ideas. The dilemma of success - Tata Nano was a runaway bestseller - left Tata Motors debating how large a bet they should make on the Nano and what kind of capacity commitment this requires.
In 2009 the Economist continued to experience impressive growth and operating margins while many of its peers reeled from both a cyclical downturn and structural threats to print publishing. The case describes the history, organization, and business model of the Economist, and describes three issues confronting Andrew Rashbass, the group's chief executive: first, reevaluating the magazine's digital strategy; second, preparing for e-readers; and, third, positioning the company to exploit what the Economist described as an era of "Mass Intelligence" where more readers sought out sophisticated and challenging information sources.
In early 2010, e-readers like Amazon's Kindle, and Apple's impending iPad, threatened to disrupt the book publishing industry. The case provides an overview of the industry, describes the broader trends regarding e-readers, and asks: how should major publishers like Random House respond to these trends?
In November 2007, Amazon introduced the Kindle, the first electronic reader with wireless functionality. The case describes the launch of the Kindle and provides information on representative players in the industry (or broader ecosystem) who are likely to be affected, and react: including Penguin (the leading educational publisher), Barnes & Noble (the largest bricks-&-mortar retailer), Apple and Sony (as manufacturers of competing devices), Google (as a major provider of free e-content) and Adobe (as a competitor in creating an e-book standard).
Berkshire Hathaway describes the history and strategy of one of the best known investment firms over the last forty years. The case describes the investment philosophy of Warren Buffett, its legendary chairman and CEO, the gradual diversification of its portfolio, its capital allocation strategy, compensation structure, and corporate governance approach, leading up to August 2008.
Between 1985 and 2007, Danaher has been one of the best-performing industrial conglomerates in the U.S. This case examines the corporate strategy of this diversified, global corporation. It describes the firm's portfolio strategy and the Danaher Business System-a systematic and wide-ranging set of organizational processes the firm has developed to drive growth and create value. In 2008, the firm confronts various challenges in sustaining its impressive historical performance. First, can it continue to balance organic and acquisition-led growth? Second, what will be the impact of increased competition from private equity players? Third, for how long can its strategy of "continuous improvement" continue?
The mantra "Every product must stand on its own bottom line" may no longer be the one to chant. Nowadays, broadening your portfolio can increase both your chances of a big win and the benefit your other products can get from a hit's popularity.
In 2006, newspaper firms in developed markets were severely threatened on three fronts: the growth of online news, online classified advertising, and free newspapers. Schibsted, however, had managed to cope with these challenges successfully, and had become something of a legend in the newspaper community. Describes the evolution of Schibsted's strategy from print media towards electronic media starting in 1995, including their choices around the internal structuring of new ventures. In September 2006, the management team confronted a few salient questions: first, should Schibsted allow Google to crawl its online news sites in Scandinavia?; and second, were Schibsted's successes within Scandinavia repeatable outside it? Indeed, how far could Schibsted's competitive advantage travel?
Conglomerates lie at the heart of debates in corporate strategy. They include, perhaps, the best known companies in history--Beatrice Corp., General Electric, ITT, Siemens, and ABB--and at various times over the last few decades have been both admired and vilified as a form of corporate organization. Regardless of the time at which these debates have occurred, they invariably focus on a few common questions, which this note addresses: Why do conglomerates exist? Do they add value to their component businesses? If so, how?
Which businesses should a firm expand into? This question of corporate scope is central to corporate strategy. Flawed scope decisions can have severe consequences, and the trauma experienced by many companies as a result of mistaken decisions to expand scope is often large. What leads to such mistakes? Where do managers go wrong? And, what might be a sensible logic by which to approach the question of scope expansion? Examines these questions and the logic of the scope decision in those instances where the target business is ostensibly related in some way to a company's existing ones.
Describes the objectives of the Corporate Strategy course; the conceptual framework used in the course; some central principles of corporate strategy that emerge from this framework; and the modular structure of the course, together with the topics each module covers.
Intellectual property comprises an ever-increasing fraction of corporate wealth, but what's the good of that if an ever-increasing fraction of the property is copied or stolen? Faced with developing countries' limited and inadequately enforced patent and copyright laws, some companies are resorting to market-based strategies to protect their intellectual property. These include preempting or threatening competitors, embedding intellectual property in environments that can be protected, bundling insecure intellectual property with its more secure cousins, and actually entering the businesses that pose a threat. The authors urge companies coping with weak property rights to follow a decision tree when choosing which strategies to use and when: Start by thinking of the strategies that will protect your business' core. If, for example, a first-mover advantage is within reach, making yourself more committed to intellectual property could be the answer. If you and your rivals are equally matched, ask yourself, "Can those that threaten me with copying be copied in turn?" The knowledge that each of you can hurt the other may dampen the competitive intensity or even lead to voluntary sharing of property. If these solutions fail or don't apply, try forging a connection with a product or business closely related to your own. Doing so may prevent a valued asset from falling into a rival's hands or make the asset harder to misappropriate. This approach can even help you expand your piece of the market pie or reduce the cost of making the threatened product, perhaps to the point where you can compete against pirated goods. Finally, if there still doesn't seem to be a way of making money from your threatened product, you may choose to move into the very business that has hurt your own. Such strategies are behind the economics of successful companies like Intel and NBC, say the authors.