Factors In A Firm's Corporate Level Strategy

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AARON TURNER C10822623 Strategic Management The importance of the study of corporate strategy stems from the fact that large businesses are increasingly multi-businesses and networks between businesses are becoming more common. Discuss the issues involved in a firm’s corporate level strategy decisions Corporate level strategy covers the strategic scope of the organization as a whole. For most organizations the corporate strategic plan is the only strategic plan required.Often strategy at the corporate level is simply referred to as corporate strategy, or in unified companies the corporate business strategy. Multi-businesses and networks are becoming more common due to the fact that there are many disadvantages of being in a single…show more content…
The Better-Off Test –either the new unit must gain competitive advantage from its link with the corporation or vice versa. Once these test's have been passed successfully , the next step in the corporate decision making is choosing the type of integration that they believe will benefit the company the greatest. The types of integration include Horizontal , Vertical and Strategic Outsourcing. While each of these hold their own benefits , they also hold different issues that must be addressed before choosing the correct one. The following factors play an important role in a firm’s corporate level strategy decisions Horizontal Integration: This is the process of acquiring or merging with industry competitors.The majority of merges and acquisitions in this case do not create value as they often fail to produce the anticipated gains. This type of integration can also bring the company into conflict with anti-trust law's. Vertical Integration: This involves expanding operations backward into an industry that produces inputs for the company or forward into an industry that distributes the companies products. The issues involved include Cost disadvantages where company-owned suppliers have higher costs than external suppliers.Rapid technology change means that you could be tying a company to an obsolescent technology. Demand unpredictability can make it difficult to achieve close…show more content…
diversification is the process of adding new businesses to the company that are distinct from its established operations. Another focus is on the execution of a diversification strategy. This might take place through internal new venturing, which is starting a business from scratch. Acquisition, or buying an existing business and joint ventures established with the help of a partner. The main aim of any Corporate Strategy is for the business to remain profitable . To increase profitability, diversification should allow the company to lower costs, differentiate its products, or better manage industry rivalry. Diversification, in many cases, can dissipate value instead of creating it. Although related diversification has more ways to increase profitability and seems to involve fewer risks, research has shown that related firms achieve profits that are only slightly higher than unrelated firms. Firms that are extensively diversified, with many businesses, tend to be less profitable. One reason for the failure of diversification to achieve its goals is that the bureaucratic costs of diversification exceed the value created by it.The level of bureaucratic costs is a function of the number of businesses in a company’s portfolio. The greater the number of businesses, the more difficult it is for managers to remain informed about the complexities of each business. They simply do not have the time to process all

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