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Strategic Analysis & Choice in The Multibusiness-Company: Rationalizing Diversification & Building Shareholder Value

Rationalizing Diversification and Integration Behavioral Consideration Affecting Strategic Choice

Rationalizing Diversification & Integration: Are


2 Critical Elements of meaningful shared opportunities:
1.

Opportunities for sharing Infrastructure & Capabilities Forthcoming?

The shared opportunities must be a significant portion of the value chain of businesses involved.

2.

The businesses involved must truly have shared needs (need for the same activity) or there is no basis for synergy in the first place.

Rationalizing Diversification & Integration: Are We


Capitalizing on Our Core Competence?

3 Basic Consideration to evaluate whether they are capitalizing on core competences:


1. Is each core competency providing relevant competitive advantage to the intended businesses? Are Businesses in the portfolio related in ways that make the companys core competence(s) beneficial? Are our combination of competencies unique or difficult to recreate?

2.

3.

Rationalizing Diversification & Integration: Does


the Companys Portfolio Balance Financial Resource?

1.
2. 3.

BCG Growth-Share Matrix


The Industry Attractiveness-Business Strength Matrix The Life Cycle-Competitive Strength Matrix

Rationalizing Diversification & Integration: Does Our


Business Portfolio Achieve Appropriate Level of Risk & Growth?

Not having all your eggs in one basket

Behavioral Consideration Affecting Strategic Choice:


1.
2. 3. 4. 5. 6.

Role of Current Strategy


Degree of the firms external defendence Attitudes toward risk Managerial priorities different from stockholder interests Internal political considerations Competitive reactions