 Strategic Management: Strategic Managment Gregory G. Dess,
University of Texas at Dallas
G.T. Lumpkin,
University of Illinois--Chicago
Corporate-Level Strategy: Creating Value Through Diversification
References| 1. Collis, D. J. & Montgomery, C. A. 1998. Creating corporate advantage. Harvard Business Review, 76(3):71–83; Saatchi & Saatchi. 2001. Saatchi & Saatchi Corporate website: www.saatchi.com.
2. The opening discussion draws on Lipin, S. & Deogun, N. 2000. Big mergers of 90s prove disappointing to shareholders. The Wall Street Journal, October 30:C1.
3. Pare, T. P. 1994. The new merger boom. Fortune, November 28:96.
4. For a comprehensive treatment of the diversification-performance relationship, refer to Palich, L. E., Cardinal, L. B. & Miller, C. C. 2000. Curvilinearity in the diversification-performance linkage: An examination of over three decades of research. Strategic Management Journal, 21(2):155–74.
5. Our framework draws upon a variety of sources, including Goold, M. & Campbell, A. 1998. Desperately seeking synergy. Harvard Business Review, 76(5):131–43; Porter,
M. E. 1987. From advantage to corporate strategy. Harvard Business Review, 65(3):43–59; and Hitt, M. A., Ireland, R. D. & Hoskisson, R. E. 2001. Strategic management: Competitiveness and globalization. 4th ed. Cincinnati, OH: South-Western.
6. Collis, D. J. & Montgomery, C. A. 1987. Corporate strategy: Resources and the scope of the firm. New York: McGraw-Hill.
7. This imagery of the corporation as a tree and related discussion draws on Prahalad, C. K. & Hamel, G. 1990. The core competence of the corporation. Harvard Business Review, 68 (3):79–91. Parts of this section also draw on Picken, J. C. & Dess, G. G. 1997. Mission critical. Burr Ridge, IL. Irwin Professional Publishing, chapter 5.
8. This section draws on Prahalad & Hamel, op. cit. and Porter, op. cit.
9. Harley-Davidson Annual Report, 1993.
10. Collis & Montgomery, op. cit.
11. Henricks, M. 1994. VF seeks global brand dominance. Apparel Industry Magazine, August: 21–40: VF Corporation. 1st quarter, corporate summary report. 1993 VF Annual Report.
12. Weber, J., Anderson-Forest, S., Symonds, W. C. & Byrnes, N. 2001. The best performers. Business Week, Spring:33; Srinivasan, K. 2000. AOL, Time Warner clear hurdle. Lexington (KY) Herald-Leader, December 15:D2.
13. Hill, A. & Hargreaves, D. 2001. Turbulent times for GE-Honeywell deal. Financial Times, February 28:26.
14. Lowry, T. 2001. Media. Business Week, January 8:100–101.
15. The Tribune Company. 1999 Annual Report.
16. This section draws on Hrebiniak, L. G. & Joyce, W. F. 1984. Implementing strategy. New York: MacMillan; and Oster, S. M. 1994. Modern competitive analysis. New York: Oxford University Press.
17. Shaw Industries Annual Reports. 1993, 2000; Server, A. 1994. How to escape a price war. Fortune, June 13:88; Picken & Dess, op. cit. pp. 118–20.
18. The discussion of the benefits and costs of vertical integration draws on Hax, A. C. & Majluf, N. S. 1991. The strategy concept and process: A pragmatic approach. Englewood Cliffs, NJ: Prentice Hall:139.
19. This discussion draws on Oster, S. M. 1994. Modern competitive analysis. 2nd ed. New York: Oxford University Press; and Harrigan, K. 1986. Matching vertical integration strategies to competitive conditions. Strategic Management Journal, 7(6):535–56.
20. Campbell, A., Goold, M. & Alexander, M. 1995. Corporate strategy: The quest for parenting advantage. Harvard Business Review, 73 (2):120–32; and Picken & Dess, op. cit.
21. Anslinger, P. A. & Copeland, T. E. 1996. Growth through acquisition: A fresh look. Harvard Business Review, 74 (1):126–35.
22. Campbell et al., op. cit.
23. This section draws on Porter, op. cit.; and Hambrick, D. C. 1985. Turnaround strategies. In Guth, W. D., ed. Handbook of Business Strategy. Boston: Warren, Gorham & Lamont:10-1–10-32.
24. There is an important delineation between companies that are operated for a long-term profit and those that are bought and sold for short-term gains. The latter are considered "holding companies" and are generally more concerned about financial issues than strategic issues.
25. The Tyco example draws upon Collis & Montgomery, op. cit., pp. 171–83; and Whalen, C. J., Pascual, A. M., Lowery, T. & Muller, J. 2001. The top 25 managers. Business Week, January 8:64; Symonds, W. C. 2001. The most aggressive CEO. Business Week, May 28:69–77; Weber, J. et al., op. cit., p. 24.
26. Hax & Majluf, op. cit. By 1979, 45 percent of Fortune 500 companies employed some form of portfolio analysis, according to Haspelagh, P. 1982. Portfolio planning: Uses and limits. Harvard Busines Review, 60:58–73. A later study conducted in 1993 found that over 40 percent of the respondents used portfolio analysis techniques but the level of usage was expected to increase to more than 60 percent in the near future: (Rigby, D. K. 1994. Managing the management tools. Planning Review, September–October:20–24.
27. Goold, M. & Luchs, K. 1993. Why diversify? Four decades of management thinking. Academy of Management Executive, 7(3):7–25.
28. Other approaches include the industry attractiveness–business strength matrix developed jointly by General Electric and McKinsey and Company, the life-cycle matrix developed by Arthur D. Little, and the profitability matrix proposed by Marakon. For an extensive review, refer to Hax & Majluf, op. cit., pp. 182–94.
29. Porter, op. cit., pp. 49–52.
30. Collis, D. J. 1995. Portfolio planning at Ciba-Giegy and the Newport investment proposal. Harvard Business School Case No. 9-795-040. Novartis AG was created in 1996 by the merger of Ciba-Geigy and Sandoz.
31. Buzzell, R. D. & Gale, B. T. 1987. The PIMS principles: Linking strategy to performance. New York: Free Press; and Miller, A. & Dess, G. G. Strategic Management. 2nd ed. New York: McGraw-Hill.
32. Seeger, J. 1984. Reversing the images of BCG’s growth share matrix. Strategic Management Journal, 5(1):93–97.
33. Picken & Dess, op. cit.; Securities and Exchange Commission. 2001. 10-Q Filing. Securities and Exchange Commission, May 14.
34. Koudsi, S. 2001. Remedies for an economic hangover. Fortune, June 25:130–39.
35. Carey, D., moderator. 2000. A CEO roundtable on making mergers succeed. Harvard Business Review, 78(3):146.
36. Shinal, J. 2001. Can Mike Volpi make Cisco sizzle again? Business Week, February 26:102–4; Kambil, A., Eselius, E. D. & Monteiro, K. A. 2000. Fast venturing: The quick way to start web businesses. Sloan Management Review, 41(4):55–67; and Elstrom, P. 2001. Sorry, Cisco. The old answers won’t work. Business Week, April 30:39.
37. Like many high-tech firms during the economic slump that began in mid-2000, Cisco Systems has experienced declining performance. On April 16, 2001, it announced that its revenues for the quarter closing April 30 would drop 5 percent from a year earlier—and a stunning 30 percent from the previous three months—to about $4.7 billion. Furthermore, Cisco announced that it would lay off 8,500 employees and take an enormous $2.5 billion charge to write down inventory. By mid-December 2001, its stock was trading at around $20, down significantly from its 52-week high of $70. Elstrom, op. cit., p. 39.
38. Barrett, A. 2001. Drugs. Business Week, January 8:112–13.
39. Whalen et al., op. cit., p. 63.
40. Muoio, A., ed. 1998. Unit of one. Fast Company, September:82.
41. For scholarly perspectives on the role of learning in creating value in strategic alliances, refer to Anard, B. N. & Khanna, T. 2000. Do firms learn to create value. Strategic Management Journal, 12(3):295–317; and Vermeulen, F. & Barkema, H. 2001. Learning through acquisitions. Academy of Management Journal, 44(3):457–76.
42. This section draws on Hutt, M. D., Stafford, E. R. Walker, B. A. & Reingen, P. H. 2000. Case study: Defining the strategic alliance. Sloan Management Review, 41(2):51–62; and Walters, B. A., Peters, S. & Dess, G. G. 1994. Strategic alliances and joint ventures: Making them work. Business Horizons, 4:5–10.
43. Edmondson, G. & Reinhardt, A. 2001. From niche player to Goliath. Business Week, March 12:94–96.
44. Clayton, V. 2000. Lourdes Pizana’s passions: Confessions and lessons of an accidental business owner. E-Merging Business, Fall–Winter:73–75.
45. Porter, op. cit., pp. 43–59.
46. Angwin, J. S. & Wingfield, N. 2000. How Jay Walker built WebHouse on a theory that he couldn’t prove. The Wall Street Journal, October 16:A1 & A8.
47. The Jack Welch and Hilton Hotel/ITT examples draw upon Sellers, P. 2001. Get over yourself. Fortune, April 30:76–88.
48. This section draws on Weston, J. F.; Besley, S. & Brigham, E. F. 1996. Essentials of managerial finance. 11th ed. Fort Worth, TX: The Dryden Press, Harcourt Brace: 18–20 |
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