Corporate strategy refers to the across-the-board direction of the organization and how all the different businesses of the organization work together to achieve the main goals of the organization. So the question is, how can an organization determine their corporate strategy? And how can they use it effectively? This essay will be analyzing the use of corporate strategy for StarHub Limited by using the theoretical models of corporate strategy. Corporate strategy can be broken down into four key questions. 1) What is the overall rationale of the corporate parent in the sense of how it positions itself and plays a part in enhancing the value created by its different business units for its shareholders? 2) What is the reasoning of the combination of business units in the corporate portfolio? 3) Is the type of diversification adopted reasonable? Given the corporate rationale and combination of business units. 4) Lastly, how do the corporate parent and the business units interact? These four key questions are all connected.
2.0 What is a corporate parent?
Firstly, what is a corporate parent? Within an organization, the management above the different business units that do not have direct interaction with the buyers and competitors are commonly known as the corporate parent. The corporate parent takes on the role of trying to create and add value with the business units in the organization. Refer to figure 1.1 for an example of the corporate parent of an organization. Fig 1.1 – Simple Multi-business company example
3.0 Corporate Rationale
There are four main corporate rationales that an organization can have: portfolio manager, restructurer, synergy manager and lastly, parental developer. 3.1 Portfolio Manager
In the portfolio manager rationale, the corporate parent acts as the financial markets and shareholders with a perspective to enhance the value produced by the different business units in a more effective and efficient way. They help to identify and buy over under-valued assets and businesses and improve them. They will normally give the chief executives a lot of space and control but yet at the same time setting clear targets for them to achieve. Thus with this style of managing, the corporate parent can manage many different business units while not directly intervening in the strategies of the businesses. At the same time, the corporate parent is also able to make evaluations on how the future outlook of the business is and make decisions of investing or divesting accordingly. 3.2 Restructurer
The restructurer rationale is in some ways similar to the portfolio manager rationale; they have minimal intervention in the business unit level. However, they are strong in identifying restructuring opportunities and at the same time have the skills to help grow and manage the business in the restructuring period.
3.3 Synergy Managing
Synergy managing has always been a main goal for corporate parents. Synergy occurs when two or more activities or processes complement each other and that their combined effect is greater than the sum of the parts. This quality makes the synergy manager rationale very viable in a multi-business company. In a multi-business company that owns more businesses than normal companies, it will have several activities and processes that complement each other. Thus, the synergy manager’s job is to identify the areas of synergy, where two or more businesses can complement each other by sharing the capabilities, skills, competences and even research. After identifying the areas of possible synergy the synergy managers will have to integrate the resources together to full capitalize on what it has. 3.4 Parental Developer
Finally the parental developer rationale, this rationale is unlike the synergy manager; it does not focus on finding synergy....