Title the work Catherine Owens only

This week we are looking at two dimensions of strategic management that extend beyond a simple business:

· How does the international dimension of business fit in?

· How do we extend our thinking when a single company is operating in more than one business.

We will consider both of these dimensions in this week’s Learning Activities

International Strategy

It almost goes without saying that we live in an economy that is becoming ever more global.  So it is important that we step back from time to time to be sure that our strategy is fully engaged on the international dimension.  Not just as a PEST "factor", but as a dimension of making strategic choices.

These choices exist on multiple dimensions.  You may well have noticed a sticker in some Apple products that says "designed in California" or words to that effect.   Businesses in one country are affected by inventions in other countries.   We need to think about where we purchase supplies or buy inventory.  We need to think about what parts of the production process should be located where.  In what countries should we be selling our products and services, and how?  Directly or using agents or by licensing our products to foreign companies.  (The recent attempt by a European company to purchase Hershey had much to do with the way candy companies have cross licensed their products to one another so as to make and sell each others' products in different countries.)

Corporate Strategy

In discussing our Assignment One/Two Companies, we have discovered that some of them are actually multi-business companies, as are some of their competitors. When companies (and some or all of their primary competitors) are in multiple “businesses” at the same time, it complicates the analysis – particularly with respect to getting numbers with which to make comparisons.

When we discuss corporate strategy, we are usually discussing one of three questions:

· What are the overall values and strategies that define the overall strategy of the corporation as opposed to the strategies of each unit?

· How should the corporation best manage its “portfolio” of businesses?

· How should the corporation manage its overall financial affairs?

The overall corporate strategy often deals with how the corporate “center” relates to the individual businesses. Does the corporate center provide common training programs to all the businesses. Does it set “rules” that all the units must follow. GE under Jack Welch provides examples of each of these. GE developed a “Sixth Sigma” program on managing quality that all GE managers were required to take.  GE also set as a ground rule that every business unit needed to be the #1 or #2 competitor in its market.  GE also routinely moves managers from one business unit to create and reinforce a "GE-way” of doing business.

Managing the corporate portfolio of businesses brings us back to the GE/McKinsey Nine Box Matrix and the similar BCG Growth Share Matrix. A corporation plots each of its businesses on one or both of these tools and then asks itself:

· Which units should be given more cash to help them grow faster? 

· Which units should be "milked" to provide the cash to help the other units. 

· Are there units "missing" that should be created or purchased? 

· Are there units that should be sold off or closed?

It’s not particularly surprising that the cash needs of the businesses you want to grow rarely match the excess cash being generated by the businesses you want to “milk”. This inequality means that the company needs to do one of three things: go get more cash (sell stock or borrow it), get rid of the excess cash (pay off debt, return it to the shareholders), or modify the cash plans of the individual businesses to better balance out.

Both of these topics figure into the Learning Activities for this week