1. In your own words and using referenced
quotes describe the difference between ‘business unit level’ strategy and
‘corporate level’ strategy?
The
way business seeks to compete successfully in the market is called business
unit level strategy. It is the decision a company takes on its way to maintain,
create and use its competitive advantage. A strategic business unit is a
semi-autonomous unit for an organization. This unit is responsible for its own
price setting, budgeting and new product decision. The corporate headquarter
consider Strategic Business Unit as an internal profit Center.
Bases of
Competition
Price
Differentiation
Hybrid
Focus
|
Achieving
Competitive Advantage
Sustainability
Hyper competition
Collaboration
Game Theory
|
|
SBU
Strategies
|
||
Detailed
Choices
Directions
Methods
|
Figure: Business Level
Strategies
Corporate level
strategy:
Corporate
level strategy is all strategic decision that affects the firm as a whole. It
is concerned with overall purpose and scope of an organization. Adding value to
its business unit is the main objective of corporate level strategy. The
Corporate level strategies affect the matters such as deciding the size and
composition of business portfolio of the overall firm.
Differences between
Business Unit Level Strategy and Corporate Level Strategy:
Business-Level Strategy
Business
level strategy is low-level strategy that applies to a single division or
business unit. Business-level strategic issues include pricing and marketing
strategies. Business-level strategies are normally decided by mid-level
managers who are responsible for the business unit or division.
Corporate-Level Strategy
Corporate
strategy refers to all strategic decisions that affect the firm as a whole.
Often, corporate-level strategies will have an affect on several business
units. Corporate strategic issues include the financial structure of the firm,
mergers and acquisitions, and the allocation of resources to individual
business units. Corporate strategic decisions are normally made by the board of
directors.
2. Discuss the corporate parenting style of
Virgin group.
The
Virgin group is one of the one of the UK’s largest private company. According
to 1996 survey, 96% of UK consumers were aware of the brand Virgin.
Virgin has been described as a “keiretsu”
organization. Further, the Virgin Group had controlled by Mr. Richard Branson.
His approach to management style was one that decentralized decision making and
responsibility of the own development. Branson ruled by delegating power to
managers, however when it came to marketing and promotion, he would take more
involved role.
The name Virgin was chosen so that the brand
can be remained virgin in every business it enters. Virgin’s expansion into new
markets had been through a series of joint venture whereby Virgin provided the
brand name and the partner provided the majority capital. It is involved in
mobile telephony, travel, financial services, leisure, music, holidays and
health and wellness. It partners with others and transfers and combines skills,
knowledge and operational expertise from a wide range of industries. Also,
Virgin Group Company is able to run their business by their self. Further the
company actively helps each other to solve problems.
Virgin is involved in not only commercial
activities but it is involved in finding solutions to world major issues or
problem. With the help of Virgin Unite, a nonprofit foundation, it is
organizing campaign like health, economic empowerment, conservation and climate
change.
By observing the ownership, the corporate
structure and the management style of Virgin Group, we can say that Virgin is
following the Synergy manager corporate parenting style. The synergy manager is
a corporate parenting style looking to enhance value across business units by
managing synergies across business units. We can easily say that Virgin is
following synergy manager corporate parenting style because of the following
reasons:
Resources and
activities are shared:
Virgin group use common
distribution system across its business. It uses the same from brand name for
each of its products and services. In many of the countries its offices are
shared by its smaller business units depending upon the geographical diversity.
Skills are
transferable:
Virgin Group also actively
transfers their skills to the required industry. For example Virgin Music can
transfer its skill to Virgin Cinema and vice-versa to improve its technology.
Further, Virgin Group has its own value adding capabilities by which one
business unit help each other in sharing technologies, skills and knowledge.
The accumulated knowledge and skills learned in one business is utilized in
another business unit in the Virgin Group. This has helped Virgin Group to
increase its performance. In addition, marketing and R&D are the expertise
skills which are used by Virgin Group to improve the performance of the newly
launched products.
References:
- Johnson, Whittington and Scholes (2011) Exploring
Strategy, 9th Edition, Pearson Education, Chapter 1
- Johnson, Whittington and Scholes (2011) Exploring
Strategy, 9th Edition, Pearson Education, Chapter 7
- De Wit, B and Meyer, R (editors) (2010). 4th Edition
Strategy: Process, Content, Context, Thomson International Business Press:
London. Chapter 6
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