When defining their strategies, corporations face myriad dilemmas and challenges:
- How to create value and synergies out of the different business units of the company to end up with a whole that is worth more than the sum of the parts?
- How to determine the most suitable way to diversify the business, should it be through the acquisition of some competitors or by attempting to access new high growth markets?
- How to manage one’s portfolio in the time of economic downturns?
- Product development is a strategy that entails a considerable risk since new skills and competencies will need to be acquired. Companies need to build the capabilities required to deliver their new product/service while keeping an eye on the project costs to maintain them under control during the trial and error process.
- Companies should be able to tell whether their drivers for diversification are well proven or not. Is diversification the right way to face an economic downturn? Or spread risk….
- To which extent the company should be diversified and how related this diversification should be to former activities to ensure an optimal performance?
- What about de-diversification? How vulnerable your business becomes in case of a downturn and how much can you benefit from the expansion if you focus on the most profitable activity?
- Integration allows companies to secure the inputs if it goes backward in the value network and facilitates access to the market when it is forward but to which extent should it be pursued knowing that the different activities do not have the same profitability along the value network?
- How to make wise decisions about outsourcing that will minimize transaction costs with subcontractors, guarantee a quality product and tap into your distinctive capabilities?
Our support in defining the corporate strategy is based on a thorough understanding of the priorities of the clients, the peculiarities of its functioning and our broad knowledge of the markets and trends. After highlighting the real opportunities for the business, we proceed with their evaluation and design a comprehensive view on how to balance all the activities for an optimal performance.
Here are some examples of the tools we use:
- The corporate strategy directions matrix: This matrix depicts the possibilities of diversification and is used to suggest your next market/product move.
- The growth/share matrix: This matrix locates the different activities of your company and offers a prediction of how they can evolve in the future. This predictive power is particularly important because it highlights the areas where additional attention should be paid to positively influence the growth of the activities.
- The directional policy matrix: This is one of the richest tools available for portfolio analysis. It relies on four dimensions: the attractiveness of the industry, the capabilities within the strategic business units, the maturity of the markets and the company’s actual share of those markets. Investment, divestment, and growth will vary depending on the four-dimension combination.
- The parenting matrix: Particularly suitable when evaluating an investment opportunity, the parenting matrix brings out the activities that are likely to be most profitable for the company and discards those who will be a burden. In addition, it can identify the cases where company capability upgrade or reorganization is required to ensure the expected return on investment.