Strategy and organization week 2 Corporate strategy
General information from lectures
Keywords:
(vertical/horizontal) hierarchy SBUs –Headquarter
RBV – knowledge base view
Managerial thinking, corporate governance
Skills, capabilities, transfer, sharing, synergy
Creative, innovative, long-term vision
Networks, alliances, partnerships.. ‘cultural/strategic fit’
Structure M-form, multidimensional
Corporate strategy → the overall plan for a diversified company (porter, 1987)
or the overall scope and direction of a corporation and the way in which its
various business operations work together to achieve particular goals
How to create value across SBUs?
What corporate governance structure?
Who are the decision makers?
What business should the company be in?
How should the corporate office manage its portfolio of SBUs?
The joint performance of multiple activities under the same roof has to be
justified by some form of advantage arising from it
Corporate governance → concerns “the structure of rights and responsibilities
among the parties with a stake in the firm” (aoki)
Main issues:
Who controls the corporation?
What mechanisms do different groups use to exert control?
How to compare the similarities and differences in CG across countries
The mechanisms of governance:
Informal governance
o Social norms, reputation, trust and codes
Regulation
o Company law
Ownership
o Large shareholders, shareholder activism, takeovers
Boards
Incentive systems (pay)
Stakeholder pressure
o Credit monitoring, auditors, analysts, competition
, Owners
Different types of owners → individuals, banks, government, institutional
investors, other companies and foreign firms
Ownership concentration:
US and UK → dispersed ownership
Germany, japan and spain → ownership concentration
o Cross-shareholdings
o Business groups/pyramidal groups
o Golden shares (privatized firms)
Managers
Training (Human capital): engineering based vs MBA based
Labor market mobility: closed vs open
Executive compensation: a governance mechanism that seeks to align managers’
and owners’ interest through salary, bonuses and long-term incentive
compensation contingent on performance such as stock options
Board of directors
Size
Composition
o Insiders vs outsiders (independent)
o Staggered boards
o Board committees: auditing, remuneration, nominations
o Dual leadership: CEO-chairman
Two tier vs one tier
o Role of other stakeholders in the board, codetermination
o Management board (vorstand) vs supervisory board (aufsichtstrat)
General information from lectures
Keywords:
(vertical/horizontal) hierarchy SBUs –Headquarter
RBV – knowledge base view
Managerial thinking, corporate governance
Skills, capabilities, transfer, sharing, synergy
Creative, innovative, long-term vision
Networks, alliances, partnerships.. ‘cultural/strategic fit’
Structure M-form, multidimensional
Corporate strategy → the overall plan for a diversified company (porter, 1987)
or the overall scope and direction of a corporation and the way in which its
various business operations work together to achieve particular goals
How to create value across SBUs?
What corporate governance structure?
Who are the decision makers?
What business should the company be in?
How should the corporate office manage its portfolio of SBUs?
The joint performance of multiple activities under the same roof has to be
justified by some form of advantage arising from it
Corporate governance → concerns “the structure of rights and responsibilities
among the parties with a stake in the firm” (aoki)
Main issues:
Who controls the corporation?
What mechanisms do different groups use to exert control?
How to compare the similarities and differences in CG across countries
The mechanisms of governance:
Informal governance
o Social norms, reputation, trust and codes
Regulation
o Company law
Ownership
o Large shareholders, shareholder activism, takeovers
Boards
Incentive systems (pay)
Stakeholder pressure
o Credit monitoring, auditors, analysts, competition
, Owners
Different types of owners → individuals, banks, government, institutional
investors, other companies and foreign firms
Ownership concentration:
US and UK → dispersed ownership
Germany, japan and spain → ownership concentration
o Cross-shareholdings
o Business groups/pyramidal groups
o Golden shares (privatized firms)
Managers
Training (Human capital): engineering based vs MBA based
Labor market mobility: closed vs open
Executive compensation: a governance mechanism that seeks to align managers’
and owners’ interest through salary, bonuses and long-term incentive
compensation contingent on performance such as stock options
Board of directors
Size
Composition
o Insiders vs outsiders (independent)
o Staggered boards
o Board committees: auditing, remuneration, nominations
o Dual leadership: CEO-chairman
Two tier vs one tier
o Role of other stakeholders in the board, codetermination
o Management board (vorstand) vs supervisory board (aufsichtstrat)
