Corporate Strategy: Core Concepts

Corporate Strategy in a Nutshell

Are you a good “parent” to your businesses?

The Big Question: As a corporation, what businesses should you be in?

The Test: Are your businesses worth MORE together under your ownership than they would be as separate companies?

• YES? -> You have a Parenting Advantage! (You are creating value.)
• NO? -> You might have a Conglomerate Discount. (You are destroying value.)

How to Create Value as a Parent:

• Act like a smart investor: Manage your portfolio. Sell your “dogs,” milk your “cows,” and fund your “stars.”
• Be a fixer-upper: Buy underperforming businesses, improve them, and then integrate or sell them.
• Share your expertise: Transfer your unique skills in marketing, tech, or operations to all your businesses.
• Make them play together: Find synergies. Can your businesses share a sales force, a factory, or a supply chain to cut costs?

Key Pitfall: Believing in “synergies” that look good on paper but are impossible to execute in reality. Be honest about whether you are truly adding value.