Wednesday, March 14, 2012

Concepts of Corporate and Business Strategies - Historical Evolution

Present day readers and students of strategy identify business strategy or competitive strategy with Michael Porter and corporate strategy with BCG matrix. But the concepts of business strategy and corporate strategy existed in the literature much before.  Porter made a substantial contribution to these concepts.

The article “Making Strategy Explicit – A special Commentary” by S. Tilles of the Boston Consulting Group reprinted in Business Strategy (1969) gives us an opportunity to go back to that period and understand the issues were raised at that point regarding business strategy and corporate strategy.

Tilles made distinction between long range planning and strategy. Long range planning is an extension of annual budgeting. The practitioners of long range planning have not articulated competitive strategy and tactics adequately. As a result, long range planning may be extrapolating a past strategy which might have already failed.

Business strategy

Within an individual business, a statement of strategy should include:

The business definition

Business of a firm is a match between a given product group and a given market. Market is to be defined from a strategic point of view and the product is also to be defined from a strategic point of view. There is choice of market segment and there is choice of specific product. Strategy will not be clear if market and product are specified in general terms.

Competitive tactics

The articles identified innovation, concentration, and timing as competitive tactics. Analysis of competitive strengths and weaknesses is required to decide competitive tactics.

Industry analysis: A company has to analyze within and it also has to analyze the environment. Industry in which it is operating is an important segment of environment.

Corporate strategy

Corporate strategy is design of portfolio of businesses.  The portfolio of businesses a firm is engaged in and businesses it intends to enter can be evaluated by applying the following criteria.

A. Criteria related to individual performance

Probable contribution
Minimum standards

2. Criteria related to the total mix (Portfolio criteria)

Risk level
Resource requirements.


S. Tilles (1966),  “Making Strategy Explicit – A special Commentary” The Boston Consulting Group,  reprinted in Business Strategy (1969), Igor Ansoff (Editor), Penguin Education, Harmondsworth, England.
Original Knol - 2utb2lsm2k7a/ 56

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