Reported by: Jhoanna Mary E.

Pescasio

CORPORATE INPUT STRATEGY

Gaining greater differential advantage

than they could muster if they operated independently.

General Electric as a conglomerate

General Electric buys dozens of firms every year. The acquisitions help GE to obtain new technologies and enter new markets. The Company acts swiftly in integrating target aspects of acquired companies into the GE culture and releases parts it does not need. GE is a global company with 60% of its business and 54% of its employees operating outside America and uses local markets to fuel both its employment. While it began in America, it is essential for GE to operate in the global market to remain competitive and achieve production efficiency. The combined value of GEs businesses is of greater value to the organization than the value of each of the individual businesses, because GE derives corporate management synergies from utilizing distinctive corporate organization design and corporate strategic capabilities as discussed in detail in the table below

Strategic/Organizational design capability Active portfolio management

How capability leads to value-adding synergies to GE Through actively managing its corporate portfolio, GE provides its businesses with a solid financial and strategic resource base and opens up future growth opportunities.

Corporate leadership systems (values, culture and GEs strong values, culture and HR processes various HR policies) develop skilled and motivated managers that allow GEs businesses to rapidly staff key management positions with the most appropriate leaders and establish high performance learning cultures. Corporate management systems GE has a strict financial planning system focused on continuous performance improvement to help businesses rapidly translate new ideas into strategic initiatives and execute them successfully. Corporate mission and long-term strategy GE corporate managers apply a thorough and carefully designed mission and corporate strategy to provide its businesses strategic intent, direction and long-term orientation. GEs corporate structure facilitates the reduction of overhead costs to businesses by exchanging best practices, and also fosters adaptation, innovation and customer focus. GE corporate managers leverage the strategic brain of the combined firm to improve the strategic positioning and organizational capabilities of GEs businesses by anticipating competitive requirements early on and facilitating change through strategic initiatives.

Corporate structure (primary, secondary and decision rights)

Development of corporate initiatives

Contributions

Quality & Value

Central Issues of CIS

Differential advantage Integrating strengths

CORPORATE RESOURCE ARSENAL

Providing one or more valuable resources on attractive terms.

Central management of synergies among the business units.

Low-Cost Capital

Outstanding Executives

CORPORATE VALUABLE RESOURCES

Corporate R&D

Centralized Marketing

Low-Cost Capital
If capital structure permits more borrowing and its enjoy a favorable credit rating, interest will be a

taxable expense, and thus the net cost of capital will be relatively low for new venture. If parent corporation enjoys a high price earnings (P/E) ratio on its stock, equity capital may cost less than the business-unit would have to pay.

Outstanding Executives
Our greatest strength is our people.

Selection, training and know-how are designed to give

managers a competitive edge. Spend effort and money on executive development, to have outstanding managers who can moved into various business units- with expectation that those managers will be able to run their units better than their competitors.

Corporate R & D
Centralized R & D, that could be a cost saving on the

part of the company. The aim is to create a powerful research group at the corporate level than makes contributions to the operating divisions- contributions that the division acting alone would be unable to achieve or even unlikely to investigate.

Centralized Marketing
By combing selling and promotion into a single

division, the corporation provided the several operating companies much more complete coverage and skillful promotion than any company could muster when acting separately. Coca-Cola Company, leaves most marketing functions with its local distributors but it centralizes control over promotion of the trade name.

CORPORATE MANAGEMENT AND SYNERGIES

Vertical Integration Full Utilization of Raw Materials

Combined Services

Vertical Integration
Involves gaining ownership or increased control over suppliers or distributors.

Kinds of Vertical Integration

a. Backward

integration involves gaining ownership of firms suppliers. For example, a manufacture of finished products may take over the business of a supplier who manufactures raw materials, component parts and other inputs. It decreases the dependability of the supply and quality of raw materials used as production inputs. b. Forward integration involves gaining ownership or increased control over distributors or retailers.

Full Utilization of Raw Materials

Minimizes raw materials and maximizes
output of the most profitable components of the mix. The corporate task is to make the combines whole more valuable than the sum of the independent parts.

Combined Services
Combined services or products for the consumer

are often suggested as a source of synergy . A set of combined services normally must be backed up by series o specialized business-units, each with its own technological and institutional constraints. If these supplying organizations take the limelight or pursue strictly parochial interest, little merging will occur. Otherwise, f the corporation manages the synchronizing the services, the strategy has much better chances of success.