Strategic Management Report: Portfolio Analysis, Strategy Overview

This report delves into the realm of strategic management, offering a comprehensive analysis of key concepts and their practical applications. It begins by defining strategic management and then proceeds to dissect the advantages and disadvantages of portfolio analysis, a crucial tool for evaluating a company's product and service offerings. The report then elucidates the role of corporate parenting in shaping effective corporate strategies, highlighting how headquarters can guide and support various business units. Furthermore, the report explores two primary types of diversification strategies, related and unrelated, and examines the benefits and risks associated with each. Finally, it outlines the roles of the four vertical growth integration strategies—forward, backward, taper, and quasi-integration—in enhancing a firm's overall corporate strategy. The report concludes by summarizing the importance of these strategies and their impact on business performance.

Strategic
Management
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Describe the advantages and disadvantages of Portfolio Analysis..............................................3
Explain how Corporate Parenting can contribute to an effective corporate strategy..................3
Describe the two types of diversification strategies....................................................................4
The roles each of the four vertical growth integration strategies................................................4
Conclusion.......................................................................................................................................5
References........................................................................................................................................6
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INTRODUCTION
Strategic management can be defined as the process in which different plans are
developed and implemented with an objective to carry out the smooth flow of business
operations and accomplish different goals (Bettis, Ethiraj, Gambardella, Helfat, & Mitchell,
2016). The present reports explain the key advantages and disadvantages linked to portfolio
analysis. The role of corporate parenting in enhancing a firm’s overall corporate strategy is also
reflected in this report.
MAIN BODY
Describe the advantages and disadvantages of Portfolio Analysis
Portfolio analysis can be termed as an efficient process which allows businesses to carry
out the systematic analysis of their services and products offered. Furthermore, portfolio analysis
is conducted by companies with an objective to identify the performance of their investment
portfolio with regards to areas such as risks and rate of return. The key advantage of carrying out
portfolio analysis is that it supports businesses in managing risk and return efficiently. In
addition to this, it assists corporations to conduct an adequate evaluation of their different
business unit and helps in accurately allocating resources.
On the other side of this, it can be critically argued that the process encourages
companies to carry out the separation of their products, services, and business units and this is
very time consuming and complicated process (Hill, Jones, & Schilling, 2014). Another
disadvantage of portfolio analysis is that the analysis depends entirely on forecasting and it is not
necessary that prediction provides accurate and correct information every time. Companies can
make use of portfolio analysis to identify the current position of their products in BCG matrix.
For example, it can render organizations with information that some products lie in the category
of dogs which indicates low market share and low growth rate of products. Based on the
information collected, companies can take corrective measures through portfolio analysis.
Explain how Corporate Parenting can contribute to an effective corporate strategy
Corporate parenting can be termed as the process in which the corporate headquarter of a
company takes care of different business sub units. It can be expressed that corporate parenting
directly contributes to development and implementation of the effective corporate strategy. For
example, SWOT analysis of different business units can be carried out by corporate headquarters
of the company. The analysis is considered as a crucial and integral part of corporate parenting
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and helps companies to identify the key strengths and weakness of every unit. Furthermore, the
analysis also discloses the opportunities and threats present in front of units (Bettis,
Gambardella, Helfat, & Mitchell, 2014). Based on the information collected, Corporate
headquarter can develop an effective corporate strategy which can contribute to long term
growth and success of every unit. Strategies can be drawn up by corporate headquarter to
overcome weakness and deal with critical threats.
Describe the two types of diversification strategies
Related and unrelated are the two different types of diversification strategy which can be
taken into consideration by the strategic audit firm. According to the related diversification
strategy, the company will be required to introduce the new line of existing products and services
within existing markets. It can be evaluated that the core benefit of related diversification
strategy is that here the risk associated with products failure is quite small. The company offers
new range of existing products in the market which it is already aware of.
Unrelated diversification is the strategy in which company add on the new product line
and enter a market which is entirely new (Menz, Kunisch, & Collis, 2015). It can be evaluated
that the use of unrelated diversification strategy will support the company to enhance its market
share by acquiring new customers. However, it can be critically argued that effective
management of all resources and proper planning is essential for the business to achieve success
through unrelated diversification strategy.
The roles each of the four vertical growth integration strategies
Forward integration strategy – According to this vertical growth strategy, companies rely
heavily on different intermediaries to sell its products and services. The intermediaries are
generally in the form of retailers and distributors. In the overall corporate strategy of the firm,
Forward integration strategy plays a vital role in situations where company’s existing system of
distribution is expensive and not reliable.
Backward integration strategy – It can play a significant role in enhancing the overall corporate
strategy of a business enterprise in situations where existing suppliers of the company are not
sufficient enough. Furthermore, the approach is also beneficial in conditions where the total
number of vendors is very less (Hollensen, 2015).
Taper integration – It can be termed as the strategy in which half of the production is carried out
by the company, and the remaining is being bought from suppliers. Taper integration can
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enhance the corporate strategy by providing the opportunity to lower down the operational cost.
The rationale behind this is that where companies make use of suppliers resources for
production.
Quasi-integration - As per this strategy, organizations purchase outlets of its goods to carry out
the smooth flow of all operations (Morschett, Schramm-Klein, & Zentes, 2015). Quasi-
integration can enhance the corporate strategy of the company by allowing it better access to the
existing markets.
CONCLUSION
It can be concluded that portfolio analysis has different advantages and disadvantages
which need to be taken care by companies. Furthermore, corporate parenting and vertical growth
strategy can directly contribute to the enhancement of the corporate strategy.
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REFERENCES
Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating repeatable
cumulative knowledge in strategic management. Strategic Management Journal , 257-
261.
Bettis, R., Gambardella, A., Helfat, C., & Mitchell, W. (2014). Quantitative empirical analysis in
strategic management. . Strategic Management Journal , 949-953.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Boston: Cengage Learning.
Hollensen, S. (2015). Marketing management: A relationship approach. New York City:
Pearson Education.
Menz, M., Kunisch, S., & Collis, D. J. (2015). The corporate headquarters in the contemporary
corporation: Advancing a multimarket firm perspective. . The Academy of Management
Annals , 633-714.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management.
New York City: Springer.
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