Corporate and business-level strategy integration and diversification

Business Strategy

What role does corporate-level strategy play in relation to business-level strategy?

The greatest variation between corporate-level strategy and business level strategy is the time horizon each is based on, in addition to the level of internal synchronization each requires. Corporate-level strategies require longer time-frames, typically between three to five years, and require the synchronization of all departments of an organization. Business-level strategies are structured to enable specific business units or divisions to better integrate into corporate-level strategies, synchronizing with broader plans and strategies. One of the key characteristics of a high performing organization is the ability to clearly define the integration of business segment or division strategies to corporate overarching strategic plans (Marren, 2007).

What roles do a firm's core competencies play in a decision to diversify into new businesses?

The innate strengths of an organization are its core competencies (Mooney, 2007). To increase the likelihood of success of any diversification, it is critical that the strategy capitalize on these core competencies. For Federal Express, their core competency is their knowledge of logistics for example. As FedEx moves into other businesses, their primary criteria will be to capitalize on their core competencies in logistics.

Why does unrelated diversification have a worse performance record than related diversification?