第十二讲 横向战略的战略分析
Growing Importance of Horizontal Strategy
Among Business Units
Steps of Formulating Horizontal Strategy
and Diversification Strategy
Mechanisms for Achieving Interrelationships
to Manage Horizontal Organization?
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Horizontal strategy is a coordinated set of goals and policies across distinct but interrelated business units. It is required at the group, sector, and corporate levels of a diversified firm. It does not replace or eliminate the need for separate business and/or business unit strategies. Rather, horizontal strategy provides for explicit coordination among business units that makes corporate or group strategy more than the sum of the individual business unit strategies.
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Growing Importance of Horizontal Strategy
⑴Diversification philosophy is changing
⑵Emphasis is shifting from growth to performance
⑶Technological change is proliferating interrelationships and making them more achievable
⑷Multipoint competition is increasing
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Among Business Units
⑴Tangible Interrelationships
①Procurement Interrelationships. Source: common purchased inputs; Possible forms of sharing: joint procurement.
②Technological Interrelationships. Source: common product(or process) technology, common technology in other value activities, one product incorporated into another, interface among products; Possible forms of sharing: joint technology development, joint interface design.
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③Infrastructure Interrelationships. Source: common firm infrastructure needs, common capital; Possible forms of sharing: shared raising of capital, shared cash utilization, shared accounting, shared legal department, shared government relations, shared hiring and training, etc.
④Production Interrelationships. Source: common location of raw materials, identical or similar fabrication(or assembly) process, identical or similar testing/quality control procedures, common factory support needs; Possible forms of sharing: shared inbound logistics, shared component fabrication, shared assembly facilities, shared testing/quality control facilities, shared factory indirect activities, shared site infrastructure.
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⑤Market Interrelationships. Source: common buyer, common channel, common geographic market; Possible forms of sharing: shared brand name, cross selling of products, bundled or packaged selling, cross subsidization of complementary products, shared marketing department, shared sales force, shared service/repair network, shared order processing system, shared physical distribution system, shared buyer or distributor financing organization.
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⑵Intangible Interrelationships
Sources: ①same generic strategy, ②same type of buyer(though not the same buyer), ③similar configuration of the value chain(., many dispersed sites of mineral extraction and processing), ④similar important value activities(., relations with government). Although value activities cannot be shared, these similarities among business units mean that know-how gained in one business unit is valuable and transferable to another.
Testing: ①How similar are the value activities in the business units? ②How important are the value activities involved to competition? ③How significant is the know-how that would be transferred to competitive advantage in the relevant activities?
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⑶Competitor Interrelationships
They stem from the existence of rivals that actually or potentially compete with a firm in more than one industry. These multipoint competitors necessarily link industries together because actions toward them in one industry may have implications in another.
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Steps of Formulating Horizontal Strategy
⑴Identify all tangible interrelationships.(see Figure2 A&B)
The first step in doing so is to examine value chains of each business unit for actual and possible opportunities for sharing. In a diversified firm with many business units, to simplify the analytical task of identifying interrelationships, it may be possible to break up a diversified firm into a number of clusters of business units that have many interrelationships among themselves, but relatively few with other clusters.
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A. Interrelationship Matrix
Business 1
Business 2
Common Buyer
Business 2
Business 3
Common Buyer;
Common Raw Material;
Common Component
Common Buyer
Business 3
Business 4
Common Raw Material;
Common Component
Common Raw Material;
Common Component
If interrelationships are extensive, a separate matrix can be prepared for each type of interrelationships.
B. Linkage Diagram
Market Interrelationship
Production Interrelationship
Technological Interrelationship
If there are a manageable number of business units, the linkage diagram can be a clearer mean to display interrelationships within a firm.
Business
Unit B
Business
Unit A
Business
Unit E
Business
Unit D
Business
Unit C
Business
Unit F
⑵Trace tangible interrelationships outside the boundaries of the firm.
A firm will rarely compete in all the industries that are related to its current business units. Thus, it is necessary to identify interrelationships between a firm’s existing business units and other industries not currently in its portfolio.
⑶Identify possible intangible interrelationships.
Signals of potential intangible interrelationships include similarities in generic strategy, buyer type, or value chain configuration. Many potential intangible interrelationships are usually present, which makes screening them to access their importance to competitive advantage an essential task.
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⑷Identify competitor interrelationships.(Figure 1)
A firm must identify all its multipoint competitors, potential multipoint competitors, and competitors pursuing different patterns of interrelationships.
⑸Assess the importance of interrelationships to competitive advantage.
The net competitive advantage from a tangible interrelationship is a function of the advantage from sharing, the costs of sharing, and the difficulty of matching the interrelationships. The challenge is to isolate the important ones.
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⑹Develop a coordinated horizontal strategy to achieve and enhance the most important interrelationships.(in a variety of ways)
①Share appropriate value activities.
②Coordinate strategic postures of related business units.
③Distinguish the goals of business units.
④Coordinate offensive and defensive strategies against multipoint competitors and competitors with different interrelationships.
⑤Exploit important intangible interrelationships through formal programs for exchanging Know-How.
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⑥Diversify to strengthen important interrelationships or create new ones.
⑦Sell business units that do not have significant interrelationships with others or that make the achievement of important interrelationships more difficult.
⑺Create horizontal organizational mechanisms to assure implementation
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and Diversification Strategy
Tangible interrelationships should be the starting point for formulating diversification strategy.
The presence of interrelationships per se is not sufficient justification for entering an industry unless they allow a firm to transform an unattractive industry into an attractive one.
Seeking industries with both an attractive structure and interrelationships that will yield the firm a competitive advantage in competing in those industries are the dual guides to diversification strategy.
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⑴Diversification Based on Tangible Interrelationships
A market-oriented diversification strategy aims to sell new products to common buyers, channels, or geographic markets in order to reap the benefits of market interrelationships.
A product-oriented diversification strategy aims to produce similar products with shared production value activities. Procurement interrelationships often stem from production interrelationships.
A technology-oriented diversification strategy aims to develop or enter new industries based on similar core technologies, that involve products sold to either existing or new markets.
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⑵Diversification Through Beachheads(intangible interrelationships)
A key test of diversification opportunities based on intangible interrelationships is their potential as a beachhead.
⑶Diversification and Corporate Resources
Diversification is a means to widen a firm’s stock of assets and skills by expanding the perimeter of the value activities in which it participates.
The best diversification is that which does both----it reinforces the firm’s existing strengths and creates the basis for new ones.
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Mechanisms for Achieving Interrelationships
⑴Horizontal Structure
Horizontal structure refers to temporary or permanent organizational entities that cut across business unit boundaries, supplementing the business unit structure.
①Grouping Business Units.
Groups (and sectors) should be constructed around the interrelationships that are most significant for competitive advantage, growing out of a systematic look at all the interrelationships within the firm.
Unless one form of interrelationship is dominant throughout an entire firm, different groups should be based on different types of interrelationships.
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②Partial Centralization.
It may be appropriate to centralize value activities because of important interrelationships, while still maintaining the profit responsibility of business units.
③Other Cross-Business Unit Organization Mechanisms.
⒈Market Focus Committees.
⒉Technology, Channel and Other Interrelationship Committees.
⒊Temporary Task Forces.
④Group or Corporate Interrelationship Champions.
A final structural device is the appointment of executives at the group, sector, or corporate level to act as champions for interrelationships.
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⑵Horizontal Systems
①Horizontal Strategic Planning.
First, the corporate planning department can accept responsibility for identifying interrelationships and initiating steps to exploit them.
Second, group and sector executives can be given responsibility for horizontal strategy and the content of the group plan should concentrate on interrelationships.
A third approach is to add an interrelationships section to business unit plans.
②Horizontal Procedures.
③Horizontal Incentives.
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⑶Horizontal Human Resource Practices
①Personnel Rotation among Business Units.
②Some Firmwide Role in Hiring and Training.
③Promotion from Within.
④Cross-Business Unit Forums and Meetings.
⑤Education on Interrelationship concepts.
⑷Horizontal Conflict Resolution Processes
Senior management always plays an important role by setting the tone for how business units should interact and by acting as final arbiters of any disputes.
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to Manage Horizontal Organization?
⑴About corporate role.
A purely bottom-up approach to interrelationships rarely succeeds. Chief executive officers can have a major impact on the achievement of interrelationships through their behavior, as can other line executives above the business unit level. One important way to reinforce interrelationships is through articulating a unifying theme. It should be prominently and repeatedly stressed by senior management both externally and internally, and at all levels of the company.
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⑵About firm’s development.
The achievement of interrelationships is facilitated by developing new businesses internally rather than acquiring them. Internal development is typically based on interrelationships, and organically grown units are likely to have strategies consistent with other parts of the firm.
⑶Managing horizontal organization.
Achieving interrelationships is a function of instituting an array of horizontal practices. Structure must be reinforced by group and sector executives, as well as appropriate management systems and human resource polices. Top management must also reinforce interrelationships by sending clear signals.
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