MBL93D-U Module Overview 2014

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Module overview 2014

Corporate Strategy
MBL93D-U
Year module
IMPORTANT INFORMATION:
This module overview contains important information
about your module.
CONTENTS
Page
CONTENTS ......................................................................................................................... 2
1
INTRODUCTION ...................................................................................................... 3
PURPOSE AND BROAD AND SPECIFIC OUTCOMES FOR THE MODULE .......... 3
2.1
Purpose .................................................................................................................... 3
2.2
Broad and specific outcomes.................................................................................... 3
LECTURER(S) AND CONTACT DETAILS ............................................................... 4
3.1
Lecturer(s) ................................................................................................................ 4
3.2
Area ......................................................................................................................... 4
3.3
University ................................................................................................................. 4
MODULE-RELATED RESOURCES ......................................................................... 4
4.1
Prescribed books ...................................................................................................... 4
4.2
Recommended books............................................................................................... 4
4.3
Electronic reserves (e-reserves) ............................................................................... 4
TOPICS .................................................................................................................... 5
STUDY SCHOOL PLAN ......................................................................................... 18
MODULE-SPECIFIC STUDY PLAN ....................................................................... 18
ASSESSMENT ....................................................................................................... 18
8.1
Assessment plan .................................................................................................... 18
8.2
General assignment numbers ................................................................................. 18
8.2.1
Due dates for assignments ..................................................................................... 18
8.3
Submission of assignments .................................................................................... 19
8.4
Assignments ........................................................................................................... 19
OTHER ASSESSMENT METHODS ....................................................................... 20
10
EXAMINATION...................................................................................................... 21
11
FREQUENTLY ASKED QUESTIONS..................................................................... 21
12
SOURCES CONSULTED ....................................................................................... 21
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INTRODUCTION
Dear Student
A perennial question for the corporate office is How can we add value? For many
senior executives, the Hippocratic oath of corporate management seems to be the
answer: First, do no harm. Divisional autonomy has gone from managerial principle
to mantra. The corporate office is there simply to set and enforce performance
targets. But in a world increasingly obsessed with private equity, the power of focus,
and the discipline of debt, is there really a role for even the most mildly diversified
firm and the corporate layer of management that such diversification necessarily
creates?
What, then, is corporate strategy? The most widespread view is that improving the
competitive strategies of the operating units is the essence of corporate strategy. The
corporate office should be focused on, for example, the identification and capture of
synergies between operating units. There remains considerable debate about how
best to do this.
(Raynor, 2007:1)
PURPOSE AND BROAD AND SPECIFIC OUTCOMES FOR THE MODULE
2.1
Purpose
The purpose of this module, Corporate Strategy, is to enable the student to gain
insights into what drives strategy in a multi-business corporation.
2.2
Broad and specific outcomes

The student needs to have a thorough understanding of the unique context in which
corporate strategy takes place, and the variables thus applicable.
The specific outcomes for each topic in this module are as follows:
(1) Corporate parenting: creating value in the multi-business company
Evaluate corporate strategic decisions from a value creation perspective. Incorporate
the latest corporate strategy theories in corporate strategic decision making.
(2) The firm as a complex adaptive system: the influence of complexity and chaos
theory
Incorporate this corporate strategy theory into corporate strategic decision making.
(3) Co-opetition and game theory in corporate strategy
Incorporate the latest corporate strategy theories in corporate strategic decision
making.
(4) The role of knowledge and distinctive capabilities in corporate strategy
Evaluate corporate strategic decisions from a value creation perspective.
making.
(5) Strategy as risk management

making.
(6) The role of innovation in corporate strategy
making.
LECTURER(S) AND CONTACT DETAILS
3.1
Lecturer(s)
Dr F du Toit
E-mail:
Office:
Cell:
3.2
fdutoit@sbleds.ac.za
+27 11 652 0326
+27 82 925 3575
Area
Strategy
3.3
University
Unisa School of Business Leadership
MODULE-RELATED RESOURCES
4.1
Prescribed books
Goold, M, Campbell, A & Alexander, M. 1994. Corporate-level strategy. New York:
Wiley.
Brown, SL & Eisenhardt, KM. 1998. Competing on the edge. Boston: Harvard
Business School Press.
4.2
Recommended books
Richard Branson and the Virgin Group of Companies in 2004 (Grant casebook, p
308)
General Electric: Life after Jack (Grant casebook, p 336)
4.3
Electronic reserves (e-reserves)

Baldoni RJ. 2004. The journey to successful enterprise-wide risk management,
Directorship, 30(3): 10 - 15
Ballou B. & Heitger DL. 2005. A building block approach for implementing COSOs
Enterprise Risk Management Integrated Framework, Management Accounting
Quarterly, 6 (2): 1 - 10
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Barbee , G & Rubel, T. 1997. Co-opetition in action, The Journal of Business

Strategy, 18(5):7-8.
Caldart, AA & Ricart, JE.
2004.
Corporate strategy revisited: A view from
complexity theory, European Management Review ,1(1):96-104

Eisenhardt, KM & Galunic, DC. 2000. Co-evolving: At last a way to make synergies
work, Harvard Business Review, 78(1):91-101.
Grant, R. 1991. The resource-based theory of competitive advantage: Implications
for strategy formulation, California Management Review, 33(3):114-135.
Grant, RM. 1996. Toward a knowledge-based theory of the firm, Strategic
Management Journal, 17, Winter Special Issue: 109-122.
Hamel, G. 1998. Strategy innovation and the quest for value, Sloan Management
Review, 39(2):7-14.
Harris, L, Coles, AM & Dickson, K. 2000. Building innovation networks: Issues of
strategy and expertise, Technology Analysis and Strategic Management, 12(2):229241.
Krinsky, R & Jenkins, AC. 1997. Collide: The uneasy fusion of strategy and
innovation. ,Strategy and Leadership, 25(4):37-41
McAfee, RP & McMillan, J. 1996. Competition and game theory. Journal of
Marketing Research, 33(3):263- 267.
Merna, A & Merna, T. 2004. Development of a model for risk management at
corporate, strategic business, and project levels. The Journal of Structured and
Project , 10(1):79-85.
Nalebuff, BJ & Brandenburger, AM. 1997. Co-opetition: Competitive and cooperative strategies for the digital economy, Strategy and Leadership ,(6):28 -35.
Pascale, RT. 1999. Surfing the edge of chaos, Sloan Management Review ,
40(3):83-94.
Porter, M. 1987. From competitive advantage to corporate strategy, Harvard
Business Review, 65(3): 43-59 or Management Today, 19(5):4-10. (Use the
reference to find the article as HBR does not allow linking to this article)
Schoenberg, R. 2003. An integrated approach to strategy innovation, European
Business Journal, 15(3):95-103.
TOPICS
5.1 Corporate parenting: creating value in the multi-business company

5.1.1 Tuition period
Time allocation: before study school 1
5.1.2 Specific outcomes

Evaluate corporate strategic decisions from a value creation perspective. Incorporate
the latest corporate strategy theories in corporate strategic decision making.
5.1.3 Critical questions
Examine any business publication and you will see phrases such as "mergers",
"acquisitions", "hostile takeovers", "joint ventures", "unlocking shareholder value" and
"unbundling". This is the language of corporate strategy. It is all about how
corporations are trying to create value for their shareholders by making decisions
relating to the vertical, horizontal and geographical scale, as well as the scope of the
corporation.
Take a moment to reflect on the following questions:
Are there reasons other than the creation of shareholder value that could give rise to
corporate strategic decisions? What are they?
What are the factors that could positively influence the success of corporate strategic
decisions?
What are the factors that could negatively influence the success of corporate strategic
decisions?
Michael Porter (2003) points out that a disappointingly large number of corporate
strategic decisions are failures and do not add value to the corporate portfolio,
because most corporations do not think about how they really add value to their
subsidiaries. The potentially devastating effects of poor corporate strategic decision
making were recently evident in the globally publicised reversal of the merger of
Daimler-Benz and Chrysler.
In this topic, we will investigate the following questions:
How do corporate "parents" add value to their subsidiaries?
How is corporate strategy developed?
What corporate strategies may be successful?
What factors could result in poor corporate strategic decision making?
5.1.4 Learning through activities
The main source of information for this topic is the prescribed book by Goold,
Campbell and Alexander (1994).
The primary decisions in corporate strategy (according to Goold et al 1994) are the
following:
In what businesses should the corporation invest its resources and what model of
ownership or investment should be used?
How should the parent company influence and relate to the businesses under its
control?
The Virgin Group, under the leadership of Richard Branson, for example, have
invested (by way of joint ownership) in a wide range of extremely diverse businesses -- from Virgin Cola to the Virgin Atlantic airline. In this process, Virgin brings certain
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competencies to bear, but always treats the businesses as "stand-alone" entities,

allowing a great deal of strategic freedom. In some respects, Virgin acts as an
investment bank rather than a corporate parent.
In the prescribed book, the first section (chs 1 to 4) provides an overview of the idea of
corporate parenting advantage. Chapter 4 specifically provides an overview of the
development of corporate strategic thinking and the key contributions and
shortcomings of each (see exhibit 4-1, p 61, for a useful summary of the key issues
and concepts of every phase).
Part 2 of the prescribed book (chs 5 to 11) deals with examples of successful
corporate strategies in the following four categories:
(1) stand-alone influence
(20 linkage influence
(3) functional and services influence
(4) corporate development
Each of the chapters contains various examples of successful corporate strategies.
Part 3 of the prescribed book focuses on the development of corporate strategy. In this
regard, chapter 13 contains a step-by-step example of how this was done for a
construction company. Exhibit 13-8 (p 338) contains an example of a parenting
advantage statement.
The appendixes (pp 387-442) should not be ignored. They also contains useful
information on the parenting advantage concept, particularly appendix C (p 411),
which examines the different corporate parenting styles.
The prescribed article by Michael Porter (2003) is an excellent summary of some key
principles of corporate strategy. Your first assignment requires you to do more
research on this subject.
Read the prescribed book by Goold et al (1994) and the article by Michael Porter
(2003).
5.1.5 Self-assessment
Develop a statement of parenting advantage for the organisation you work for (or for
any organisation of your choice).
5.1.6 Reflection
Now that you have assessed yourself on this topic, the following questions may help
you to reflect on your learning so far:
What, in your opinion, are the key factors that determine the success of corporate
strategic decisions?
To what extent should shareholder value be the key driver of corporate strategic
decision making?
How relevant is the notion of parenting advantage in the African context?
5.1.7 Conclusion
Thus far we have examined how a corporate parent can create shareholder value by
being a "good corporate parent". This is an important issue, since the cost of corporate
failure is high. Think of the money lost by Daimler-Benz and Chrysler shareholders in
their failed merger. Poor corporate decision making can also impact negatively on
market image, share price and general business performance. In the next topic we
focus on strategy in conditions of flux.
5.2 The firm as complex adaptive system: the influence of complexity and
chaos theory
Time allocation: before individual Assignment 02
making.
Looking at the world around us, there is no doubt that we live in a complex and often
chaotic world. This obviously affects the world of business as well. However, it is
surprising how many organisations are caught unawares by change and are often
unable to respond to it successfully.
Consider the following questions:
To what extent does complexity play a role in your organisation?
How are organisations in your industry coping with flux? What about the organisation
you work for?
How are you personally coping in a complex world?
To what extent do you feel that the concept of "strategic management" is applicable in
today's world? What about your own industry?
The pace of change and the magnitude of complexity have led to the theory that
traditional, linear processes of strategic management may not be as applicable today
as they were in a more "stable" world. Terms like "post-modernism", "complex
adaptive systems", "chaos theory", "complexity theory" and so on, all came to be a part
of the strategic debate, and new theories are constantly being developed around these
crucial concepts.
In this topic we examine the effect of chaos and complexity on strategic management,
and possible strategies for dealing with chaos and complexity.
Although much has been written about the influences of complexity and chaos on
strategic management, few sources are so well researched, coherent and thorough as
the prescribed book by Brown and Eisenhardt (1998). This book makes a strong case
that a competitive advantage is merely temporary, and that dominance (competitive
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advantage) depends on the creation of a relentless stream of competitive advantages.

The book also introduces the concept of semi-coherent strategy.
This is illustrated by a series of case examples --- one of the many interesting ones
being the Microsoft case study (see p 9). Instead of the well-oiled, well-directed
machine one sometimes imagines Microsoft to be under the leadership of Bill Gates,
the case study shows that strategy in Microsoft is often unpredictable, uncontrolled
and inefficient. However, Microsoft (perhaps more than any other ICT company) has
created a stream of competitive advantages by being proactive, continuous and
diverse. One could conclude from this that strategy development in Microsoft is messy
rather than ordered, and mistakes abound, but that ultimately a "semi-coherent
strategic direction" exists that gives it an edge over its rivals.
Chapter 1 examines the strategic challenge of change and introduces a number of key
themes. Figure 1.2 on page 8 is particularly interesting because it compares various
views on strategy.
Chapters 2 to 6 examine the principles of competing on the edge, while the last three
chapters explain the development of strategy in competing-on-the-edge mode. On
page 238 there is a useful comparison of traditional leaders with competing-on-theedge leadership.
There are also some useful prescribed articles on the topic:
The article by Caldart and Ricart (2004) examines corporate strategy from the
viewpoint of complexity theory.
The article by Pascale (1999) focuses on the relationship between chaos and
business.
The article by Eisenhardt and Galunic (2000) examines the role of "coevolution" in
corporate strategy, with the corporate centre as the setter of context and the divisions
responsible for managing a collaborative web" of relationships.
Instead of regarding these sources as stand-alone views, try and identify the elements
common in all of them.
Read the prescribed book by Brown and Eisenhardt and the articles by Caldart and
Ricart (2004), Pascale (1999) and Eisenhardt and Galunic (2000).
Use the prescribed sources to develop your own framework for understanding the
effect of complexity and chaos on your industry. Use it to evaluate the extent to which
your organisation manages to function as a complex adaptive system.
5.2.6 Reflection
This topic addresses a number of crucial issues that impact deeply on the practice of
corporate strategy. It is essential for you have a deep enough understanding of certain
key issues. Take a moment to think about the next two questions.
It is not enough merely to understand that the environment is complex and chaotic.
You need to understand what your organisation and you as a manager can do about it.
Do you have some ideas that you could apply in your job and your organisation?
Whatever you do well today may not matter tomorrow. Do you have a sense of how
your organisation may need to reinvent itself and learn new ways of dealing with
strategic change?
The complexity view of strategy may not be applicable to all organisations and under
all conditions. However, if you operate under conditions of flux and feel that your
organisation is not well equipped to deal with it, now is a good time to act.
5.2.7 Conclusion
Thus far in this module we have examined the role of the corporate parent in creating
value, and how organisations can adapt to complexity and chaos in their
environments. The next topic addresses the developments in strategic thinking around
game theory and its implications for corporate strategy.
5.3 Co-opetition and game theory in corporate strategy

Time allocation: before the examination
making.
Imagine a situation where two partners in crime have been arrested and are being held
in separate interrogation rooms. Prisoner A has the following choices:
He can confess to the crime.
He can maintain his innocence.
The possible outcomes of each strategy are as follows:
Strategy 1 (he confesses):
His partner confesses too, and both are convicted, but with reduced prison terms (a
utility of 1 for each prisoner).
His partner does not confess and prisoner A goes free in exchange for testifying
against him (a utility of 10).
Strategy 2 (he does not confess):
His partner confesses and prisoner A goes to jail for the full term (utility of 0).
His partner also does not confess and they go free to share the proceeds of the crime
(utility of 5 for each player).
This is an example of a famous game called Prisoner's Dilemma
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(http://levine.sscnet.ucla.edu/general/whatis.htm), and it illustrates a number of key

points central to game theory.
Before we explore this in more detail, think about the following questions:
If you were in Prisoner A's shoes, what would the best course of action be? Why?
What are the lessons from this game that could be applied to corporate strategy?
This topic explores some of the business applications of game theory and how it can
be applied to corporate strategy.
Game theory focuses on understanding how people or groups of people interact and
make decisions. The prescribed articles explore this in the context of business. A key
requirement for using game theory is to understand what the game is, who the players
are and what their options are.
We will now go back to the Prisoner's Dilemma game for a moment. You could argue
that the most rational course of action would be that the prisoner should always
confess, since it minimises risk (i.e. the worst outcome is a reduced jail sentence).
However, what if the prisoners could cooperate in some way or "signal" each other
during the interrogation? That would mean that they could optimise utility or behave in
favour of the common good" (or bad in this example) instead of behaving selfishly,
especially if the game is repeated. These issues are at the heart of many business
decisions.
This is also the line of thinking taken by Brandenburger and Nalebuff (1996), the
authors who have probably contributed most to the understanding of the practical
implications of game theory for strategy. One of the central points of departure for
Brandenburger and Nalebuff (1996) is that competitors should all have a common
goal, namely to maximise the value of the industry, not to run each other down or put
each other out of business (as so often seems to be the perception of business
practitioners and students).
For those of you interested in this topic, the following book may be an interesting read:
Brandenburger, AM & Nalebuff, BJ. 1996. Co-opetition. New York: Currency
Doubleday.
In this regard, Brandenburger and Nalebuff (1996) have come up with two key ideas:
(1) The concept of co-opetition, which suggests that competitors may compete in some
areas and co-operate in others where it is to the common good (i.e. the value of the
industry).
(2) The concept of complementors (and the Valuenet), whose presence in the market
enhances the value of your own product or service.
These concepts can be illustrated by two recent examples from the South African
cellular industry.
Soon after Cell C launched its service, it was announced that Vodacom would allow
Cell C to "roam" on the Vodacom network for 15 years. This decision benefits both
parties and contributes to the overall value of the industry. So although the companies
still compete for subscribers, they cooperate in other areas to their mutual benefit.
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There are many examples of complementors in the cellular business. The most
obvious complementors to cellular services are handset manufacturers. The more
features cellular handsets and devices enable, the more services cellular providers
can offer. For example, with digital cameras now common in cellular phones, it
benefits cellular operators to offer multimedia messaging services (MMS). Creators of
content (such as logos and ringtones) are also complementors.
What are the implications of game theory for corporate strategy? Here are some
thoughts:
Complementors have to be defined, as well as the relationship that one has with them.
It is sometimes necessary to introduce new players to the game (e.g. suppliers) in
order to reduce the power (and cost) of a specific group of players.
By controlling supply (as De Beers did with diamonds for a long time), the added value
can be increased, as can increasing demand.
An overriding principle introduced by Brandenburger and Nalebuff (1996) is that
competition is valuable dont give it away!
Read the prescribed articles by Barbee and Rubel (1997), McAfee and McMillan 1996)
and Nalebuff and Brandenburger (1997).
Using the principles of game theory identified in the prescribed articles, identify the
opportunities for co-opetition and adding value that are presented by your industry.
5.3.6 Reflection
Game theory is an interesting approach, but not without flaws. Many business
situations are much too complex for game theory principles to apply and simplifications
are required. In addition, you can never be certain that players are going to behave
rationally. Given the above, take some time to reflect on the following questions:
Under what conditions would game theory be most useful as a means of identifying
corporate strategic options?
What concepts in the context of game theory have added most to your understanding
of strategy and strategic options?
Is game theory something that you would be able to apply in your business
environment? Why or why not?
What about the use of game theory in the broader African context?
5.3.7 Conclusion
Thus far we have considered three important approaches to adding value in corporate
strategy. The next topic is no stranger to you --- you have probably encountered the
resource-based views of strategy in your previous studies. However, we now focus on
the roles of knowledge, resources and capabilities in corporate strategic decisions.
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5.4 The role of knowledge and distinctive capabilities in corporate strategy

making.
In your previous strategy courses, you would probably have touched on the
importance of strategic resources and distinctive capabilities (or core competencies, as
Hamel and Prahalad define them), especially in the way firms can compete using
resources and capabilities as a basis to develop a competitive advantage. In this topic,
however, we reflect on the role of knowledge, resources and capabilities in corporate
strategy.
Take some time to reflect on the following questions:
Why are resources, capabilities and knowledge important in corporate strategy?
What types of resources, capabilities and knowledge are most important?
How can knowledge, resources and capabilities be used to create shareholder value?
This topic will explore how value is created in the multi-business firm, using
knowledge, resources and capabilities.
The prescribed articles by Grant (1991 & 1996) and Spanos and Lioukas (2001) inform
this topic.
To recap: Resources (tangible and intangible) can be combined into distinctive
capabilities that provide the firm with a competitive advantage and superior profitability.
The resource-based view of strategy thus suggests that value is built up through the
rent-earning capabilities of the firms resources and capabilities rather than its market
position. Grant (1996) extends this argument to suggest that knowledge is a basis for
distinctive capabilities and therefore plays a critical role in the creation of value.
In addition to explaining how value is built up, knowledge and capabilities also form a
particularly sustainable source of competitive advantage, which is durable and hard to
imitate.
However, this does not answer the question of how knowledge and distinctive
capabilities play a role in corporate strategy. The answer lies in the ability to replicate
unique capabilities in other markets or settings. So, if an organisation has a particular
capability, it can replicate that capability in other geographical and industrial settings.
Thus one can argue that resources and capabilities play a key role in selecting
corporate strategic opportunities.
Here are some examples:
13
Cellular providers, Vodacom and MTN, have replicated their capability of developing
and running cellular networks and services in developing economies across various
African countries, and are dominant players in several of them.
Chicken fast-food franchiser, Nando's, has decided to expand its recipe for successful
franchising internationally and has over 150 franchises in the UK.
The Virgin group applies its unique skills in developing greenfield businesses to take
on large incumbents in many different industries and markets: airlines, rail services,
soft drinks, record stores and even a bridal store.
The nature of the specific capabilities can be diverse, although John Kay suggests that
capabilities typically revolve around architecture, reputation or innovation. For very few
(but very successful) firms, one could even argue that the extent to which they are able
to replicate their culture could be a distinctive capability (e.g. Wal*Mart).
Read the prescribed articles by Grant (1991), Grant (1996) and Spanos and Lioukas
(2001).
Looking at your industry, what are the distinctive capabilities of the dominant players in
the industry? How have they used these capabilities in their corporate strategic
decision making? Hint: Be careful not to confuse resources (such as strategic alliances
or brands) with capabilities.
5.4.6 Reflection
Now that we are nearing the end of this topic, let us reflect on some aspects of
distinctive capabilities and the role they play in strategy.
How applicable is this theory to your day-to-day work? To your organisation? The
African context?
What, in your view, are your own organisation's possible sources of distinctive
capabilities?
How does this influence your thoughts on the strategic direction of your organisation?
What are some of the opportunities presenting themselves to your organisation based
on the resource-based view?
5.4.7 Conclusion
We have covered a lot of ground, but so far we have focused much on theories that
are fairly well developed and, although they are fairly new as theories go, they have
been around for some time. The last two topics are much newer and more abstract,
and not much information is readily available on their role in corporate strategy.
5.5 Strategy as risk management

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making.
All businesses face risk --- after all, without risk there is no reward. However, corporate
scandals like those involving Enron, Parmalat and Worldcom have highlighted the
need to manage enterprise risk more responsibly with a view to ensuring corporate
sustainability. The rise of corporate governance and corporate governance frameworks
(e.g. the King reports in South Africa) as a vehicle to guide corporate governance is
well documented. The effect of this has also filtered through to corporate strategic
management.
Imagine you are a manager deliberating whether to acquire another company.
Obviously there are a number of factors that you would investigate. What variables
would you consider when making the decision? How would you decide when to
execute the transaction? What are the factors that could impact on the outcome of the
decision?
All of these questions have traditionally been dealt with in the area of strategic financial
management and, specifically, valuations. However, there is an increasing realisation
that the theories and techniques traditionally relating to the fields of investment,
portfolio management and management accounting could also be applied to the
evaluation of strategic alternatives. In this regard, real options theory seems to have
found a niche market in the evaluation of strategic alternatives. In addition to this, there
is an increasing awareness that strategic management is in reality risk management at
the highest possible level --- hence the increasing references and material on
enterprise risk management (ERM).
This topic provides a brief overview of some of the concepts in the area of ERM.
Corporate decision making is mostly about investment and divestment decisions.
Typically, strategic decision makers are faced with more than one option. Add to this
the question of decision timing and other environmental contingency factors, and it can
become quite a complex decision.
From the perspective of enterprise risk management (ERM), the article by Sobel and
Reding (2004) highlights the importance of interdependence between key role players
in aligning corporate governance and enterprise risk management. Merna and Merna
(2004) provide a model for managing risk at the corporate, strategic business unit and
project levels. The paper by Ballou and Heitger (2005) provides certain guidelines on
how to implement ERM using the widely accepted Committee of Sponsoring
Organisations of the Treadway Commission (COSO) framework for ERM. Baldoni
(2005) also provides certain implementation guidelines.
There are also views that look at risk specifically as an opportunity to gain a
competitive advantage. Those interested in this topic may find the following book of
interest:
Chatterjee, S. 2004. Failsafe strategies: profit and grow from risks that others avoid.
Upper Saddle River, NJ FT Prentice Hall.
Read the prescribed articles by Sobel and Reding (2004), Merna and Merna (2004),
Baldoni (2004) and Ballou and Heitger (2005).
15
Identify a situation in your own or another organisation where you feel that the use of
ERM or real options theory might have made a difference, and explain how.
5.5.6 Reflection
The idea of strategy as risk management is relatively new, and you may have found it
hard to come to grips with it in such a brief period of time and with relatively few
sources. However, you may have learnt enough to form some informed opinions.
Let us consider some of them.
How applicable is ERM in your organisation?
Provide some examples where they could have been applied in the past.
How useful is ERM in the African context?
5.5.7 Conclusion
We are nearing the end of this module, and you have hopefully learnt a lot about a
number of approaches and ideas that could be useful in the environment you work in.
This last module again highlights the fact that the strategic body of knowledge was and
is constantly informed by many diverse disciplines.
5.6 The role of innovation in corporate strategy

making.
"Disruptive technologies", "reinvention", "re-engineering" and "creative destruction" are
but a few of the many phrases and buzz-words associated with the need for radical
change and the innovation that goes along with it. Bain and Company report that
managers are increasingly concerned about the commoditisation of products and
services, and that this "innovation gap" is high on the agenda of many organisations.
Consider the following questions:
What does innovation mean to you?
Would you describe your organisation as innovative? What about yourself?
Can you think of examples of innovation from your industry?
Can one use the term strategic innovation? What other types of innovation are there?
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This topic investigates (fleetingly) the role of innovation in corporate strategic

management.
Strategic planning, in the traditional sense of the word, and innovation are not
necessarily comfortable partners, as Krinsky and Jenkins (1997) point out in their
prescribed article. However, many of the leading management thinkers today suggest
that "incrementalism" or "continuous improvement is not enough. Instead, they
suggest, organisations should "reinvent", reimagine" or even "creatively destroy"
themselves and the way they do business.
Robert Grant suggests that strategic innovation (as opposed to product or process
innovation) involves the following:
The creation of "new game strategies" by redefining or disrupting the traditional value
chain (e.g. Dell Computers and amazon.com).
Embracing new markets or customer groups.
Adding products and services that perform new but related functions.
For most businesses, innovation is easier said than done. In fact, most businesses got
to where they are in a linear fashion, and to suggest that radical change or innovation
is what is needed, really goes against the grain for them. In addition, it is easier said
than done to actually design and implement innovation programmes.
The articles by Schoenberg (2003), Hamel (1998), and Harris, Coles and Dickson
(2000) all investigate different aspects of strategic innovation.
It is important for you to examine these sources and views to establish how (in your
view) they influence corporate strategic decision making.
Read the prescribed articles by Hamel (1998), Harris, Coles and Dickson (2000),
Krinsky and Jenkins (1997), and Schoenberg (2003).
Using an organisation that you are familiar with, evaluate the extent to which you feel
their success is dependent on innovation.
5.6.6 Reflection
Innovation is an over-used phrase, but actually hard to grasp and make concrete and
practical. In addition, many people believe that innovation only applies to new-to-theworld inventions, forgetting that there are various kinds of innovation. Take a moment
to reflect on the following questions:
What types of innovation did you come across in your study of this topic?
What does the term "innovation" mean to you in the context of corporate strategy?
How does innovation influence corporate strategic decision making?
How important is innovation in the African context?
8.6.7 Conclusion
17
We have now come to the end of this module on corporate strategic management. As
you reflect on your learning so far, I trust that you have realised that there are many
different approaches, yet no single "right" answer. However, one could say that some
answers are more thoughtful than others, and the aim of this module is really to open
your mind to some of the thinking processes available to you.
STUDY SCHOOL PLAN

Topic number 1:
Corporate parenting advantage (prescribed book Goold et al

1994)
Topic number 2:
Introduction to strategy and complexity theory
MODULE-SPECIFIC STUDY PLAN

Use your my Studies @ Unisa brochure for general time management and planning
skills.
This
brochure
is
available
at
http://www.unisa.ac.za/
contents/study2012/docs/myStudies-Unisa-2014.pdf. We strongly recommend that
you set a study programme for yourself for this year and that you allocate sufficient
time to work through the study guide, to study and read the relevant sections of the
prescribed books, to incorporate additional material if necessary, to do the
assignments, and to prepare for the examination.
You will need to spend at least 240 hours working on this module. This includes
approximately 100 hours of reading and studying the learning material, 80 hours of
doing activities and assignments, and 60 hours of preparation for the examination.
This includes attending the study school.
ASSESSMENT
The distributed distance learning elements comprises self-tuition and group work in
which you must do both prescribed and recommended reading, complete
assignments, and contribute to group activities.
8.1
Assessment plan
To determine how well you have accomplished the learning outcomes for the
module, you will be assessed throughout the year by means of an individual test, two
group assignments and an examination. Assignments contribute 24% towards the
final mark of this module. The test is written during May, at approved Unisa
examination centres, and contributes 16% towards the final mark. The weight of the
year mark is 40% and that of the written examination is 60%.
8.2
General assignment numbers
8.2.1
Due dates for assignments
18
Assignment 01
09/05/2014
Assignment 02
08/08/2014
2014_ MBL93D-U
8.3
Submission of assignments
Both Assignment 01 and Assignment 02 have to be submitted before the closing
dates to gain entrance to the examination.
Assignments must be submitted on the SBL EDS system in Ms Word format, Arial 11
font, 1.5 line spacing. A Turn-it-In report with the text must accompany the
submissions.
Late assignments, assignments that do not conform to the specifications and
assignments that do not answer the assignment questions will not be considered.
Feedback on the assignments will be provided on the SBL EDS system.
8.4
Assignments
8.4.1 Individual Assignment 01
Due Date: 09/05/2014
Select a commercial multi-business corporation of your choice. Assess its corporate

strategy in relation to the theory presented by Goold et al (1994). Use the evidence
from the case to make plausible assumptions. Apply the theory by incorporating the
case variables (populate diagrams, tables, graphs, etc).
Note: It is important that you select an appropriate corporation (e.g. a small business with no
subsidiaries is not a multi-business corporation); alternatively, you could select a
listed corporation and do your own research or use an appropriate case study of your
choice. Bear in mind that the parenting advantage statement is the product or
outcome of analysis to understand, for example, the corporations strategy for adding
value or distinctive parenting characteristics. If you select a case study where an
assessment of the corporate strategy has been done by someone else, you will find it
hard to make your own additional and novel contribution, which is what marks are
earned for. The reader is familiar with Goold et al (1994) - no marks will be earned for
unapplied theory.
Your answer should be a maximum of 15 A4 pages (only the body, excluding the title
page, contents page, executive summary, references and appendices). The title of
the assignment is given with the instructions above. Right after the contents page,
present an executive summary of two pages maximum, in bullet form. This should be
able to convey your findings as a stand-alone section.
8.4.2 Individual Assignment 02
Due Date: 08/08/2014
Find an article from a peer reviewed, scholarly journal, that is relevant to the
corporate strategy of local corporations, on each of the following three topics;
Global markets, emerging markets, green economy and corporate social
responsibility (CSR).
For each article:
(1) Briefly introduce the topic,
(25% weighting)
(2) Discuss the key contributions of the article.
(25% weighting)
(3) Discuss the relevance of the topic to the corporate strategy of local corporations
and the implications of the contributions of the article. Relate to the topics
studied in this course.
(50% weighting)
19
Your answer should be a maximum of 20 A4 pages (only the body, excluding the title
page, contents page, executive summary, references and appendices). The title of
the assignment is given in the instructions above, with your topic selected. Right after
the contents page, present an executive summary of two pages maximum, in bullet
form. This should be able to convey your findings as a stand-alone section. Attach
copies of the articles as appendices.
8.5
Marking guideline/matrix/rubric
1 Use of theory
[20]
Requirement: The ability to select and correctly apply theoretical concepts

from the body of knowledge.
Did the student select appropriate concepts from the body of knowledge? Were the
selected concepts used in the correct context?
Did the use of theory suggest thorough understanding of theoretical principles?
2 Application of theory
[40]
Requirement: The use of theoretical principles to derive insight into a practical

situation
Were the theoretical concepts applied correctly? This might be evident through the
use of case examples as evidence.
Did the student show insight into the corporate strategic management issues of the
case or the organisation?
3 Argumentation skills
[20]
Requirement: The student shows the ability to adopt a logical approach to

answering a question.
The assignment followed a logical approach (introduction, discussion, conclusion)
The student managed to established a common thread or flow throughout the
assignment
Clear conclusions were provided that were clearly linked to analysis
The question was clearly answered.
4 Technical factors
[Maximum penalty of -20]
Length requirement
Layout (headings, numbering, structure) and correct referencing
Bibliography
Language
OTHER ASSESSMENT METHODS

No other assessment is done.
20
2014_ MBL93D-U
10
EXAMINATION
Open book examinations will be written during October/November. The duration of
the examination is four hours. The examination will consist of one or more case
studies and specific questions related to the case(s). All reading material set out in
this module overview, together with all material covered at the study schools, should
be studied for the examination.
Examination eligibility will be according to the rules and procedures applicable to the
MBL. Students will be required to adhere to the Unisa examination timetable as well
as the designated Unisa examination centres. Students may be required to write
more than one module per day during the examination period.
11
FREQUENTLY ASKED QUESTIONS

The my Studies @ Unisa brochure contains an A-Z guide of the most relevant study
information. This brochure is available at http://www.unisa.ac.za /contents/study2012/
docs/myStudies-Unisa-2014.pdf
12
SOURCES CONSULTED
Raynor, E.M. 2007. What is corporate strategy, really? Ivey Business Journal,
December 2007
21

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2014_ MBL93DU

Module overview 2014

Broad and specific outcomes.................................................................................... 3

LECTURER(S) AND CONTACT DETAILS ............................................................... 4

MODULE-RELATED RESOURCES ......................................................................... 4

Prescribed books ...................................................................................................... 4

Electronic reserves (e-reserves) ............................................................................... 4

STUDY SCHOOL PLAN ......................................................................................... 18

MODULE-SPECIFIC STUDY PLAN ....................................................................... 18

Assessment plan .................................................................................................... 18

General assignment numbers ................................................................................. 18

Due dates for assignments ..................................................................................... 18

Submission of assignments .................................................................................... 19

OTHER ASSESSMENT METHODS ....................................................................... 20

FREQUENTLY ASKED QUESTIONS..................................................................... 21

SOURCES CONSULTED ....................................................................................... 21

PURPOSE AND BROAD AND SPECIFIC OUTCOMES FOR THE MODULE

Broad and specific outcomes

Incorporate the latest corporate strategy theories in corporate strategic decision

LECTURER(S) AND CONTACT DETAILS

Electronic reserves (e-reserves)

Barbee , G & Rubel, T. 1997. Co-opetition in action, The Journal of Business

Corporate strategy revisited: A view from

complexity theory, European Management Review ,1(1):96-104

5.1 Corporate parenting: creating value in the multi-business company

5.1.2 Specific outcomes

competencies to bear, but always treats the businesses as "stand-alone" entities,

advantage) depends on the creation of a relentless stream of competitive advantages.

5.3 Co-opetition and game theory in corporate strategy

(http://levine.sscnet.ucla.edu/general/whatis.htm), and it illustrates a number of key

5.4 The role of knowledge and distinctive capabilities in corporate strategy

5.5 Strategy as risk management

Incorporate the latest corporate strategy theories in corporate strategic decision

5.6 The role of innovation in corporate strategy

This topic investigates (fleetingly) the role of innovation in corporate strategic

STUDY SCHOOL PLAN

Corporate parenting advantage (prescribed book Goold et al

Introduction to strategy and complexity theory

MODULE-SPECIFIC STUDY PLAN

General assignment numbers

Due dates for assignments

8.4.1 Individual Assignment 01

Due Date: 09/05/2014

Select a commercial multi-business corporation of your choice. Assess its corporate

Due Date: 08/08/2014

(2) Discuss the key contributions of the article.

Requirement: The ability to select and correctly apply theoretical concepts

Requirement: The use of theoretical principles to derive insight into a practical

Requirement: The student shows the ability to adopt a logical approach to

[Maximum penalty of -20]

OTHER ASSESSMENT METHODS

FREQUENTLY ASKED QUESTIONS

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