The three main topics discussed in the chapter were the strategies undertaken by businesses to create structures based on their portfolios, the mixed model approach, and the value additions that companies explore to enhance their portfolios. The basic portfolios discussed were unrelated businesses, related businesses, and single businesses. The different strategy implications and the different areas of policy in the Star Model were shown, indicating how policies reinforce managerial behavior (Galbraith, 2014). Policies are consistent in each business model, with each other, and with the portfolio strategy. BMW is used as an example of a business that has adopted a single business strategy with its structure following a similar path. Kellogg is an example of a business that has diversified to new areas related to its main business and organized its product divisions and lines. Norvatis is an example of a business that appears to be a single business but has four distinct businesses. On the other hand, Procter & Gamble appears to be multiple businesses while, in fact, all its products are customer centered; hence, it is a single business (Hill et al., 2014).
In the Mixed model portfolio, the businesses are a convergence of several sectors, groups, or clusters (Osterwalder & Pigneur, 2010). Each group has its own portfolio strategy, which together forms the company’s corporate portfolio strategy. The divisions within each group have common processes though these are different between the various groups. The model is a result of related businesses, which have become more diverse, and the holding company’s businesses have become more synergistic. The business model fits a continuum based on portfolio types and varieties with value addition amounting to it. The main corporate center is responsible for the finances, while the constituent groups exercise strategic and financial control. An example of strategic control exercise by a company in a mixed model portfolio was the contracting of Xerox by AlliedSignal/Honeywell to implement Six Sigma into their business model. Management in the mixed model portfolio businesses is rewarded based on different levels, including corporate bonuses based on corporate performance; group bonuses awarded to group managers, and divisional bonuses awarded to the divisions.
Lastly, value addition is a significant business approach that allows companies to remain competitive and avoid becoming conglomerates (Zeghal & Maaloul, 2010). Businesses go to great lengths to add value to their products and services to increase profitability and meet customer demands. Different companies have used different strategies to add value to their businesses. An example of such a business is IBM, combining its products, services, and software from diverse businesses into customer segments-integrated solutions. Another example is Disney which spreads its intellectual property to its constituent businesses. However, for companies to get the best from value addition, they need to utilize more than one of the common strategies. The most effective of the strategies is to mobilize its talent to achieve a transfer of technology, development of talent and expertise, and building of networks and relations (Zeghal et al., 2010).
In conclusion, I have learned from this unit’s readings the diverse ways in which business portfolios inherently shape business structures. The reward systems of the different portfolios also go in tandem with the structures. From my observation, it is more advantageous for a manager to work in a holding company as the reward and bonuses are higher than those of a manager working in a dimensionalized company. Further, a manager in the former company has more autonomy and leverage to make specific decisions for the sector they manage; hence, the company is likely to get better performance results compared to the latter manager in a dimensionalized company.
Galbraith, J. R. (2014). Designing organizations. Jossey-Bass & Pfeiffer Imprints, Wiley,
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.
Zeghal, D., & Maaloul, A. (2010). Analysing value added as an indicator of intellectual capital and its consequences on company performance. Journal of Intellectual capital, 11(1), 39-60.
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U04d1 Reading Reflection
Reflect on your unit readings. Post your thoughts on the readings in 1-2 page, if 1 page no less than 3 paragraphs.
Use this discussion to digest your readings and gather ideas for your reflective paper.
DISCUSSION PARTICIPATION SCORING GUIDE
Due Date: Weekly.
Percentage of Course Grade: 20%.
|DISCUSSION PARTICIPATION GRADING RUBRIC|
|Applies relevant course concepts, theories, or materials correctly.||Does not explain relevant course concepts, theories, or materials.||Explains relevant course concepts, theories, or materials.||Applies relevant course concepts, theories, or materials correctly.||Analyzes course concepts, theories, or materials correctly, using examples or supporting evidence.|
|Collaborates with fellow learners, relating the discussion to relevant course concepts.||Does not collaborate with fellow learners.||Collaborates with fellow learners without relating discussion to the relevant course concepts.||Collaborates with fellow learners, relating the discussion to relevant course concepts.||Collaborates with fellow learners, relating the discussion to relevant course concepts and extending the dialogue.|
|Applies relevant professional, personal, or other real-world experiences.||Does not contribute professional, personal, or other real-world experiences.||Contributes professional, personal, or other real-world experiences, but lacks relevance.||Applies relevant professional, personal, or other real-world experiences.||Applies relevant professional, personal, or other real-world experiences to extend the dialogue.|
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