1. Corporate Strategy (The action plan for managing a diversified Companies) Efforts to die diversification to a theme that creates a strong corporate identity Effort to build a corporate level competitive advantage via related diversification Recent moves to strengthen the competitive positions and profitability of existing businesses Moves to add new businesses to the portfolio and to build new positions in attractive industries Moves to divest weak or unattractive business units Approach to allocating investment capital across business units (how the company is investing its capital resources How much diversification (based narrowly in a few industries or broadly in many industries) What kind of diversification (related or unrelated or both)

2. agriculture Personal Care Electronics SWIFT Apparel ESMARK Coal Iron Ore USX Engineering Transport Oil Gas Energy Unrelated diversification Concentric Diversification

3. Vertically Related Hatcheries Feed Contract Transport Processing institutions wholesalers retailers PepsiCo Soft drinks Snacks Restaurants Pizza HutTaco Bell KFC

4. Figure 2. Supply stages in a Manufacturing Industry Supply Flow Raw Materials Primary Manufacturer Fabricator Product Producer Consumer Marketer Retail Consumer

5. UpstreamDownstream CommodityProprietary StandardizeCustomize Maximum End UsersTarget End User Low Cost ProducersHigh Margins Sales PushMarketing Pull Line Driven OrganizationLine/Staff Process InnovationProduct Innovation Capital BudgetR&D/Advertising Budget Capital IntensivePeople Intensive Technological Know-HowMarketing Skills Supply & Trading/Manufacturing &Engineering Product Development/Marketing Table 1 Contrasting Characteristics Of Upstream and Downstream Companies

6. Figure 3 Five Paper Companies Operating at Different Centers of Gravity International Paper Container Corporation Appleton Procter and Gamble Weyerhaeuser

7. Related 10 Unrelated 1 1.Process Technology 2.Product Technology 3.Product Development 4.Purchasing 5.Assembly 6.Packaging 7.Shipping 8.Inventory Management 9.Quality 10.Labor Relations 11.Distribution 12.Selling 13.Promotion 14.Advertising 15.Consumer/Customer 16.Buying Habits 17.Capital (Fixed) 18.Working Capital 19.Credit Table 2 Business Functional Aspects

8. Soft Drinks Coffee Prepared Mixes Shortening & Oil Soaps Dentifrice Pharmaceuticals Paper Figure 5 Procter and Gamble Diversified

9. The Generic Value Chain Margin Primary Activities Inbound Logistics Outbound Logistics OperationsMarketing & Sales Service Procurement Technology Development Human Resource Management Firm Infrastructure Support Activities Upstream Value Activities Downstream Value Activities Economies of Scale Dominate Economies of Scope Dominate

10. RESOURCESPRODUCTBUYEREXAMPLES A. No commonality between products R1P1B1 R2P2B2 ITT: Hotels & Telecomm- unications equipment B. Common buyers between products R1P1B1 R2P2B2 American Express: Financial Services and Travel C. Shared resources between products R1P1B1 R2P2B2 Philip Morris: Several businesses Share marketing services D. Shared resources and common between products R1P1B1 R2P2B2