Case Study (b) Discuss the nature and role of corporate-level planning in a conglomerate such suc h as YTL YT L Berhad Berh ad.
YTL Corporation Berhad is one of the largest companies listed on the Bursa Malaysia, and together with its five listed entities has a combined market value of about M !" billion, the compan company y has a total total asset asset of over over M"# M"# billi billion. on. The ma$or ma$or busin business ess carries carries out out by YTL Corporation included power generation, construction contracting, property development, hotel development and management, cement manufacturing, supply of water, treatment and disposal of waste water, and incubating and advisory services for internet businesses. The success of YTL Corporation is because they using the right way of the strategy planning process. This process is most applicable to strategic management at the business unit level of the organi%ation. &or large corporations, strategy at the corporate level is most concerned with managing a portfolio of business. &or e'ample, corporate level strategy involves decisions about which business units are to grow, resource allocation among the business units, taking advantage of synergies among the business units, and mergers and ac(uisitions. Company will be used to indicate a single)business firm or a single business unit of a diversified firm. Corporate planning strategies provide corporate with specific guidelines or rules for improving
business operations operations and advancing the company*s company*s mission. mission. These strategies strategies provide managers managers and employees with a targeted direction for the company. Business owners can also use strategies as a reference to ensure certain business opportunities that will overe'tend the company*s resources are avoide avoided. d. The The strat strategi egies es includ includee concen concentra tratio tion, n, vertic vertical al ac(uis ac(uisiti ition, on, divers diversifi ificat cation ion,, conglomerate, retrenchment, divestiture, li(uidation and so on. &urthermore, portfolio management approach helps to allocate resources in multi business companies. +t is an approach pioneered by the Boston Consulting roup that attempted to help manage managers rs balan balance ce the flow flow of cash cash resour resources ces among among their their variou variouss busin business esses es while while also also identifying their basic strategic purpose within the overall portfolio. synergy y acros acrosss busine business ss unit unit. ppor -e't is synerg pportun tunit ities ies to build build value value via diver diversif sifica icatio tion, n,
integration, or $oint venture strategies are usually found in market)related, operations)related, and manage managemen mentt activi activitie ties. s. /trate /trategic gic analy analysis sis is concer concerned ned with with whethe whetherr or not not the poten potenti tial al competitive advantages e'pected to arise from each value opportunity have materiali%ed. The most compelling compelling reason reason companies companies should diversify diversify can be found found in situatio situations ns where where core competencies, the key value)building skills can be leveraged with other products or into markets that are not a part of where where they were created. 0ach core competency should should provide a relevant relevant
competitive advantage to the intended businesses. Businesses in the portfolio should be related in ways that make the company*s core competencies beneficial. 1ny combination of competencies must be uni(ue or difficult to recreate. Lastly is parenting frameor! and patching approach. The parenting frameor! are the perspective that the role of corporate head(uarters in multi business companies is that of a parent sharing wisdom, insight and guidance to help develop its various businesses to e'cel. +t sees multi businesses companies as creating value by influencing or parenting their businesses. The best parent companies create more value than any of their rivals do or would if they owned the same businesses. "atching is the process by which corporate e'ecutives routinely remap their businesses to match rapidly changing market opportunities by adding, splitting, transferring, e'iting or combining chunks of businesses. 2atching is not seen as critical in stable and unchanging markets. 3hen marketers are confused and rapidly changing, patching is seen as critical to the creation of economic value in a multi business company.
