Education Religion And Education - 2010 Words

Religion in Education Public education in America was first founded April 23, 1635 at the Boston Latin School in Boston, Massachusetts. However the â€Å"first town in the U.S. to establish a free, tax-supported public school† was founded in 1644 in Dedham, Massachusetts (Walking Tour, 2010). Coincidentally though the teacher in Dedham, the first tax-funded public education, was Rev. Ralph Wheelock. Reverend Wheelock tied together education and religion to efficiently nurture youth to become contributing civil, community members of society and not just to advance technology and science. As the seed of education in America, Dedham antedating exemplified our current educational system; tax-funded, open to the public, and advanced society as a†¦show more content†¦Disconnecting the relationship of church and state is an issue of government endorsement and religious freedom. This public policy has become an issue of government endorsement as tax dollars are utilized to fund â€Å"hospitals operated by religious organizations, [and] chaplains are provided in the armed forces as well as in Congress† (Dye, 2013). The supplement of these services are direct endorsements of influencing religion and an even more threatening association of respecting a denomination. As the government funds these programs they construct a relationship between which religions they are funding, furthermore impeding other religions as one is favored more than the consequent. Addressing Religion in Education In the 1925 the Supreme Court case Pierce v. Society of Sisters, the court struck down the Oregon Compulsory Act of 1922 which â€Å"forc[ed] [students] to accept instruction from public teachers only,† and therefore were not allowed to attend private religious schools as they were private. The court interpreted this as in impedance of â€Å"free exercise† found within the First Amendment and Due Process clause within the Fourteenth Amendment (Dye, 199). In the 1947 Supreme Court case Everson v. Board of Education, the court upheld â€Å"bus transportation for parochial school children at public expense on the grounds that the wall of separation between church and state does not prohibit from adopting a general

The Forbidden Game The Kill Chapter 11 Free Essays

string(22) " Michael in the back\." They were all four waiting for her when she got out. Summer said, â€Å"Where’ve you been?† Audrey said, â€Å"Did you-â€Å" Jenny nodded over Summer’s head. Audrey hiked up a copper eyebrow. We will write a custom essay sample on The Forbidden Game: The Kill Chapter 11 or any similar topic only for you Order Now â€Å"Just a little unscheduled detour,† Jenny murmured to Dee and Michael. She said to Summer, â€Å"I’m okay. Everything’s okay.† Summer’s MM’s were lying scattered on the ground. â€Å"I don’t like people disappearing,† she said. â€Å"Aw, honey, it’s gonna be all right,† Michael said and patted her awkwardly. â€Å"We told her where we are and sort of basically what’s going on,† he said to Jenny. Jenny’s buoyancy at finding Summer was gone; the effervescence had fizzled out of her blood. Julian was going to do something nasty-but what could be worse than what he’d already done? Since she’d known Julian, he’d chased her with UFOs, dark elves, and giant insects-not to mention a Shadow Wolf and Snake. He’d lurked in the shadows of her room and hissed terrifying messages at her in the dark. He’d caught her in a cave-in, left her alone to drown, and menaced her with a cyber-lion. He’d kidnapped her and hunted her throughout two worlds. What could he do to top all that? â€Å"Where do we go next?† Audrey said. They looked around. Nothing in the immediate vicinity was lit up. The park was completely dark and dead silent around them. â€Å"Here, hold this,† Dee said to Jenny. Jenny took the flashlight and said, â€Å"Oh, be careful. † Dee was shinning up one of the old-fashioned green-painted lampposts. â€Å"I can see the lighthouse on the island,† she said at the top with one long leg hooked over the crosspiece which supported a lantern. â€Å"And there’re a lot of trees everywhere†¦ . The Ferris wheel looks cool, it’s sort of rising out of them like a mountain rising out of clouds.† â€Å"Is it lit up?† â€Å"The only thing that’s lit is something toward the back-it’s got a big waterwheel and some boats shaped like swans.† â€Å"The Tunnel of Love,† Jenny said. Dee came down and they started toward the Tunnel of Love, Jenny guiding them. It was another ride she’d loved as a kid-not because it had anything to do with love, but because it was dark, and cool, and she’d loved the swan boats. Now, the thought of going into that tunnel was-well, it was better not to think about it. They were skirting the lake when they saw the shape among the trees. â€Å"It’s a critter!† Michael said. â€Å"Only a big one!† The flashlight beams caught it briefly, even as it moved back into the trees. It was big, and Jenny had a glimpse of reddish skin like tanned leather. â€Å"It’s got a head, so it can’t be P.C. or Slug,† Audrey said. â€Å"Who or who?† asked Summer. â€Å"Never mind. We’d better just watch out for it,† Jenny said, and they did, keeping their backs to the water and watching the trees. I should have asked Julian about them, she thought. Aloud, she said, â€Å"What are they, d’you think? And how come they’re running around loose?† â€Å"Other people the Shadow Men have caught,† said Dee. â€Å"Pets,† said Michael. â€Å"Or maybe just part of the general ambiance,† Audrey said grimly. Whatever the thing had been, Jenny felt an instinctive horror and revulsion for it, just as she’d felt for the little gray one that had looked like a withered fetus. Summer didn’t join the conversation at all. She just hurried lightly along, one hand gripping Jenny’s sleeve, staring at everything they passed. She was like a large blue butterfly skimming in their midst. They were a motley group, Jenny thought-Summer in her springtime dress and Dee’s camouflage jacket, Audrey with her arm tied up in a sling made of Michael’s undershirt. Jenny herself carrying Dee’s flashlight. Michael was carrying his own flashlight, while Dee carried Audrey’s pick. The other weapons had all gotten lost along the way. Jenny noticed that Dee kept her distance from Audrey. Things still weren’t right with Dee. She was too quiet, too un-exuberant. Sure they were in danger, but Dee loved danger, she got up and ate it for breakfast, breathed it, went looking for it whenever she could. Dee should be enjoying this. Jenny edged closer and said softly, â€Å"You know, Audrey didn’t mean anything by that-when she said not to put your hand in the MM’s machine.† Dee shrugged. â€Å"I know.† She went on looking straight ahead. â€Å"Really she didn’t. She’s just like my mom, sometimes she’s got to say things for your own good.† â€Å"Sure. I know.† Jenny gave up. They passed a food stand just before they got to the Tunnel of Love. Jenny had an urge to break in-even a cold hot dog would be good right now, even a bun-but she didn’t say anything. They had two gold coins. They were so close. They couldn’t stop for anything now. Blue and red and purple lights shone on the waterwheel in front of the Tunnel of Love. There was a rustic old mill behind the waterwheel, and a sign on the tunnel. In the afternoon, in the real park, the sign had read: tunnel of love. Now it read: tunnel of love and d-. The last word was obscured by clusters of ivy. â€Å"I can’t read it,† Jenny said. â€Å"Death, probably. As in ‘Love and death are the only two things that really matter.’ N’est-ce pas?† Audrey said. â€Å"Oh, spiffy,† said Michael. Summer got a firmer grip on Jenny’s sleeve. A swan boat was waiting at the loading dock, its white wings arched gracefully by its sides, its neck a supple curve. Beads of water glistened on the plastic. Jenny didn’t want to get into it. If that head turns around – But they didn’t have any choice. This was obviously the right place, awake and waiting for them. If Jenny wanted the third gold coin, she had to get on the ride. â€Å"Come on, people,† she said. The boat tilted as they got in-Jenny and Dee on the front seat with Summer between them, Audrey and Michael in the back. You read "The Forbidden Game: The Kill Chapter 11" in category "Essay examples" They sat on wooden boards. As soon as they were all in, the swan began to move. â€Å"Did you notice that cave looking like a face this afternoon?† Michael said as they approached the tunnel. Jenny hadn’t. The fiberglass rock did look like a face now, with crags and shadows forming the eyes and nose. The gaping mouth was the tunnel itself. Inside, it was dank and dark, with a musty smell. And quiet. That afternoon there had been the sounds of people talking, the occasional echoing laugh. Now all Jenny could hear was the quiet lapping of water around the boat. She was still holding the flashlight Dee had given her. and she trained it on the water, the walls, the swan’s head. All unexciting. The water was dark green and murky, the walls were damp and trickly, the swan’s head was staying put. â€Å"Where’s the stuff-the scenes and everything?† Michael whispered. It was a whispering kind of place. â€Å"I don’t know,† Jenny said, just as softly. That afternoon there had been illuminated dioramas-silly things like Stone Age people playing cards and painting dinosaurs on the cave walls. Now there was nothing. The swan boat went on gliding smoothly into darkness. That was when Jenny noticed something wrong with the flashlight. The light was getting dimmer. â€Å"Hey,† she said and turned it toward her. Orange. The white beam was receding into a sullen orange glow. She banged it on the swan’s neck and immediately wished she hadn’t. It made a startlingly loud sound, and the light got even dimmer. â€Å"Oh, criminy-mine, too,† Michael said. She could hear the jingle of metal as he shook it. â€Å"We should have kept just one on, to save the batteries,† Dee muttered. â€Å"I thought of that before, and then I forgot. I’m stupid.† Even in the midst of her worry Jenny was shocked at this. Dee didn’t talk that way. â€Å"Look, Dee, if anybody should have thought of it-â€Å" â€Å"There it goes,† Michael said. There was now complete darkness from the backseat. Jenny had been thumbing the switch of her flashlight and screwing and unscrewing the top. but it didn’t make any difference. She could barely see the dim orange bulb. When she shook it, it went out altogether. â€Å"Spiffy, spiffy, spiffy,† Michael said. Audrey said sharply, â€Å"Does anybody feel like we’re slowing down?† It was hard to tell in the dark. Jenny was thoroughly sick of darkness-it seemed as if she’d spent all night blind, wondering what might be coming at her from which direction. But she thought Audrey could be right. The lapping water was quieter. The only motion she could feel was the gentle swaying of the boat from side to side. There was a quiet splash. â€Å"We’re not moving,† Dee said. â€Å"Dee, get your hand out of the water!† Dee muttered something inaudible, but Jenny heard the drip as she took her hand out. â€Å"I don’t like this,† Summer said. Jenny didn’t, either-and she especially didn’t like the thought of getting out of the boat and sloshing around trying to find their way. â€Å"So we’re stranded,† she murmured. Everyone else was very still and tense. Wondering what’s coming at us, and from which direction†¦ . She could think of lots of things, all of them nasty. And she had time to think, because for a long while they just sat there, the swan boat rocking gently in the darkness. â€Å"Just don’t imagine anything,† Audrey said through her teeth from the backseat. â€Å"I’m trying not to,† Michael answered defensively. But of course it was impossible, like trying not to think of a pink elephant. The harder Jenny tried not to imagine what Julian might do to them, the quicker the images crowded into her mind. Every nightmare she’d ever had was suddenly clamoring for her attention. â€Å"I can’t take this anymore,† Summer breathed. Dee exhaled sharply. â€Å"No. Look, I’m gonna-â€Å" Light. It started as a fuzzy blue patch in Jenny’s peripheral vision, and brightened when she turned to look at it. Like a spotlight in some overly dramatic stage show. Two other spotlights went on, one red, one purple. The colors of the floodlights outside-and the colors of the stained-glass lamps in the More Games shop, Jenny thought. The place where she’d first seen Julian. â€Å"It all comes down to this, doesn’t it?† Julian’s voice said. He moved out of the darkness, into the circle where the spotlights mingled. He was wearing a T-shirt with rolled-up sleeves, a black vest, and neat black boots. There was some kind of bangle around his upper arm. He looked urban and barbaric, like somebody you might find wandering the bad parts of town at night. Some street kid with no place to go and too much knowledge behind his blue eyes. Summer took one look at him and crouched behind Dee. Jenny felt at a disadvantage. Julian was in the place where the diorama should be-but she felt as if the five of them in the flimsy plastic boat were the show. Julian was in a perfect position to watch whatever happened to them-and they couldn’t even stand without risking an upset. â€Å"You were wrong about the sign on this ride,† Julian said casually. He stood easily, seeming to enjoy their reactions as they stared at him. â€Å"It’s not the Tunnel of Love and Death. It’s the Tunnel of Love-and Despair.† The five in the boat just looked at him. Finally Dee said, â€Å"So what?† â€Å"Just thought you’d like to know.† He flipped something in the air, caught it. Jenny couldn’t tell what color the thing was because of the lights, but it gleamed. â€Å"What, this? Oh, yes, it’s a doubloon,† Julian said, looking into his palm as if only just then noticing it. Everyone in the boat exchanged glances. The boat rocked gently. â€Å"Don’t you want to know what you have to do to get it?† Jenny didn’t, but she felt sure he was going to tell them anyway. â€Å"You just have to listen, that’s all. We’ll have a little conversation. A chat.† It was up to Jenny to answer, and she knew it. â€Å"About what?† she said tensely, leaning back to look at him around Dee. â€Å"This and that. The weather. Nuclear disarmament. You.† â€Å"Us?† Michael squeaked, startled into speech. â€Å"Sure. Look at you-all of you. What a pathetic bunch. And you’re trying to storm the Shadow World?† â€Å"Right,† Dee muttered and started to get up. â€Å"You never learn, do you?† Julian said and took a step toward her. That was all he did, but Dee sat down, only partly because Jenny had grabbed her arm and pulled her back. Julian was scaring Jenny right now-not with any overt display of power, but just with himself. What he was. Julian picked up moods and put them on like clothes, and right now the brightness in his eyes, the quick rise of his breathing, the way his lips were slightly skinned back from his teeth-they all scared Jenny. He was in the mood to destroy things, to bring down some ultimate disaster, she thought. Not just to hunt, but to kill. â€Å"Please, let’s all just be calm,† she said. Julian was still looking at Dee, with bright sickness shining in his eyes. â€Å"Maybe you’re just too stupid to learn,† he said. â€Å"That’s the real reason you don’t want to go to college, isn’t it? You know you’ll never be as smart as your mother.† â€Å"Don’t rise to him,† Jenny said. â€Å"Dee, turn around-just don’t listen.† Dee didn’t turn. Jenny could only see her silhouette, and the blue light glistening on the velvet nubs of hair on her head, but she could feel the stress in Dee’s body. â€Å"All this athletic stuff is just a front because you know you’ve disappointed her,† Julian said. â€Å"You’re inferior where it counts most.† â€Å"Dee, you know that’s not true†¦ .† â€Å"She knows she doesn’t know anything. She’s been wrong about so many things recently-like about Audrey and the lion. Like about Audrey’s mother. Imagine Mrs. Myers having done something Dee always meant to do.† â€Å"You leave her alone!† Jenny said. â€Å"And she’s nothing without her confidence. Haven’t you noticed?† â€Å"Shut up!† Dee shouted. It was a bad place for shouting, there were distant echoes. What frightened Jenny was the note of desperation in Dee’s voice. Dee never cried, but just now Dee’s voice sounded on the verge of tears. â€Å"Despair,† Jenny whispered suddenly. She reached around Dee to grip her arm. â€Å"Don’t you see what he’s trying to do? The Tunnel of Love and Despair-and he wants you to despair. To give up, to stop fighting.† â€Å"She should give up,† Julian agreed. He was breathless now, the queer wild look in his eyes brighter than ever. â€Å"She’s all talk. Hot air. Strutting around, building her muscles, saying ‘Everybody look at me.’ But there’s nothing underneath.† Jenny thought of something. She leaned in toward Dee, her fingers biting into Dee’s arm, and said, â€Å"I am my only master.† Dee’s head turned slightly, like a startled bird. â€Å"I am my only master,† Jenny whispered urgently, prompting her. â€Å"Go on, Dee. You said it, and it’s true. He can’t do anything to you. He doesn’t count. You are your only master.† She felt Dee’s breath go out. â€Å"Gets her philosophy from kung fu movies,† Julian said. â€Å"Thinks fortune cookies are great literature.† â€Å"I am my only master!† Dee said. â€Å"That’s right.† Jenny’s throat hurt. She kept holding on to Dee’s arm. Dee’s neck twisted like a black swan’s, to look at Jenny just for a moment. Jenny got a glimpse of tear tracks on the dark skin, shining blue and purple in the light, then Dee turned back. â€Å"I am my only master,† she said clearly, to Julian. There was a stirring in the backseat. â€Å"She’s smart, too,† Audrey said, astonishing Jenny. â€Å"And brave. She’s done all sorts of brave things since I got hurt. She didn’t mean to hurt me, and I never thought she did.† Dee turned and gave Audrey one sloe-eyed look of gratitude, and her shoulders straightened. She sat as proud and tall as Nefertiti. â€Å"Besides, college and books aren’t everything,† Michael said, amazing Jenny further. â€Å"I thought they were-to you,† Julian said. He was looking at Michael now, and his voice was beautiful, like ebony and silver. Michael seemed to get smaller. â€Å"You’re the one who reads about things because you’re afraid to actually do them. You talk about your books-or make jokes. The class clown. But people are laughing at you, not with you, you know.† â€Å"No, they’re not,† Michael said, which was another surprise for Jenny. She wouldn’t have thought Michael would speak up for himself. â€Å"You’re a nothing. Just a funny little fat boy that people laugh at. You’re a joke.† â€Å"No, I’m not,† Michael said doggedly. Jenny felt a surge of admiration. Michael was holding out-maybe because he’d gotten teased and stomped on at school. He’d heard it all before. But Julian’s face was more confident than ever-and more cruel. He flashed a smile that sent chills up Jenny’s arms. â€Å"We won’t talk about the little rituals you had when you were a kid,† he told Michael. â€Å"Like how you had to tear the toilet paper up into tiny pieces, exactly even. Or if you saw the word death, you had to count to eighteen. To chai-‘life’ in Hebrew.† Michael’s chest was heaving. Jenny opened her mouth, outraged, but Julian went urbanely on. â€Å"We’ll just cut to the chase. Ask your girlfriend if she’s ever called you ‘Tubby’ behind your back.† Michael turned on Audrey. Jenny could see that his defenses had torn; his face had that rumpled, not-ready-for-company look that meant he was about to cry. â€Å"Did you say that?† Audrey looked pale in the blue and purple lights, her lipstick garish. She seemed ready to cry, too. â€Å"Did you say that?† â€Å"Of course she did,† Julian said. â€Å"She said lots of other things, too. About how her dream boy was six feet tall and blond and a surfer. About how she only took up with you to fill in the time until she found someone better.† Michael was looking at Audrey. â€Å"Did you say that?† he repeated, his voice an anguished plea. Jenny willed Audrey to say no. Audrey looked back at Michael for a long, horrible moment, then said, â€Å"Yes.† Michael turned away. â€Å"Because you were good for a laugh,† Julian put in helpfully. â€Å"Don’t you want to laugh now?† â€Å"Shut up, you bastard!† Jenny shouted furiously. She was sick with her own impotence-she’d helped Dee, but there was nothing she could do to help Michael. Not with this. â€Å"I told you in the very beginning about the Game,† Julian said. â€Å"Desires unveiled. Secrets revealed. Don’t you remember?† Audrey wasn’t listening, she was looking only at Michael, her whole being focused on him. â€Å"I did say that,† she said fiercely. â€Å"A long time ago. I didn’t even really mean it then, I was just showing off.† â€Å"You still said it,† Michael said dully, not turning. â€Å"I said it before, Michael. Before you showed me that what people look like isn’t important. Before I found out I loved you.† She dissolved in sobs. Michael turned halfway. His dark eyes were wide open. â€Å"Oh-look,† he said. â€Å"Don’t. It’s okay.† â€Å"It’s not okay,† Audrey stormed. â€Å"Michael Allen Cohen-you’re an idiot!† â€Å"That’s what he said-† Michael muttered. Audrey shook him, turning him the rest of the way around. â€Å"I love you,† she said. â€Å"You made me fall in love with you. I don’t care how tall you are or what color your hair is-I care about you. You make me laugh. You’re smart. You’re gentle. And you’re real, you’re a real person, not some jock with a facade that’s going to fall apart when I get to know him. I know you already, and I love you, you idiot. I don’t care what you do with toilet paper.† â€Å"When I was seven,† Michael said. Audrey was still crying, and he reached out a stubby thumb to wipe the tears off her cheeks. â€Å"You’re a good kisser, too,† Audrey said, sniffling. She put her arms around him and laid her head on his shoulder. â€Å"Hey, I’m a great kisser,† Michael whispered. â€Å"As I will demonstrate when we get out of this freakin’ freak show.† He cradled her protectively. Jenny felt a flush of pride and joy-in their strength, in the tenderness in Michael’s face and the way Audrey clung to him. She looked at Julian defiantly. Julian wasn’t happy. He obviously didn’t like the way things were going. Then he smiled, sharp as a sword. â€Å"That’s right, cry, you whining baby,† he said, his eyes fixed on Audrey’s auburn head. â€Å"But make sure you don’t smear your mascara. You’re nothing but a painted mannequin.† His voice was venomous. â€Å"We’re not listening!† Michael said. He began talking to Audrey, softly and rapidly, right in her ear. â€Å"You’re going to turn out like your mother, you know-a shrill and contentious bitch. Your father’s words, I believe. You’re afraid that you’re not capable of having real feelings like other people.† Audrey didn’t even lift her head. Michael went on talking to her. â€Å"I’d say she’s doing a pretty good imitation of having feelings,† Dee said dryly. â€Å"Why don’t you just back off, creep?† Instead, Julian whirled on her-no, not on her. He was looking behind her, at Summer. â€Å"And as for the brainless bit of fluff in front-â€Å" Summer collapsed onto the floor of the boat. â€Å"I know I’m stUDid.† she whisnereri Jenny’s fury lifted her to her feet, making the swan boat rock. â€Å"Oh, no, you don’t,† she said. â€Å"If you have something to say, say it to me.† And then she was doing what she’d least wanted to do all this time. She was getting out of the boat, splashing down into the water. It was cool, but it only came up to her knees. She splashed through it without letting herself think what might be swimming in it. Waves churned up, wetting her thighs. She reached the diorama in a few steps and scrambled up on it. Then she was facing Julian. â€Å"Say it to me,† she said. â€Å"If you have the guts.† How to cite The Forbidden Game: The Kill Chapter 11, Essay examples

Leadership and Governance Information Technology †Free Samples

Question: Discuss about the Leadership and Governance Information Technology. Answer: Introduction Leadership within any organization plays a vital role in the success of that organization. Leaders have the responsibility of guiding their team and ensuring that their followers remain motivated and focused. Leadership roles are consistently evolving (Mujtaba McFarlane, 2005). Effective organizational leaderships is pivotal to ensure enhanced productivity of the organization. There are various leaders who have changed the shape of the world through their exceptional leadership abilities and transformational visions. This report highlights the story of a renowned leader who started his career as a mere tea vendor in the small city of Vadnagar in India and went on to lead the country as a Prime Minister of the nation (Marino, 2014). Through this report, Narendra Modis competent leadership styles have been thrown light upon and his adopted strategies have been linked with leadership theories in order to gain a deeper understanding of him as a leader. Born in 1950 to a middle class family of Gujarat, India, Narendra Modi was a bright student who helped his father sell tea at the railway station in his hometown. He entered the Indian politics in 2001 and served four terms as the Chief Minister of Gujarat. On 26th May 2014, Narendra Modi was elected as the Prime Minister of the largest democracy in the world. Since then, his leadership style and efforts to change the face of the Indian economy have garnered him attention from around the world (Rajput, 2014). Today the man has become a global leader and his leadership styles are inspiring leaders from different walks of life. Narendra Modi has become a brand which has all the right ingredients of a global dominance and leadership. Narendra Modis leadership styles have been a source of inspiration for various leaders. Leading an entire country is a lot more demanding than leading an organization. The leader is required to change his leadership style in the face of changing circumstances (Goleman, 2017). Narendra Modi has demonstrated suitable styles of leadership and adapted effective strategies in order to lead the country in a competent manner. Strategic leadership style In order to take control of and effectively manage an economy as large as India, Narendra Modi follows a Strategic leadership style. A strategic leader has the ability to influence his followers to enhance the prospects of a longer term success of the organization (Mintzberg, 2009). Narendra Modi has a solid vision for the country which continues to motivate him to lead the country to excellence. One of the most important qualities of a leader is the ability to lead by example (Hackman Johnson, 2013). Narendra Modi has been taking significant steps in leading the country from the front. He has taken key interest in improving Indias international relationships with other nations especially with Russia, China, Japan, Malaysia, Afghanistan, Bangladesh and United States of America. He has spent a significant part of his term in conducting meetings with spokespersons of various nations. He leads the meetings and take initiative in establishing and improving mutually beneficial relationsh ips with other countries. This has turned India into an attractive destination for investments. FII and FDI investments within India are at their highest at the moment. This leads to overall improvement of the economy. Transformational leadership style Narendra Modi has also demonstrated transformational leadership. A transformational leader aims to change the face of the organization by bringing in a large scale transformation (Garcia-Morales et. al., 2012). A transformational leader has a long term vision for the organization. Narendra Modi has a vision a making India a country free from corruption, reduce unemployment, eradicate illiteracy and develop a self-sufficient economy. A strong vision of a leader requires the leader to lead by example, motivate people and handle conflicts effectively (Tourish, 2016). Transformational leaders have a strong risk appetite and are not afraid to move away from status quo. Narendra Modi has been working on making India a truly digital nation. Every citizen of the country can use either of driving license, passport, PAN card, ration card or school or college ID card as a legal identification card. However, Narendra Modi launched a campaign of UID (Unique identification) within the country. As a part of this campaign, a team was set up that worked towards creating a single identity card for every citizen of the country. Therefore he made is compulsory for every citizen to have an Adhaar card. This card has details of every individuals address, date of birth and full name. At present, that single identity card is linked to an individuals bank account, mobile phone, vehicle numbers or any sources of investment. This step has brought about a wave of transformation in the country and has organized the identification process to a large extent (Kossek, 2016). Similarly, in order to make India a self-sufficient economy, Narendra Modi initiated the Make in India campaign. Through this campaign, he encouraged 25 selected industries of the country to manufacture and produce their goods within India. In order to achieve this, he allowed 100% FDI in all the 25 sectors (Make In India, 2018). Import duties were also increased to encourage people to buy home grown products rather than imported substances. Owing to this campaign, India not only received a hefty investment amount from other countries but also India jumped to 100th place in the Ease of doing Business Index by the World Bank. Before the campaign, India was ranked 130th in 2016 (World Bank, 2018). This is largely beneficial in the longer run and Narendra Modi has demonstrated an excellent example of transformational leadership. Excellent communication skills are also an important attribute of effective leadership (Carter Greer, 2013). These decisions of the Prime Ministers often faced criticism from different parts of the country. However, Narendra Modi has been giving public speeches and writing open letter to the citizens of the country in order to create transparency about this decisions. Transparent decision making of a leader enhances trust in the team. Coercive leadership style Coercive leadership is also known as autocratic leadership style. This leadership style requires leaders to take strict decision by themselves with little or no participation from the team. A coercive leader says Do as I say (Castle Decker, 2011). In order to ensure that coercive leadership style is a success, a leader must be absolutely sure of his vision as well as his actions. Narendra Modi often has to take decisions which are highly autocratic in nature. However, it is important for the growth of the Indian economy. A Coercive leader must be aware that any negative repercussions of the decisions made by a coercive leader can make the team lose faith and trust in the leader (Northouse, 2018). Two years back in 2016, Narendra Modi took one such decision that changed the shape of Indian economy. In order to curb corruption and target the number of people with high values of black money, Narendra Modi declared two important currency denominations (INR 500 and INR 1000) illegal. He planned the move very thoughtfully, announced the decision on live news and made it effective immediately. Banks were issued new currency notes, the very same night and limits were defined about the value of currency that can be exchanged from the bank. This automatically adversely impacted all the citizens of the country who had accumulated black money in cash in large chunks. Reserve bank of India revealed that 99% of the old currency notes have returned to the banks (First Post, 2018). This ensures that the currencies present in the market are all legal. Overall, a single move from the Prime Minister helped the country recover INR 3000 billion. A Coercive leadership style requires leaders to take strong steps. This leadership style can only be successful if the leader has a strong vision and tactful planning ability for the betterment of the organization (Helms, 2012). Charismatic leadership Charismatic leaderships is the ability of a leader to motivate the team based on charisma, charm and persuasiveness of the leadership (Avolio Yammarino, 2013). Narendra Modi has a dynamic personality. Before starting his tenure as the Prime Minister of the country, he served four terms as the chief minister of Gujarat. Throughout his tenure, he earned immense appreciation from all the citizens of the country. He changed the entire landscape of Gujarat and improved the economy of the state. Charismatic leader must be confident and possess excellent oratory skills. This is important in order to persuade team members to perform better (Connelly, Gaddis Helton-Fauth, 2013). Narendra Modi as earned respect and appreciation throughout the globe owing to his personality and persuasiveness. Narendra Modi often participates in events and delivers seminars and sessions in order to enhance awareness about his decisions and create transparency within the country. He also visits schools, colleges as well as youth festivals in order to build a better rapport with youth of the country. He believes that the youth are the future of the country and it is important to be able to build trust with this segment. Narendra Modi has a unique charm and has a vibrant personality. He was the first prime minister of the country to ensure that all the speeches delivered by him across the globe would be done in Hindi which is the national language of India. He has also put efforts in meeting eminent figures of the country including those who are not associated from the Indian politics. He takes time to meet with Indian citizens who are making a significant difference in their industry. These people include Indian cricket team captain Virat Kohli, Global actress Priyanka Chopra, Olympics silver medalist PV Sindhu and Tennis player Sania Mirza. By associating with these people, he has been able to reach out to their audience as well. This leads to improved positioning of the leader in the minds of the followers. Leadership also understands the importance of social media (Poba-Nzaou et. al., 2016). This is precisely why Modi has been active across all social media platforms. Narendra Modis charisma and flamboyance has been known across the globe and through these, he has been able to create a large group of fiercely loyal followers who believe in his set of values and ethics. These efforts by the Prime Minister have bonded the country of India towards a single goal and this has been possible only due to the charisma of its leader Narendra Modi. Ethics of Narendra Modi Narendra Modi has always considered himself as a servant of the country. He strongly believes that all the individuals holding a public office are required to provide service to the team. Greenleafs theory of servant leadership is a timeless concept which associates true leadership as a service to others (Van Dierendonck, 2011). Narendra Modi lives a simple lifestyle and is much related to his roots of his middle class family. Narendra Modi has also taken various steps in ensuring that the countrys growth and development does not come at an expense of corrupt officials. Narendra Modi is a perfect example of ethics demonstrated by a leader. His understanding of right and wrong and ability to keep the growth of the country above everything else demonstrates excellence of his ethics. Ethics of a leader are often evident through the leaders moral judgments. There have been various instances where the Prime Minister has taken ethical calls in the face of strong dilemma. Such steps by the leader instil trust in the minds of his followers and motivate others also to stay on the path of righteousness. An ethical leader ensures that the organization grows in an ethical manner in order to ensure the long term sustainability and growth for the business. Conclusion Effective leadership plays a pivotal role in the success of any organization. A leader can easily make or break a team. Leaders of a team are bestowed upon with various responsibilities including motivating followers, guiding them in the right direction, having a clear vision and the addressing inter-team conflicts. A leader is also important in maintaining the atmosphere of the team. This report aims to introduce a dynamic leader, Narendra Modi, who is the current Prime Minister of India. Besides being the countrys prime minister, Narendra Modi is a globally renowned leader. There are various leadership styles that have been adopted by Narendra Modi depending upon different circumstances encountered by the PM. In order to remove corruption, Narendra Modi adopted a coercive leadership style and took strict measures to curb the same. For the betterment of the country, Modi adopted a strategic leadership approach. In order to bring about large scale changes in India, PM adopted a transformational leadership approach. Lastly, in order to build trust and communication with the youth of the country, Modi adopted a charismatic leadership approach. Narendra Modis leadership style has been a source of inspiration for people across the globe. The man has worked hard at ensuring the growth and development of the country. Today, India makes a significant mark in the world map and this has only been possible under the flamboyant leadership of Mr. Narendra Modi. References Avolio, B. J., Yammarino, F. J. (Eds.). (2013). Introduction to, and overview of, transformational and charismatic leadership. InTransformational and Charismatic Leadership: The Road Ahead 10th Anniversary Edition(pp. xxvii-xxxiii). Emerald Group Publishing Limited. Carter, S. M., Greer, C. R. (2013). Strategic leadership: Values, styles, and organizational performance.Journal of Leadership Organizational Studies,20(4), 375-393. Castle, N. G., Decker, F. H. (2011). Top management leadership style and quality of care in nursing homes.The Gerontologist,51(5), 630-642. Connelly, S., Gaddis, B., Helton-Fauth, W. (2013). A closer look at the role of emotions in transformational and charismatic leadership. InTransformational and Charismatic Leadership: The Road Ahead 10th Anniversary Edition(pp. 299-327). Emerald Group Publishing Limited. First Post, (2018), Demonitisation, Available at https://www.firstpost.com/business/demonetisation-rbi-says-99-banned-notes-are-back-where-is-the-black-money-3991829.html, retrieved on 5 April, 2018. Garca-Morales, V. J., Jimnez-Barrionuevo, M. M., Gutirrez-Gutirrez, L. (2012). Transformational leadership influence on organizational performance through organizational learning and innovation.Journal of business research,65(7), 1040-1050. Goleman, D. (2017).Leadership That Gets Results (Harvard Business Review Classics). Harvard Business Press. Hackman, M. Z., Johnson, C. E. (2013).Leadership: A communication perspective. Waveland Press. Helms, L. (Ed.). (2012).Comparative political leadership. Springer. United States Kossek, E. E. (2016). Managing work-life boundaries in the digital age.Organizational Dynamics,45(3), 258-270. Make In India, (2018). Make in India: The vision, Available at https://www.makeinindia.com/article/-/v/make-in-india-reason-vision-for-the-initiative, Retrieved on 5 April, 2018. Marino, A. (2014).Narendra Modi: A political biography. HarperCollins Publishers India. Mintzberg, H. (2009).Managing. Berrett-Koehler Publishers. San Francisco. Mujtaba, B., McFarlane, A. D. (2005). Traditional and Virtual Performance Management Functions in the Age of Information Technology.The Review of Business Information Systems,9(3), 53. Northouse, P. G. (2018).Leadership: Theory and practice. Sage publications. Poba-Nzaou, P., Lemieux, N., Beaupr, D., Uwizeyemungu, S. (2016). Critical challenges associated with the adoption of social media: A Delphi of a panel of Canadian human resources managers.Journal of Business Research,69(10), 4011-4019. Tourish, D. (2014). Leadership, more or less? A processual, communication perspective on the role of agency in leadership theory.Leadership,10(1), 79-98. Van Dierendonck, D. (2011). Servant leadership: A review and synthesis.Journal of management,37(4), 1228-1261. World Bank, (2018). Doing business. Available at https://www.doingbusiness.org/data/exploreeconomies/india. Retrieved on 5 April, 2018.

From Competitive Advantage to Corporate Strategy Essay Example

From Competitive Advantage to Corporate Strategy Essay From Competitive Advantage to Corporate Strategy By Michael E. Porter Corporate strategy, the overall plan for a diversified company, is both the darling and the stepchild of contemporary management practice—the darling because CEOs have been obsessed with diversification since the early 1960s, the stepchild because almost no consensus exists about what corporate strategy is, much less about how a company should formulate it. A diversified company has two levels of strategy: business unit strategy and corporate strategy. Competitive strategy concerns how to create competitive advantage in each of the businesses in which a company competes. Corporate strategy concerns two different questions: what businesses the corporation should be in and how the corporate office should manage the array of business units. Corporate strategy is what makes the corporate whole add up to more than the sum of its business unit parts. The track record of corporate strategies has been dismal. I studied the diversification records of 33 large, prestigious U. S. companies over the 1950-1986 period and found that most of them had divested many more acquisitions than they had kept. The corporate strategies of most companies have dissipated instead of created shareholder value. The need to rethink corporate strategy could hardly be more urgent. By taking over companies and breaking them up, corporate raiders thrive on failed corporate strategy. Fueled by junk bond financing and growing acceptability, raiders can expose any company to takeover, no matter how large or blue chip. Recognizing past diversification mistakes, some companies have initiated large-scale restructuring programs. Others have done nothing at all. Whatever the response, the strategic questions persist. Those who have restructured must decide what to do next to avoid repeating the past; those ho have done nothing must awake to their vulnerability. To survive, companies must understand what good corporate strategy is. Concepts of Corporate Strategy My study has helped me identify four concepts of corporate strategy that have been put into practice-portfolio management, restructuring, transferring skills, and sharing activities. While the concepts are not always mutually exclusive, each rest s on a different mechanism by which the corporation creates shareholder value and each requires the diversified company to manage and organize itself in a different way. The first two require no connections among business units; the second two depend on them. While all four concepts of strategy have succeeded under the right circumstances, today some make more sense than others. Ignoring any of the concepts is perhaps the quickest road to failure. PORTFOLIO MANAGEMENT The concept of corporate strategy most in use is portfolio management, which is based primarily on diversification through acquisition. The corporation acquires sound, attractive companies with competent managers who agree to stay on. We will write a custom essay sample on From Competitive Advantage to Corporate Strategy specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on From Competitive Advantage to Corporate Strategy specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on From Competitive Advantage to Corporate Strategy specifically for you FOR ONLY $16.38 $13.9/page Hire Writer While acquired units do not have to be in the same industries as existing units, the best portfolio managers generally limit their range of businesses in some way, in part to limit the specific expertise needed by top management. The acquired units are autonomous, and the teams that run them are compensated according to unit results. The corporation supplies capital and works with each to infuse it with professional management techniques. At the same time, top management provides objective and dispassionate review of business unit results. Portfolio managers categorize units by potential and regularly transfer resources from units that generate cash to those with high potential and cash needs. In a portfolio strategy, the corporation seeks to create shareholder value in a number of ways. It uses its expertise and analytical resources to spot attractive acquisition candidates that the individual shareholder could not. The company provides capital on favorable terms that reflect corporate wide fund-raising ability. It introduces professional management skills and discipline. Finally, it provides high-quality review and coaching, unencumbered by conventional wisdom or emotional attachments to the business. The logic of the portfolio management concept rests on a number of vital assumptions. If a company’s diversification plan is to meet the attractiveness and cost-of-entry tests, it must find good but undervalued companies. Acquired companies must be truly undervalued because the parent does little for the new unit once it is acquired. To meet the better-off test, the benefits the corporation provides must yield a significant competitive advantage to acquired units. The style of operating through highly autonomous business units must both develop sound business strategies and motivate managers. In most countries, the days when portfolio management was a valid concept of corporate strategy are past. In the face of increasingly well-developed capital markets, attractive companies with good managements show up on everyone’s computer screen and attract top dollar in terms of acquisition premium. Simply contributing capital isn’t contributing much. A sound strategy can easily be funded; small to medium-size companies don’t need a munificent parent. Other benefits have also eroded. Large companies no longer corner the market for professional management skills; in fact, more and more observers believe managers cannot necessarily run anything in the absence of industry-specific knowledge and experience. Another supposed advantage of the portfolio management concept—dispassionate review—rests on similarly shaky ground since the added value of review alone is questionable in a portfolio of sound companies. The benefit of giving business units complete autonomy is also questionable. Increasingly, a company’s business units are interrelated, drawn together by ew technology, broadening distribution channels, and changing regulations. Setting strategies of units independently may well undermine unit performance. The companies in my sample that have succeeded in diversification have recognized the value of interrelationships and understood that a strong sense of corporate identity is as important as slavish adherence to parochial business unit financial results. But it is the sheer complexity of the management task that has ultimately defeated even the best portfolio managers. As the size of the company grows, portfolio managers need to find more and more deals just to maintain growth. Supervising dozens or even hundreds of disparate units and under chain-letter pressures to add more, management begins to make mistakes. At the same time, the inevitable costs of being part of a diversified company take their toll and unit performance slides while the whole company’s ROI turns downward. Eventually, a new management team is in-stalled that initiates wholesale divestments and pares down the company to its core businesses. The experiences of Gulf Western, Consolidated Foods (now Sara Lee), and ITT are just a few comparatively recent examples. Reflecting these realities, the U. S. apital markets today reward companies that follow the portfolio management model with a â€Å"conglomerate discount†; they value the whole less than the sum of the parts. In developing countries, where large companies are few, capital markets are undeveloped, and professional management is scarce, portfolio management still works. But it is no longer a valid model for corporate s trategy m advanced economies. Nevertheless, the technique is in the limelight today in the United Kingdom, where it is supported so far by a newly energized stock market eager for excitement. But this enthusiasm will wane, as well it should. Portfolio management is no way to conduct corporate strategy. RESTRUCTURING Unlike its passive role as a portfolio manager, when it serves as banker and reviewer, a company that bases its strategy on restructuring becomes an active restructurer of business units. The new businesses are not necessarily related to existing units. All that is necessary is unrealized potential. The restructuring strategy seeks out undeveloped, sick, or threatened organizations or industries on the threshold of significant change. The parent intervenes, frequently changing the unit management team, shifting strategy, or infusing the company with new technology. Then it may make follow-up acquisitions to build . a critical mass and sell off unneeded or unconnected parts and thereby reduce the effective acquisition cost. The result is a strengthened company or a transformed industry. As a coda, the parent sells off the stronger unit once results are clear because the parent is no longer adding value and top management decides that its attention should be directed elsewhere. When well implemented, the restructuring concept is sound, for it passes the three tests of successful diversification. The restructurer meets the cost-of-entry test through the types of company it acquires. It limits acquisition premiums by buying companies with problems and lackluster images or by buying into industries with as yet unforeseen potential. Intervention by the corporation clearly meets the better-off test. Provided that the target industries are structurally attractive, the restructuring model can create enormous shareholder value. Some restructuring companies are Loew’s, BTR, and General Cinema. Ironically, many of today’s restructurers are profiting from yesterday’s portfolio management strategies. To work, the restructuring strategy requires a corporate management team with the insight to spot undervalued companies or positions in industries ripe for transformation. The same insight is necessary to actually turn the units around even though they are in new and unfamiliar businesses. These requirements expose the restructurer to considerable risk and usually limit the time in which the company can succeed at the strategy. The most skillful proponents understand this problem, recognize their mistakes, and move decisively to dispose of them. The best companies realize they are not just acquiring companies but restructuring an industry. Unless they can integrate the acquisitions to create a whole new strategic position, they are just portfolio managers in disguise. Another important difficulty surfaces if so many other companies join the action that they deplete the pool of suitable candidates and bid their prices up. Perhaps the greatest pitfall, however, is that companies find it very hard to dispose of business units once they are restructured and performing well. Human nature fights economic rationale. Size supplants shareholder value as the corporate goal. The company does not sell a unit even though the company no longer adds value to the unit. While the transformed units would be better off in another company that had related businesses, the restructuring company instead retains them. Gradually, it becomes a portfolio manager. The parent company’s ROI declines as the need for reinvestment in the units and normal business risks eventually offset restructuring’s one-shot gain. The perceived need to keep growing intensifies the pace of acquisition; errors result and standards fall. The restructuring company turns into a conglomerate with returns that only equal the average of all industries at best. TRANSFERRING SKILLS The purpose of the first two concepts of corporate strategy is to create value through a company’s relationship with each autonomous unit. The corporation’s role is to be a selector, a banker, and an intervenor. The last two concepts exploit the interrelationships between businesses. In articulating them, however, one comes face-to-face with the often ill-defined concept of synergy. If you believe the text of the countless corporate annual reports, just about anything is related to just about anything else! But imagined synergy is much more common than real synergy. GM’s purchase of Hughes Aircraft simply because cars were going electronic and Hughes was an electronics concern demonstrates the folly of paper synergy. Such corporate relatedness is an ex post facto rationalization of a diversification undertaken for other reasons. Even synergy that is clearly defined often fails to materialize. Instead of cooperating, business units often compete. A company that can define the synergies it is pursuing still faces significant organizational impediments in achieving them. But the need to capture the benefits of relationships between businesses has never been more important. Technological and competitive developments already link many businesses and are creating new possibilities for competitive advantage. In such sectors as financial services, computing, office equipment, entertainment, and health care, interrelationships among previously distinct businesses are perhaps the central concern of strategy. To understand the role of relatedness in corporate strategy, we must give new meaning to this often ill-defined idea. I have identified a good way to start—the value chain. 5 Every business unit is a collection of discrete activities ranging from sales to accounting that allow it to compete. I call them value activities. It is at this level, not in the company as a whole, that the unit achieves competitive advantage. I group these activities in nine categories. Primary activities create the product or service, deliver and market it, and provide after-sale support. The categories of primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities provide the input and infrastructure that allow the primary activities to take place. The categories are company infrastructure, human resource management, technology development, and procurement. The value chain defines the two types of interrelationships that may create synergy. The first is a company’s ability to transfer skills or expertise among similar value chains. The second is the ability to share activities. Two business units, for example, can share the same sales force or logistics network The value chain helps expose the last two (and most important) concepts of corporate strategy. The transfer of skills among business units in the diversified company is the basis for one concept. While each business unit has a separate value chain, knowledge about how to perform activities is transferred among the units. For example, a toiletries business unit, expert in the marketing of convenience products, transmits ideas on new positioning concepts, promotional techniques, and packaging possibilities to a newly acquired unit that sells cough syrup. Newly entered industries can benefit from the expertise of existing units and vice versa. These opportunities arise when business units have similar buyers or channels, similar value activities like government relations or procurement, similarities in the broad configuration of the value chain (for example, managing a multisite service organization), or the same strategic concept (for example, low cost). Even though the units operate separately, such similarities allow the sharing of knowledge. Of course, some similarities are common; one can imagine them at some level between almost any pair of businesses. Countless companies have fallen into the trap of diversifying too readily because of similarities; mere similarity is not enough. Transferring skills leads to competitive advantage only if the similarities among businesses meet three conditions: 1. The activities involved in the businesses are similar enough that sharing expertise is meaningful. Broad similarities (marketing intensiveness, for example, or a common core process technology such as bending metal) are not a sufficient basis for diversification. The resulting ability to transfer skills is likely to have little impact on competitive advantage. 2. The transfer of skills involves activities important to competitive advantage. Transferring skills in peripheral activities such as government relations or real estate in consumer goods units may be beneficial but is not a basis for diversification. 3. The skills transferred represent a significant source of competitive advantage for the receiving unit. The expertise or skills to be transferred are both advanced and proprietary enough to be beyond the capabilities of competitors. The transfer of skills is an active process that significantly changes the strategy or operations of the receiving unit. The prospect for change must be specific and identifiable. Almost guaranteeing that no shareholder value will be created, too many companies are satisfied with vague prospects or faint hopes that skills will transfer. The transfer of skills does not happen by accident or by osmosis. The company will have to reassign critical personnel, even on a permanent basis, and the participation and support of high-level management in skills transfer is essential. Many companies have been defeated at skills transfer because they have not provided their business units with any incentives to participate. Transferring skills meets the tests of diversification if the company truly mobilizes proprietary expertise across units. This makes certain the company can offset the acquisition premium or lower the cost of overcoming entry barriers. The industries the company chooses for diversification must pass the attractiveness test. Even a close fit that reflects opportunities to transfer skills may not overcome poor industry structure. Opportunities to transfer skills, however, may help the company transform the structures of newly entered industries and send them in favorable directions. The transfer of skills can be one-time or ongoing. If the company exhausts opportunities to infuse new expertise into a unit after the initial post-acquisition period, the unit should ultimately be sold. The corporation is no longer creating shareholder value. Few companies have grasped this point, however, and many gradually suffer mediocre returns. Yet a company diversified into well-chosen businesses can transfer skills eventually in many directions. If corporate management conceives of its role in this way and creates appropriate organizational mechanisms to facilitate cross-unit interchange, the opportunities to share expertise will be meaningful. By using both acquisitions and internal development, companies can build a transfer-of-skills strategy. The presence of a strong base of skills ometimes creates the possibility for internal entry instead of the acquisition of a going concern. Successful diversifiers that employ the concept of skills transfer may, however, often acquire a company in the target industry as a beachhead and then build on it with their internal expertise. By doing so, they can reduce some of the risks of internal entry and speed up the process. Two companie s that have diversified using the transfer-of-skills concept are 3M and Pepsico. SHARING ACTIVITIES The fourth concept of corporate strategy is based on sharing activities in the value chains among business units. Procter Gamble, for example, employs a common physical distribution system and sales force in both paper towels and disposable diapers. McKesson, a leading distribution company, will handle such diverse lines as pharmaceuticals and liquor through superwarehouses. The ability to share activities is a potent basis for corporate strategy because sharing often enhances competitive advantage by lowering cost or raising differentiation. But not all sharing leads to competitive advantage, and companies can encounter deep organizational resistance to even beneficial sharing possibilities. These hard truths have led many companies to reject synergy prematurely and retreat to the false simplicity of portfolio management. A cost-benefit analysis of prospective sharing opportunities can determine whether synergy is possible. Sharing can lower costs if it achieves economies of scale, boosts the efficiency of utilization, or helps a company move more rapidly down the learning curve. The costs of General Electric’s advertising, sales, and after-sales service activities in major appliances are low because they are spread over a wide range of appliance products. Sharing can also enhance the potential for differentiation. A shared order-processing system, for instance, may allow new features and services that a buyer will value. Sharing can also reduce the cost of differentiation. A shared service network, for example, may make more advanced, remote servicing technology economically feasible. Often, sharing will allow an activity to be wholly reconfigured in ways that can dramatically raise competitive advantage. Sharing must involve activities that are significant to competitive advantage, not just any activity. PG’s distribution system is such an instance in the diaper and paper towel business, where products are bulky and costly to ship. Conversely, diversification based on the opportunities to share only corporate overhead is rarely, if ever, appropriate. Sharing activities inevitably involves costs that the benefits must outweigh. One cost is the greater coordination required to manage a shared activity. More important is the need to compromise the design or performance of an activity so that it can be shared. A salesperson handling the products of two business units, for example, must operate in a way that is usually not what either unit would choose were it independent. And if compromise greatly erodes the unit’s effectiveness, then sharing may reduce rather than enhance competitive advantage. Many companies have only superficially identified their potential for sharing. Companies also merge activities without consideration of whether they are sensitive to economies of scale. When they are not, the coordination costs kill the benefits. Companies compound such errors by not identifying costs of sharing in advance, when steps can be taken to minimize them. Costs of compromise can frequently be mitigated by redesigning the activity for sharing. The shared salesperson, for example, can be provided with a remote computer terminal to boost productivity and provide more customer information. Jamming business units together without such thinking exacerbates the costs of sharing. Despite such pitfalls, opportunities to gain advantage from sharing activities have proliferated because of momentous developments in technology, deregulation, and competition. The infusion of electronics and information systems into many industries creates new opportunities to link businesses. The corporate strategy of sharing can involve both acquisition and internal development. Internal development is often possible because the corporation can bring to bear clear resources in launching a new unit. Start-ups are less difficult to integrate than acquisitions. Companies using the shared-activities concept can also make acquisitions as beachhead landings into a new industry and then integrate the units through sharing with other units. Prime examples of companies that have diversified via using shared activities include PG, Du Pont, and IBM. The fields into which each has diversified are a cluster of tightly related units. Marriott illustrates both successes and failures in sharing activities over time. Following the shared-activities model requires an organizational context in which business unit collaboration is encouraged and reinforced. Highly autonomous business units are inimical to such collaboration. The company must put into place a variety of what I call horizontal mechanisms—a strong sense of corporate identity, a clear corporate mission statement that emphasizes the importance of integrating business unit strategies, an incentive system that rewards more than just business unit results, cross-business-unit task forces, and other methods of integrating. A corporate strategy based on shared activities clearly meets the better-off test because business units gain ongoing tangible advantages from others within the corporation. It also meets the cost-of-entry test by reducing the expense of surmounting the barriers to internal entry. Other bids for acquisitions that do not share opportunities will have lower reservation prices. Even widespread opportunities for sharing activities do not allow a company to suspend the attractiveness test, however. Many diversifiers have made the critical mistake of equating the close fit of a target industry with attractive diversification. Target industries must pass the strict requirement test of having an attractive structure as well as a close fit in opportunities if diversification is to ultimately succeed. Choosing a Corporate Strategy Each concept of corporate strategy allows the diversified company to create shareholder value in a different way. Companies can succeed with any of the concepts if they clearly define the corporation’s role and objectives, have the skills necessary for meeting the concept’s prerequisites, organize themselves to manage diversity in a way that fits the strategy, and find themselves in an appropriate capital market environment. The caveat is that portfolio management is only sensible in limited circumstances. A company’s choice of corporate strategy is partly a legacy of its past. If its business units are in unattractive industries, the company must start from scratch. If the company has few truly proprietary skills or activities it can share in related diversification, then its initial diversification must rely on other concepts. Yet corporate strategy should not be a once-and-for-all choice but a vision that can evolve. A company should choose its long-term preferred concept and then proceed pragmatically toward it from its initial starting point. Both the strategic logic and the experience of the companies I studied over the last decade suggest that a company will create shareholder value through diversification to a greater and greater extent as its strategy moves from portfolio management toward sharing activities. Because they do not rely on superior insight or other questionable assumptions about the company’s capabilities, sharing activities and transferring skills offer the best avenues for value creation. Each concept of corporate strategy is not mutually exclusive of those that come before, a potent advantage of the third and fourth concepts. A company can employ a restructuring strategy at the same time it transfers skills or shares activities. A strategy based on shared activities becomes more powerful if business units can also exchange skills. A company can often pursue the two strategies together and even incorporate some of the principles of restructuring with them. When it chooses industries in which to transfer skills or share activities, the company can also investigate the possibility of transforming the industry structure. When a company bases its strategy on interrelationships, it has a broader basis on which to create shareholder value than if it rests its entire strategy on transforming companies in unfamiliar industries. My study supports the soundness of basing a corporate strategy on the transfer of skills or shared activities. The data on the sample companies’ diversification programs illustrate some important characteristics of successful diversifiers. They have made a disproportionately low percentage of unrelated acquisitions, unrelated being defined as having no clear opportunity to transfer skills or share important activities. Even successful diversifiers such as 3M, IBM, and TRW have terrible records when they have strayed into unrelated acquisitions. Successful acquirers diversify into fields, each of which is related to many others. Procter Gamble and IBM, for example, operate in 18 and 19 interrelated fields, respectively, and so enjoy numerous opportunities to transfer skills and share activities. Companies with the best acquisition records tend to make heavier-than-average use of start-ups and joint ventures. Most companies shy away from modes of entry besides acquisition. My results cast doubt on the conventional wisdom regarding start-ups. While joint ventures are about as risky as acquisitions, start-ups are not. Moreover, successful companies often have very good records with start-up units, as 3M, PG, Johnson Johnson, IBM, and United Technologies illustrate. When a company has the internal strength to start up a unit, it can be safer and less costly to launch a company than to rely solely on an acquisition and then have to deal with the problem of integration. Japanese diversification histories support the soundness of start-up as an entry alternative. My data also illustrate that none of the concepts of corporate strategy works when industry structure is poor or implementation is bad, no matter how related the industries are. Xerox acquired companies in related industries, but the businesses had poor structures and its skills were insufficient to provide enough competitive advantage to offset implementation problems. AN ACTION PROGRAM To translate the principles of corporate strategy into successful diversification, a company must first take an objective look at its existing businesses and the value added by the corporation. Only through such an assessment can an understanding of good corporate strategy grow. That understanding should guide future diversification as well as the development of skills and activities with which to select further new businesses. The following action program provides a concrete approach to conducting such a review. A company can choose a corporate strategy by: 1. Identifying the interrelationships among already existing business units. A company should begin to develop a corporate strategy by identifying all the opportunities it has to share activities or transfer skills in its existing portfolio of business units. The company will not only find ways to enhance the competitive advantage of existing units but also come upon several possible diversification avenues. The lack of meaningful interrelationships in the portfolio is an equally important finding, suggesting the need to justify the value added by the corporation or, alternately, a fundamental restructuring. 2. Selecting the core businesses that will be the foundation of the corporate strategy. Successful diversification starts with an understanding of the core businesses that will serve as the basis for corporate strategy. Core businesses are those that are in an attractive industry, have the potential to achieve sustainable competitive advantage, have important interrelationships with other business units, and provide skills or activities that represent a base from which to diversify. The company must first make certain its core businesses are on sound footing by upgrading management, internationalizing strategy, or improving technology. My study shows that geographic extensions of existing units, whether by acquisition, joint venture, From Competitive Advantage to Corporate Strategy Essay Example From Competitive Advantage to Corporate Strategy Essay From Competitive Advantage to Corporate Strategy By Michael E. Porter Corporate strategy, the overall plan for a diversified company, is both the darling and the stepchild of contemporary management practice—the darling because CEOs have been obsessed with diversification since the early 1960s, the stepchild because almost no consensus exists about what corporate strategy is, much less about how a company should formulate it. A diversified company has two levels of strategy: business unit strategy and corporate strategy. Competitive strategy concerns how to create competitive advantage in each of the businesses in which a company competes. Corporate strategy concerns two different questions: what businesses the corporation should be in and how the corporate office should manage the array of business units. Corporate strategy is what makes the corporate whole add up to more than the sum of its business unit parts. The track record of corporate strategies has been dismal. I studied the diversification records of 33 large, prestigious U. S. companies over the 1950-1986 period and found that most of them had divested many more acquisitions than they had kept. The corporate strategies of most companies have dissipated instead of created shareholder value. The need to rethink corporate strategy could hardly be more urgent. By taking over companies and breaking them up, corporate raiders thrive on failed corporate strategy. Fueled by junk bond financing and growing acceptability, raiders can expose any company to takeover, no matter how large or blue chip. Recognizing past diversification mistakes, some companies have initiated large-scale restructuring programs. Others have done nothing at all. Whatever the response, the strategic questions persist. Those who have restructured must decide what to do next to avoid repeating the past; those ho have done nothing must awake to their vulnerability. To survive, companies must understand what good corporate strategy is. Concepts of Corporate Strategy My study has helped me identify four concepts of corporate strategy that have been put into practice-portfolio management, restructuring, transferring skills, and sharing activities. While the concepts are not always mutually exclusive, each rest s on a different mechanism by which the corporation creates shareholder value and each requires the diversified company to manage and organize itself in a different way. The first two require no connections among business units; the second two depend on them. While all four concepts of strategy have succeeded under the right circumstances, today some make more sense than others. Ignoring any of the concepts is perhaps the quickest road to failure. PORTFOLIO MANAGEMENT The concept of corporate strategy most in use is portfolio management, which is based primarily on diversification through acquisition. The corporation acquires sound, attractive companies with competent managers who agree to stay on. We will write a custom essay sample on From Competitive Advantage to Corporate Strategy specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on From Competitive Advantage to Corporate Strategy specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on From Competitive Advantage to Corporate Strategy specifically for you FOR ONLY $16.38 $13.9/page Hire Writer While acquired units do not have to be in the same industries as existing units, the best portfolio managers generally limit their range of businesses in some way, in part to limit the specific expertise needed by top management. The acquired units are autonomous, and the teams that run them are compensated according to unit results. The corporation supplies capital and works with each to infuse it with professional management techniques. At the same time, top management provides objective and dispassionate review of business unit results. Portfolio managers categorize units by potential and regularly transfer resources from units that generate cash to those with high potential and cash needs. In a portfolio strategy, the corporation seeks to create shareholder value in a number of ways. It uses its expertise and analytical resources to spot attractive acquisition candidates that the individual shareholder could not. The company provides capital on favorable terms that reflect corporate wide fund-raising ability. It introduces professional management skills and discipline. Finally, it provides high-quality review and coaching, unencumbered by conventional wisdom or emotional attachments to the business. The logic of the portfolio management concept rests on a number of vital assumptions. If a company’s diversification plan is to meet the attractiveness and cost-of-entry tests, it must find good but undervalued companies. Acquired companies must be truly undervalued because the parent does little for the new unit once it is acquired. To meet the better-off test, the benefits the corporation provides must yield a significant competitive advantage to acquired units. The style of operating through highly autonomous business units must both develop sound business strategies and motivate managers. In most countries, the days when portfolio management was a valid concept of corporate strategy are past. In the face of increasingly well-developed capital markets, attractive companies with good managements show up on everyone’s computer screen and attract top dollar in terms of acquisition premium. Simply contributing capital isn’t contributing much. A sound strategy can easily be funded; small to medium-size companies don’t need a munificent parent. Other benefits have also eroded. Large companies no longer corner the market for professional management skills; in fact, more and more observers believe managers cannot necessarily run anything in the absence of industry-specific knowledge and experience. Another supposed advantage of the portfolio management concept—dispassionate review—rests on similarly shaky ground since the added value of review alone is questionable in a portfolio of sound companies. The benefit of giving business units complete autonomy is also questionable. Increasingly, a company’s business units are interrelated, drawn together by ew technology, broadening distribution channels, and changing regulations. Setting strategies of units independently may well undermine unit performance. The companies in my sample that have succeeded in diversification have recognized the value of interrelationships and understood that a strong sense of corporate identity is as important as slavish adherence to parochial business unit financial results. But it is the sheer complexity of the management task that has ultimately defeated even the best portfolio managers. As the size of the company grows, portfolio managers need to find more and more deals just to maintain growth. Supervising dozens or even hundreds of disparate units and under chain-letter pressures to add more, management begins to make mistakes. At the same time, the inevitable costs of being part of a diversified company take their toll and unit performance slides while the whole company’s ROI turns downward. Eventually, a new management team is in-stalled that initiates wholesale divestments and pares down the company to its core businesses. The experiences of Gulf Western, Consolidated Foods (now Sara Lee), and ITT are just a few comparatively recent examples. Reflecting these realities, the U. S. apital markets today reward companies that follow the portfolio management model with a â€Å"conglomerate discount†; they value the whole less than the sum of the parts. In developing countries, where large companies are few, capital markets are undeveloped, and professional management is scarce, portfolio management still works. But it is no longer a valid model for corporate s trategy m advanced economies. Nevertheless, the technique is in the limelight today in the United Kingdom, where it is supported so far by a newly energized stock market eager for excitement. But this enthusiasm will wane, as well it should. Portfolio management is no way to conduct corporate strategy. RESTRUCTURING Unlike its passive role as a portfolio manager, when it serves as banker and reviewer, a company that bases its strategy on restructuring becomes an active restructurer of business units. The new businesses are not necessarily related to existing units. All that is necessary is unrealized potential. The restructuring strategy seeks out undeveloped, sick, or threatened organizations or industries on the threshold of significant change. The parent intervenes, frequently changing the unit management team, shifting strategy, or infusing the company with new technology. Then it may make follow-up acquisitions to build . a critical mass and sell off unneeded or unconnected parts and thereby reduce the effective acquisition cost. The result is a strengthened company or a transformed industry. As a coda, the parent sells off the stronger unit once results are clear because the parent is no longer adding value and top management decides that its attention should be directed elsewhere. When well implemented, the restructuring concept is sound, for it passes the three tests of successful diversification. The restructurer meets the cost-of-entry test through the types of company it acquires. It limits acquisition premiums by buying companies with problems and lackluster images or by buying into industries with as yet unforeseen potential. Intervention by the corporation clearly meets the better-off test. Provided that the target industries are structurally attractive, the restructuring model can create enormous shareholder value. Some restructuring companies are Loew’s, BTR, and General Cinema. Ironically, many of today’s restructurers are profiting from yesterday’s portfolio management strategies. To work, the restructuring strategy requires a corporate management team with the insight to spot undervalued companies or positions in industries ripe for transformation. The same insight is necessary to actually turn the units around even though they are in new and unfamiliar businesses. These requirements expose the restructurer to considerable risk and usually limit the time in which the company can succeed at the strategy. The most skillful proponents understand this problem, recognize their mistakes, and move decisively to dispose of them. The best companies realize they are not just acquiring companies but restructuring an industry. Unless they can integrate the acquisitions to create a whole new strategic position, they are just portfolio managers in disguise. Another important difficulty surfaces if so many other companies join the action that they deplete the pool of suitable candidates and bid their prices up. Perhaps the greatest pitfall, however, is that companies find it very hard to dispose of business units once they are restructured and performing well. Human nature fights economic rationale. Size supplants shareholder value as the corporate goal. The company does not sell a unit even though the company no longer adds value to the unit. While the transformed units would be better off in another company that had related businesses, the restructuring company instead retains them. Gradually, it becomes a portfolio manager. The parent company’s ROI declines as the need for reinvestment in the units and normal business risks eventually offset restructuring’s one-shot gain. The perceived need to keep growing intensifies the pace of acquisition; errors result and standards fall. The restructuring company turns into a conglomerate with returns that only equal the average of all industries at best. TRANSFERRING SKILLS The purpose of the first two concepts of corporate strategy is to create value through a company’s relationship with each autonomous unit. The corporation’s role is to be a selector, a banker, and an intervenor. The last two concepts exploit the interrelationships between businesses. In articulating them, however, one comes face-to-face with the often ill-defined concept of synergy. If you believe the text of the countless corporate annual reports, just about anything is related to just about anything else! But imagined synergy is much more common than real synergy. GM’s purchase of Hughes Aircraft simply because cars were going electronic and Hughes was an electronics concern demonstrates the folly of paper synergy. Such corporate relatedness is an ex post facto rationalization of a diversification undertaken for other reasons. Even synergy that is clearly defined often fails to materialize. Instead of cooperating, business units often compete. A company that can define the synergies it is pursuing still faces significant organizational impediments in achieving them. But the need to capture the benefits of relationships between businesses has never been more important. Technological and competitive developments already link many businesses and are creating new possibilities for competitive advantage. In such sectors as financial services, computing, office equipment, entertainment, and health care, interrelationships among previously distinct businesses are perhaps the central concern of strategy. To understand the role of relatedness in corporate strategy, we must give new meaning to this often ill-defined idea. I have identified a good way to start—the value chain. 5 Every business unit is a collection of discrete activities ranging from sales to accounting that allow it to compete. I call them value activities. It is at this level, not in the company as a whole, that the unit achieves competitive advantage. I group these activities in nine categories. Primary activities create the product or service, deliver and market it, and provide after-sale support. The categories of primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities provide the input and infrastructure that allow the primary activities to take place. The categories are company infrastructure, human resource management, technology development, and procurement. The value chain defines the two types of interrelationships that may create synergy. The first is a company’s ability to transfer skills or expertise among similar value chains. The second is the ability to share activities. Two business units, for example, can share the same sales force or logistics network The value chain helps expose the last two (and most important) concepts of corporate strategy. The transfer of skills among business units in the diversified company is the basis for one concept. While each business unit has a separate value chain, knowledge about how to perform activities is transferred among the units. For example, a toiletries business unit, expert in the marketing of convenience products, transmits ideas on new positioning concepts, promotional techniques, and packaging possibilities to a newly acquired unit that sells cough syrup. Newly entered industries can benefit from the expertise of existing units and vice versa. These opportunities arise when business units have similar buyers or channels, similar value activities like government relations or procurement, similarities in the broad configuration of the value chain (for example, managing a multisite service organization), or the same strategic concept (for example, low cost). Even though the units operate separately, such similarities allow the sharing of knowledge. Of course, some similarities are common; one can imagine them at some level between almost any pair of businesses. Countless companies have fallen into the trap of diversifying too readily because of similarities; mere similarity is not enough. Transferring skills leads to competitive advantage only if the similarities among businesses meet three conditions: 1. The activities involved in the businesses are similar enough that sharing expertise is meaningful. Broad similarities (marketing intensiveness, for example, or a common core process technology such as bending metal) are not a sufficient basis for diversification. The resulting ability to transfer skills is likely to have little impact on competitive advantage. 2. The transfer of skills involves activities important to competitive advantage. Transferring skills in peripheral activities such as government relations or real estate in consumer goods units may be beneficial but is not a basis for diversification. 3. The skills transferred represent a significant source of competitive advantage for the receiving unit. The expertise or skills to be transferred are both advanced and proprietary enough to be beyond the capabilities of competitors. The transfer of skills is an active process that significantly changes the strategy or operations of the receiving unit. The prospect for change must be specific and identifiable. Almost guaranteeing that no shareholder value will be created, too many companies are satisfied with vague prospects or faint hopes that skills will transfer. The transfer of skills does not happen by accident or by osmosis. The company will have to reassign critical personnel, even on a permanent basis, and the participation and support of high-level management in skills transfer is essential. Many companies have been defeated at skills transfer because they have not provided their business units with any incentives to participate. Transferring skills meets the tests of diversification if the company truly mobilizes proprietary expertise across units. This makes certain the company can offset the acquisition premium or lower the cost of overcoming entry barriers. The industries the company chooses for diversification must pass the attractiveness test. Even a close fit that reflects opportunities to transfer skills may not overcome poor industry structure. Opportunities to transfer skills, however, may help the company transform the structures of newly entered industries and send them in favorable directions. The transfer of skills can be one-time or ongoing. If the company exhausts opportunities to infuse new expertise into a unit after the initial post-acquisition period, the unit should ultimately be sold. The corporation is no longer creating shareholder value. Few companies have grasped this point, however, and many gradually suffer mediocre returns. Yet a company diversified into well-chosen businesses can transfer skills eventually in many directions. If corporate management conceives of its role in this way and creates appropriate organizational mechanisms to facilitate cross-unit interchange, the opportunities to share expertise will be meaningful. By using both acquisitions and internal development, companies can build a transfer-of-skills strategy. The presence of a strong base of skills ometimes creates the possibility for internal entry instead of the acquisition of a going concern. Successful diversifiers that employ the concept of skills transfer may, however, often acquire a company in the target industry as a beachhead and then build on it with their internal expertise. By doing so, they can reduce some of the risks of internal entry and speed up the process. Two companie s that have diversified using the transfer-of-skills concept are 3M and Pepsico. SHARING ACTIVITIES The fourth concept of corporate strategy is based on sharing activities in the value chains among business units. Procter Gamble, for example, employs a common physical distribution system and sales force in both paper towels and disposable diapers. McKesson, a leading distribution company, will handle such diverse lines as pharmaceuticals and liquor through superwarehouses. The ability to share activities is a potent basis for corporate strategy because sharing often enhances competitive advantage by lowering cost or raising differentiation. But not all sharing leads to competitive advantage, and companies can encounter deep organizational resistance to even beneficial sharing possibilities. These hard truths have led many companies to reject synergy prematurely and retreat to the false simplicity of portfolio management. A cost-benefit analysis of prospective sharing opportunities can determine whether synergy is possible. Sharing can lower costs if it achieves economies of scale, boosts the efficiency of utilization, or helps a company move more rapidly down the learning curve. The costs of General Electric’s advertising, sales, and after-sales service activities in major appliances are low because they are spread over a wide range of appliance products. Sharing can also enhance the potential for differentiation. A shared order-processing system, for instance, may allow new features and services that a buyer will value. Sharing can also reduce the cost of differentiation. A shared service network, for example, may make more advanced, remote servicing technology economically feasible. Often, sharing will allow an activity to be wholly reconfigured in ways that can dramatically raise competitive advantage. Sharing must involve activities that are significant to competitive advantage, not just any activity. PG’s distribution system is such an instance in the diaper and paper towel business, where products are bulky and costly to ship. Conversely, diversification based on the opportunities to share only corporate overhead is rarely, if ever, appropriate. Sharing activities inevitably involves costs that the benefits must outweigh. One cost is the greater coordination required to manage a shared activity. More important is the need to compromise the design or performance of an activity so that it can be shared. A salesperson handling the products of two business units, for example, must operate in a way that is usually not what either unit would choose were it independent. And if compromise greatly erodes the unit’s effectiveness, then sharing may reduce rather than enhance competitive advantage. Many companies have only superficially identified their potential for sharing. Companies also merge activities without consideration of whether they are sensitive to economies of scale. When they are not, the coordination costs kill the benefits. Companies compound such errors by not identifying costs of sharing in advance, when steps can be taken to minimize them. Costs of compromise can frequently be mitigated by redesigning the activity for sharing. The shared salesperson, for example, can be provided with a remote computer terminal to boost productivity and provide more customer information. Jamming business units together without such thinking exacerbates the costs of sharing. Despite such pitfalls, opportunities to gain advantage from sharing activities have proliferated because of momentous developments in technology, deregulation, and competition. The infusion of electronics and information systems into many industries creates new opportunities to link businesses. The corporate strategy of sharing can involve both acquisition and internal development. Internal development is often possible because the corporation can bring to bear clear resources in launching a new unit. Start-ups are less difficult to integrate than acquisitions. Companies using the shared-activities concept can also make acquisitions as beachhead landings into a new industry and then integrate the units through sharing with other units. Prime examples of companies that have diversified via using shared activities include PG, Du Pont, and IBM. The fields into which each has diversified are a cluster of tightly related units. Marriott illustrates both successes and failures in sharing activities over time. Following the shared-activities model requires an organizational context in which business unit collaboration is encouraged and reinforced. Highly autonomous business units are inimical to such collaboration. The company must put into place a variety of what I call horizontal mechanisms—a strong sense of corporate identity, a clear corporate mission statement that emphasizes the importance of integrating business unit strategies, an incentive system that rewards more than just business unit results, cross-business-unit task forces, and other methods of integrating. A corporate strategy based on shared activities clearly meets the better-off test because business units gain ongoing tangible advantages from others within the corporation. It also meets the cost-of-entry test by reducing the expense of surmounting the barriers to internal entry. Other bids for acquisitions that do not share opportunities will have lower reservation prices. Even widespread opportunities for sharing activities do not allow a company to suspend the attractiveness test, however. Many diversifiers have made the critical mistake of equating the close fit of a target industry with attractive diversification. Target industries must pass the strict requirement test of having an attractive structure as well as a close fit in opportunities if diversification is to ultimately succeed. Choosing a Corporate Strategy Each concept of corporate strategy allows the diversified company to create shareholder value in a different way. Companies can succeed with any of the concepts if they clearly define the corporation’s role and objectives, have the skills necessary for meeting the concept’s prerequisites, organize themselves to manage diversity in a way that fits the strategy, and find themselves in an appropriate capital market environment. The caveat is that portfolio management is only sensible in limited circumstances. A company’s choice of corporate strategy is partly a legacy of its past. If its business units are in unattractive industries, the company must start from scratch. If the company has few truly proprietary skills or activities it can share in related diversification, then its initial diversification must rely on other concepts. Yet corporate strategy should not be a once-and-for-all choice but a vision that can evolve. A company should choose its long-term preferred concept and then proceed pragmatically toward it from its initial starting point. Both the strategic logic and the experience of the companies I studied over the last decade suggest that a company will create shareholder value through diversification to a greater and greater extent as its strategy moves from portfolio management toward sharing activities. Because they do not rely on superior insight or other questionable assumptions about the company’s capabilities, sharing activities and transferring skills offer the best avenues for value creation. Each concept of corporate strategy is not mutually exclusive of those that come before, a potent advantage of the third and fourth concepts. A company can employ a restructuring strategy at the same time it transfers skills or shares activities. A strategy based on shared activities becomes more powerful if business units can also exchange skills. A company can often pursue the two strategies together and even incorporate some of the principles of restructuring with them. When it chooses industries in which to transfer skills or share activities, the company can also investigate the possibility of transforming the industry structure. When a company bases its strategy on interrelationships, it has a broader basis on which to create shareholder value than if it rests its entire strategy on transforming companies in unfamiliar industries. My study supports the soundness of basing a corporate strategy on the transfer of skills or shared activities. The data on the sample companies’ diversification programs illustrate some important characteristics of successful diversifiers. They have made a disproportionately low percentage of unrelated acquisitions, unrelated being defined as having no clear opportunity to transfer skills or share important activities. Even successful diversifiers such as 3M, IBM, and TRW have terrible records when they have strayed into unrelated acquisitions. Successful acquirers diversify into fields, each of which is related to many others. Procter Gamble and IBM, for example, operate in 18 and 19 interrelated fields, respectively, and so enjoy numerous opportunities to transfer skills and share activities. Companies with the best acquisition records tend to make heavier-than-average use of start-ups and joint ventures. Most companies shy away from modes of entry besides acquisition. My results cast doubt on the conventional wisdom regarding start-ups. While joint ventures are about as risky as acquisitions, start-ups are not. Moreover, successful companies often have very good records with start-up units, as 3M, PG, Johnson Johnson, IBM, and United Technologies illustrate. When a company has the internal strength to start up a unit, it can be safer and less costly to launch a company than to rely solely on an acquisition and then have to deal with the problem of integration. Japanese diversification histories support the soundness of start-up as an entry alternative. My data also illustrate that none of the concepts of corporate strategy works when industry structure is poor or implementation is bad, no matter how related the industries are. Xerox acquired companies in related industries, but the businesses had poor structures and its skills were insufficient to provide enough competitive advantage to offset implementation problems. AN ACTION PROGRAM To translate the principles of corporate strategy into successful diversification, a company must first take an objective look at its existing businesses and the value added by the corporation. Only through such an assessment can an understanding of good corporate strategy grow. That understanding should guide future diversification as well as the development of skills and activities with which to select further new businesses. The following action program provides a concrete approach to conducting such a review. A company can choose a corporate strategy by: 1. Identifying the interrelationships among already existing business units. A company should begin to develop a corporate strategy by identifying all the opportunities it has to share activities or transfer skills in its existing portfolio of business units. The company will not only find ways to enhance the competitive advantage of existing units but also come upon several possible diversification avenues. The lack of meaningful interrelationships in the portfolio is an equally important finding, suggesting the need to justify the value added by the corporation or, alternately, a fundamental restructuring. 2. Selecting the core businesses that will be the foundation of the corporate strategy. Successful diversification starts with an understanding of the core businesses that will serve as the basis for corporate strategy. Core businesses are those that are in an attractive industry, have the potential to achieve sustainable competitive advantage, have important interrelationships with other business units, and provide skills or activities that represent a base from which to diversify. The company must first make certain its core businesses are on sound footing by upgrading management, internationalizing strategy, or improving technology. My study shows that geographic extensions of existing units, whether by acquisition, joint venture,