Emerald | Journal of Business Strategy

Raising the odds of corporate venturing: a review by Intel

Boaz Vaizler, David Gordon — 2011-12-29 00:00:00.0

Abstract

Purpose – Any corporate executive ever faced with the task of launching new businesses within her organization must know this is quite a difficult challenge. Creating a new business is risky enough by itself and arguably even more problematic for large, successful firms “caught in the chains” of ever-improving what already works. In light of this true dilemma, this paper aimed to review rich up-to-date literature on corporate venturing in search for evidence-based recommendations that are really practical. Design/methodology/approach – By means of critical reading and careful selection based on real-world experience from the trenches of Intel Strategic Planning, the authors screened relevant literature from diverse sources including professional practitioner publications as well as academic research journals. Findings – Despite the surprisingly scarce practical advice found in reviewed literature, this paper emphasizes a short list of useful tips for corporate executives. For example: dedicate corporate resources but surrender central ownership; put your faith in the best people and not necessarily in the best ideas; ensure top executives “walk the talk” as sponsors and hands-on leaders; and protect disruptive innovation from being shot down by existing customers' influence. These findings are accompanied by a conceptual model mapping the main issues in corporate venturing to four distinct areas: design, resources, decisions, and monitoring. Originality/value – The key findings of this paper are brought as practical tips for executives attempting to construct a corporate venturing structure that works; these tips are noteworthy as they may contradict some of the common wisdom in corporate strategy.

Diversification: best practices of the leading companies

Graham Kenny — 2011-12-29 00:00:00.0

Abstract

Purpose – This article aims to take a fresh look at diversification – a growth strategy often disparaged by managers and commentators alike, yet one that is followed successfully by some major organizations. Design/methodology/approach – Data were gathered from a number of successful diversifiers, such as GE, to determine the practices they follow and how these might be applied by other organizations. Findings – Successful diversifiers have seven features, which all CEOs, boards and executive teams can learn from. They select capable division managers; secure competitive advantage at division and business-unit levels; establish a supportive corporate center for their divisions; install appropriate performance measures; set effective incentives for managers; align the corporate culture to strategic direction; pay the right price in acquisitions; spend time and resources integrating acquisitions with the existing organization. Originality/value – The value of these findings is that organizations in all sectors – business, government and not-for-profit – can benefit greatly by emulating the practices of successful diversifiers and thus boost their own performance.

The new do-it-yourself paradigm: financial and ethical rewards for businesses

Stephen Fox — 2011-12-29 00:00:00.0

Abstract

Purpose – The purpose of this paper is to describe the far reaching business potential of offering innovative DIY services and goods. Such offerings can enable businesses to do significant good for the world, while doing well for themselves. Design/methodology/approach – This paper provides a business-oriented summary of, and makes reference to, survey research and action research carried out over five years. Findings – Innovative DIY offerings can enable anybody anywhere to develop, produce, use and/or sell physical goods that are both original and sophisticated. Businesses introducing such innovative DIY offerings reverse two trends that have dominated since before the Industrial Revolution. First, they radically reduce financial and professional barriers against the participation of ordinary individuals. Second, they cut back mass production by enabling individual development and production of physical goods that spring from the imaginations of individual people. In doing so, businesses can avoid many of the challenges that they typically face, such as margins shrinking due to core products becoming more and more interchangeable. Also, they can directly address the three principal goals of sustainability: better enabling people to meet their needs, and express their potential, while preserving natural eco-systems. Practical implications – Businesses are facing many challenges as they try to do well for themselves. At the same time, businesses are uncertain as to how they might do good for the world. In this paper, it is explained how offering of do-it-yourself (DIY) services and goods is already enabling some businesses to do well and to do good at the same time. Moreover, an overview is provided, together with references to more detailed information, of how introducing innovative DIY offerings can open many more opportunities for businesses to do well and to do good. Originality/value – The originality of the paper is that it describes a practical option for businesses that aim to do both well and to do good. The value of this paper is that provides a referenced overview of relevant business examples and relevant enabling technologies.

Foreign retailers in China: the first ten years

Lisa Qixun Siebers — 2011-12-29 00:00:00.0

Abstract

Purpose – This paper aims to examine the important factors that influence foreign retailers' expansion in China. By doing so the paper proposes business strategies for foreign retailers to be successful in China and other emerging economies. Design/methodology/approach – A case study approach is employed to build theory. Five case studies were chosen, including the world's four largest retail firms: Wal-Mart, Carrefour, Metro and Tesco, as well as the Japanese department store Heivado. Findings – The paper identifies six important activities in successful retail expansion: adaptation to the external environment; responses to psychic distance; establishment of business networking; localization; entry strategies into new areas; and the role of local management team. A new framework articulates the interdependent relationships between various factors embedded in retail internationalization, including external environment, internal drivers, psychic distance, and expansion strategies. Practical implications – The findings provide directions to managers of international retail firms on how to expand successfully in an emerging market. Originality/value – This paper offers an exploratory framework on post-entry expansion, which provides an indispensable link between previous research on pre-entry and entry stages of retailer expansion and future research on foreign retailers' performance.

Family firms: should they hire an outside CFO?

Eva Lutz, Stephanie Schraml — 2011-12-29 00:00:00.0

Abstract

Purpose – The purpose of this paper is to examine motives for hiring a non-family Chief Financial Officer (CFO) in family firms. The authors explore the perceptions of family firm owners towards external managers by analyzing how their goals relate to the employment of a non-family CFO. Design/methodology/approach – This study is based on a survey of 195 small- and medium-sized privately-held German family firms. It investigates the relationship between goals of the family and the employment of a non-family CFO. Findings – Family firm owners decide against an external CFO when their goal of independence and control is high. Furthermore, they do not seem to trust external managers to act in accordance with their goal of enterprise value growth. However, they seem to realize that non-family CFOs are likely to decrease financial risk through the provision of additional capabilities. Originality/value – The findings are relevant to understand the relationship between external managers and family firm owners. By employing a non-family CFO, family firm owners give away part of the control, but they can also gain additional valuable input and potentially lower their financial risk. They should however put effort into setting up appropriate incentive structures for the manager.

The twin-cycle washing machine and the art of creating value

Stuart E. Jackson — 2011-12-29 00:00:00.0

Abstract

Purpose – The author has previously written about the concept of “strategic market position” (SMP). Simply stated, SMP is a strategic discipline which ties together the principles of customer preference, producer economics, and corporate finance and helps companies understand when and how increased market share leads to stronger competitive position and higher profitability. Strong SMP creates the potential for a virtuous cycle of product improvement where strong products lead to strong market shares, which lead to economies of scale and higher returns, which can in turn fund innovation and investment to create even stronger product offerings. This virtuous cycle is what the author calls “Product Excellence”. There is a related virtuous cycle of “Customer Excellence”, defined by the metric of Customer Market Position, or CMP. Strong CMP is when companies are able to address a high share of customers' overall needs, developing a higher level of understanding and trust with those customers, creating opportunities to develop new offerings that create even further advantages and differentiation. Good companies often become skilled at one or other side of these cycles, but really great companies are able to balance both of these virtuous cycles together. This paper seeks to address these issues. Design/methodology/approach – In this article, the author discusses the benefits that accrue to businesses that have a high SMP or CMP within the markets and customers they serve. The author cites a number of case examples of businesses that have reinforced their commercial success through closely managing the strength of their product offerings and the depth of their relationships and share of wallet with key customers. Examples of businesses in the article involve hospital and medical product industries, including the results of proprietary surveys undertaken by L.E.K. Consulting. The author then draws lessons that can be applied broadly by any business. Findings – The key message proposed by the author is that companies need to balance both product-centric and customers-centric strategies in order to maximize their competitive advantage and long-term value creation. Originality/value – This article sheds light on the economics and value of nurturing a business's product-based and customer-based competitive advantage. The article introduces metrics to manage and monitor both of these critical dimensions.

A new era?

Patrick Marren — 2011-12-29 00:00:00.0

Abstract

Purpose – The purpose of this paper is to examine the breakdown of political compromise and its possible effects on the business climate over the next few years. Design/methodology/approach – Essay. Findings – Political polarization has brought the basic functions of government into question and may cause gridlock on major issues for a long time. This will have serious consequences for the business climate of the country. Originality/value – This paper examines these issues in what is hoped to be a unique way.

Editor’s note

2011-12-29 00:00:00.0