Charting a Winning Corporate Strategy
What is corporate strategy? The art of ensuring that the value of the enterprise as a whole is more than the sum of its parts.
BCG — Boston Consulting Group
The goal of corporate strategy is to articulate a vision of a great company that is also a great stock-and to define the specific moves needed to bring that vision to life.
Rooted in a clear understanding of competitive advantage, corporate strategy lays out a multiyear roadmap for how best to leverage advantage to drive profitable growth and strong, sustained value creation.
A winning corporate strategy will identify the optimal business portfolio, prioritize the right growth platforms, and set a financial strategy to transform vision into value.
Our corporate strategy work with clients focuses on answering questions in four key areas:
Spotlight on Corporate Portfolio Strategy
Portfolio strategy-helping clients determine how to invest capital across businesses, products, and initiatives to maximize returns-has been at the core of BCG’s DNA since our founding.
And any good value creation strategy depends on a clear portfolio strategy and active management of the business portfolio that focuses on three imperatives:
- Define the value creation roles of the businesses in the portfolio. Which businesses will be your growth engines? Which will mainly supply cash for other businesses to invest? Which will you need to turn around or consider selling?
- Allocate capital differentially across the corporate portfolio.
Capital allocation should depend on each unit’s current performance, future potential, and role in the portfolio. Take the perspective of a long-term investor: will this business be worth more in the future-and what can we do to maximize our return on investment? - Shape and reshape the business portfolio over time.
M&A and divestitures are critical parts of active portfolio management. How can we accelerate opportunity through acquisitions? Which businesses no longer fit your portfolio logic and investor story and would be better owned by others?
Gerry Hansell on the Case for Active Portfolio Management
In this video, Hansell explains the challenges companies face in managing their portfolios and shares how they can avoid making costly missteps.
BCG’s Client Work in Corporate Strategy
Our corporate strategy consultants have completed over 4,000 corporate strategy engagements over the past five years. For example, we helped:
- A high-performing building products company define the initiatives-portfolio moves and investor communications-needed to drive a new wave of value creation, leading to a TSR increase of 5 percentage points in the subsequent three years.
- A family-owned industrial conglomerate overcome a valuation discount by rethinking portfolio, financial policies, organization, and management structures to unlock a 35% increase in valuation.
