Corporate Strategy Analysis

Management Theory and Practice/MGT 230

University of Phoenix

Corporate Strategy Analysis

The business industry is built on corporate strategies. The success or failure of any organization depends on the effectiveness of their strategy. A concentration strategy directs attention to one business and competes in that industry, while vertical integration and diversification explore other options. Vertical integration concentrates on new business ventures based on elements involved in the company’s product. Diversification refers to newly acquired business through either related market products, called concentric diversification, or unrelated market products, called conglomerate diversification (Bateman, & Snell, 2011, p. 144-146).

Gary Kelly/Southwest Airlines

Southwest Airlines is an excellent example of an organization that changes with the times to keep ahead of trending curves. Southwest’s CEO, Gary Kelly, has been at the reigns and has been able to champion change with the likes of Southwest’s Fuel Hedge fund. “With a hedge, the airline enters into a contract with a bank or other financial services firm. The airline bets oil prices will go up; the other side bets they will go down. The loser must pay the difference to the other party” (Masson, n.d.). Hedging has proven itself an effective means of vertical integration, which has been successful for Southwest.

Mackey McDonald/VF Corporation

Corporate strategies are a must for most, if not all, companies. The VF Corporation is no exception. Mackey McDonald is the CEO of the major clothing corporation, and has successfully expanded the company. The strategy used by this corporation can be considered the concentric diversification strategy. The VF Corporation is a clothing corporation that owns and manufactures many different types and brand of clothing. A few of these brands are Nautica, Reef, and The North Face. These brands are all clothing brands, but they sell different types of clothing, that appeal to different markets. The VF Corporation recently started competing in the travel bag business as well.

Anne Mulcahy/Xerox

Xerox’s Chairman and CEO, Anne Mulcahy, revitalized an iconic, but near-bankrupt company. Mulcahy’s business strategy was to concentrate on Xerox’s core business of paper processing and invest in research and development, while cutting costs to reduce the 17 billion dollar debt on the balance sheet and eliminate and outsource about 30,000 jobs (Mulcahy, 2014). Research and development was to be focused on digital copiers and high volume color printers, since margins are five times greater in color printing than they are in black and white. During all the restructuring there was an FEC investigation about accounting practices, which Xerox had to settle out (America’s, 2014). Because of Mulcahy’s choice to invest in R&D, cut costs, and concentrate in core business, she was able to bring Xerox back to profitability.

Neville Isdell/Coca-Cola

Neville Isdell, CEO of The Coca-Cola Company, practices three main corporate strategies: concentration, vertical integration, and concentric diversification. Isdell devised the his Manifesto for Growth, a ten-year plan to revive the company. The first goal was to improve the marketing and production of the company’s original product, carbonated sodas. These products still amount to four fifths of their sales. Simultaneously, he began to strength Coca-Cola’s brand through non-carbonated drinks, such as bottled waters, sports and energy drinks, and fruit juice. Isdell also focused on the flawed relationship between the company and bottling companies. Because Coca-Cola owns stake in, or outright owns, many bottlers, Isdell allowed the bottlers to team up with other firms in order to cater better to the boom in healthy drinks (The veteran, 2007).

Conclusion

In summary, after team discussions and studying the four CEOs and their corporate strategies, Team A believes that each CEO has a sound strategy. Each company is being led in the right direction by its CEO, as the strategies have proven to be advantageous. For example, Xerox was on the verge of bankruptcy and Mulcahly concentrated the company’s efforts, while cutting costs to work on decreasing the company’s debt. Also, Coca-Cola was losing against the competition and Isdell returned from retirement and revitalized the company. These are just two examples of how the CEO strategies have been beneficial. Overall, Team A agrees that although each CEO has a different strategy, the strategies used by each CEO are sound.

References

America’s best leaders: Anne Mulcahy, xerox ceo. (2014). US News. Retrieved from http://www.usnews.com/news/best-leaders/articles/2008/11/19/americas-best-leaders-anne-mulchay-xerox-ceo

Bateman, T., & Snell, S. (2011). Management: leading and collaborating in a competitive world (9th ed.). New York, NY: McGraw-Hill.

Masson, M. (n.d.). Southwest’s fuel gamble: Hedges keeps fares in check. ABC News. Retrieved from http://abcnews.go.com/Travel/story?id=5918252

Mulcahy took a no nonsense approach to turn xerox around. (2014). Stanford Business. Retrieved from http://www.gsb.stanfor.edu/news/headlines/vftt_mulcahy.shtmlThe veteran. (2007, June 14). The Economist online. Retrieved from http://www.economist.com /node/9334529