Corporate Management
Quiz
1: A diversified firm may include more than one business or industry within each of its business units. How does the firm decide which businesses to include in a business unit?
A diversified firm decides which business to include in a business’s unit through their judgment on how to assign their diversified business to specific business units. There is no formal criteria. However, the relationship between the businesses in the firm is based on whether they are loosely or strongly tied businesses.
2: What differentiates a set of loosely tied businesses from a set of strongly tied businesses?
A set of loosely tied businesses uses a targeted customer approach because the businesses are not closely related in terms of businesses, competencies, or in any way whatsoever. A set of strongly tied businesses uses a shared approach because the businesses are strongly related and share common activities and operations. Further, an organization can get more involved in running strongly tied businesses than in running loosely tied businesses.
3: Why is it difficult for a firm to get more involved with the running of its businesses when they are loosely tied to each other?
Due to the lack of common operational activities, a firm is not able to get involved with the running of its businesses that are loosely tied. Loosely tied businesses have diversified operations and activities and thus are given autonomy to govern their own business plans and operations. One business does not in any way affect the other; thus, an organization can only give general guidelines and can evaluate these businesses only in terms of performance through accessing returns over asserts and the businesses growth rate.
4: When a firm pursues a supply chain approach, why are its businesses likely to be more loosely tied?
They are likely to be more loosely tied since the only similarity is if one supplies material to the other or when one distributes the products of the other. However, the logistic planning, the operations and the activities used in each businesses are different and have their own formation.
5: How can the firm assist its various businesses when they are more strongly tied to each other?
When businesses are strongly tied, a firm can be involved through developing ways to enhance new product development and increased distribution methods. Also business can assist in developing operations and activities strategy that would guide towards success.
Discussion
The relationship established by firms to its various business units can be defined as loosely tied or strongly tied businesses. Loosely tied is when business units have less common characteristics, while strongly tied is when businesses have more related characteristics. Considering these characteristics, P&G businesses; household products, personal products, health care products, and shaving products should be managed as loosely tied. P&G should decentralize business management and give them the autonomy to develop their business frameworks. The businesses have little similarities in their manufacturing, production, and even distribution.
Based on the concept of corporate management, such businesses should be given autonomy of management and only be evaluated based on performance, such as returns over investments and growth rates. P&G has, in the past, managed these businesses together in a decentralized manner and failed. Such a failure is caused by the integration of the operations of distinct businesses that have different activities and functionalities. The stakeholders, such as Taylor, believe that the decentralization of these business units would give them autonomy to adjust to the prevailing market needs. Further, decentralization is an important element for the corporate management of firms that have a global market (Kasperson, 2019). Businesses in a global market experience cultural differences, varying customers’ needs, and preferences, and different marketing strategies. Such market variations require the decentralization of business units to help them adjust to the changing market environments to enhance success.
In conclusion, P&G should manage these business units as loosely tied to each other and have less control over their operations. Despite the businesses having less common characteristics, P&G is also an international organization which is likely to face global market challenges such as cultural barrier and varying customers’ needs and preferences.
References
Kasperson, R. E. (2019). Corporate management of health and safety hazards: a comparison of current practice. Routledge.