7. Portfolio Planning Models: The GE/ McKinsey Matrix H A R V E S T H O L D B U I L D Low Medium High Low Medium High Industry Attractiveness Industry Attractiveness Criteria Business Unit Position - Market size - Market share (domestic, - Market growth global, and relative) - Industry profitability - Competitive position - Inflation recovery - Relative profitability - Overseas sales ratio Business Unit Position

8. Portfolio Planning Models: The BCG Growth-Share Matrix HIGH LOW LOW Annual real rate of market growth (%) Relative market share Earnings: high stable Cash flow: high stable Strategy: milk Earnings: low, unstable Cash flow: neutral or negative Strategy: divest Earnings: high stable, growing Cash flow: neutral Strategy: invest for growth Earnings: low, unstable, growing Cash flow: negative Strategy: analyze to determine whether business can be grown into a star, or will degenerate into a dog HIGH ?

9. Annual real rate of market growth (%) Relative market share - 8 -4 0 4 8 12 Bakery division P osition in 2003 Position in 2000 . ( Area of circle proportional to $ sales ) Applying the BCG Matrix to Time Warner Inc. AOL Film production Cable Cable TV Networks Music Magazine Publishing

11. Corporate Restructuring to Create Value: The McKinsey Pentagon Current market value Maximum raider opportunity Current perceptions gap Company value as is Optimal restructured value Strategic and operating opportunities Potential value with internal improvements Disposal/acquisition opportunities Total company opportunities 1 2 5 RESTRUCTURING FRAMEWORK 3 4 Potential value with external improvements

12. Exxon’s Strategic Planning Process Economic Review Energy Review Business Plans Discuss- -ion with contact director Approval by Mgmt. Committee Stewardship Review Stewardship Basis Financial Forecast Corporate Plan Investment Reappraisals Annual Budget

13. Corporate Control over the Business es 2 basic approaches Inpu t control Monitoring & approving business level decisions Output (or performance) control Setting & monitoring the achievement of performance targets Primarily through strategic planning system & capital expenditure approval system Primarily through performance management system, incl uding operating budget s and HR appraisal s

14. Goold & Campbell’s Corporate Management Styles : Financial and Strategic Control H igh L ow CONTROL INFLUENCE Strategic planning Centralized Strategic control Holding company Financial control CORPORATE INFLUENCE Flexible strategic Tight strategic Tight financial

20. Rethinking the Management of Multibusiness Corporations: Bartlett & Gh o shal’s Analysis of Key Management Processes Managing the tension between short-term ambition Managing operational interdependencies and personal networks Creating and pursuing opportunities Creating and maintaining organizational trust Linking skills, knowledge, and resources Reviewing, developing, and supporting initiatives Shaping and embedding corporate purpose Developing and nurturing organizational values Establishing strategic mission & performance standards Front - line Management Middle Management Top Management RENEWAL PROCESS INTEGRATION PROCESS ENTREPRENEURIAL PROCESS