Strategic Management; McLaren group The WritePass Journal

Strategic Management; McLaren group Executive Summary Strategic Management; McLaren group ). Cross Sector Diversification Cross sector diversification occurs when a firm enters into business within a different industry which has a similar value chain as of its core business (Charles et, al. 2010). McLaren also ventured into cross sector diversification by entering into a marketing and advertising business. Similarly, its venturing into the event management and hospitality industry also qualifies for cross sector diversification. Both these businesses share the same value chain as of McLaren’s core racing business to some extent in that they both cater the internal demands of McLaren Group and serve its own customers. McLaren marketing overlooks the group’s marketing activities apart from operating as a separate entity while Absolute Taste (McLaren’s hospitality and event management business) caters the Group’s customer at formula one event along with serving other high-end customers globally. Unrelated Diversification Unrelated diversification occurs when a firm enters into a new business in a different industry than that of its primary business through which it does not aim to achieve any value chain synergies (Charles et, al. 2010). McLaren, diversification into applied technologies can be categorized as unrelated diversification in that this business engages an entirely different value chain in terms of suppliers, production, and customers. This business involves developing groundbreaking technologies for the field of sport, medicine, biomechanics and entertainment (McLaren, 2013). It is worthy to note that this business does benefit from McLaren’s overall technical know-how in providing improved technological systems and solutions and therefore it cannot be definitely termed as unrelated diversification. Historical Perspective on Corporate Diversification From 1950s to 1970s There was an era when there were only a few companies selling similar products within a particular market, while the demands of the customers were relatively simple and less sophisticated. At that time, the phenomenon of strategic management was neither popular nor deemed a critical element for business success. This was the case throughout the first half of the 20th century (Orcullo, 2007). In the following two decades, there was an emphasis upon several principles of management, which were deemed equally applicable across various industries and businesses. Throughout 1960s and 1970s, the simple faith in general management skills justified virtuous circle of corporate growth and diversification. Robert Katz noted in that regard that: We are all familiar with those professional managers who are becoming the prototypes of our modern executive world. These men shift with great ease and with no apparent loss in effectiveness, from one industry to another. Their human and conceptual skil ls seem to make up for their unfamiliarity with the new jobs technical aspects. (Goold and Luchs, 1993) Hence, during 1950s and 1960s, it was widely opined that any business with a relatively effective management could venture into any other related or un-related business solely based upon its managerial resources. Throughout this period, McLaren was simply focused upon its primary business of formula one racing. From 1970s to 1980s According to Orcullo (2007), the notion of strategic management only became popular and well known after the 1970s. Strategic positioning and market competition implied that firms were now under increasing pressure to grow and diversify in order to sustain and thrive in the changing business environment. Concurrently, there was a realization during 1970s and 1980s that different businesses had to be managed differently (Goold and Luchs, 1993). This view encouraged businesses to undergo main related-horizontal diversification so that a firm’s new undertakings may share the exact sources of synergies such as market, operational and management fit. At this time, McLaren strategized to expand into mass car market which closely shared the sources of synergies with McLaren’s racing team. 1990s and Onwards During the late 1980s and 1990s, management literature introduced new themes such as core competencies and management dominant logic view and business synergies. These themes further emphasized on achieving synergy through diversification and venturing into businesses which were directly or indirectly related to the core competencies and fell within the dominant management logic of the company (Goold and Luchs, 1993). Coinciding to these corresponding business views, McLaren was expanding in some of its current businesses during this time which are all either directly or indirectly related to its core competencies and create synergy for the McLaren Group. References Ansoff, I. (1957) Strategies for Diversification. Harvard Business Review. Vol. 35 Issue 5. Carroll, L. (1941). Through the Looking-Glass. The Heritage Press . New York, p. 41. Charles E.,   Bamford, G. and West, P (2010). Strategic Management. Cengage Learning. Goold, M. and Luchs, K. (1993) Why Diversify: Four Decades of Management Thinking. Academic of Management Executive. Vol. 7 No. 3 Johnson G.   Scholes K.   Whittingham W. 2008. Exploring Corporate Strategy. 8th edition. Prentice Hall McLaren (2013) Vodafone McLaren Mercedes. Available from mclaren.com/formula1/page/mclaren-group (cited on 8th, March, 2013) Orcullo, N. (2007) Fundamentals of Strategic Management. Rex Bookstore, Inc. Porter, M.E. (1979)  How Competitive Forces Shape Strategy,  Harvard Business Review, March/April 1979. Porter, M. E. (2001) Service Operations Strategy. Harvard Business School Porter. M.E. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review, January 2008, p.86-104. Van Valen, L. (1973) A New Evolutionary Law   in Evolutionary Theory, p. 1-30. William, T. (2009).   McLaren  Ã¢â‚¬â€œ The Cars 1964–2008. Coterie Press.