Olga Liash Case

I. Introduction..............................................................................3

II. Theory....................................................................................3

III. Case description.......................................................................6

3.1. Tata Consultancy Services..........................................................6

3.2. Corporate Composition .............................................................6

3.3. Corporate Scope......................................................................7

3.4. Corporate Distribution...............................................................8

3.5. Corporate Management.............................................................9

IV. Synergy vs Responsiveness.......................................................11

V. Recommendations ..................................................................15

V.I. Conclusion..........................................................................15

I. Introduction

This paper aims to provide a link between the strategy concepts of the Corporate and Global Strategy Alignment course, to an actual organization's conditions. Tata Consultancy Services (TSC) was selected as an organization to investigate, and the Corporate Level Strategy concepts were selected as the theorethical framework we will apply. In the first part of the paper,we summarize the key concepts of Corporate Level Strategy, namely the two perspectives: (1) synergy of an integrated organization, and (2) responsiveness of a portfolio-based organization. In chapter three we describe the TCS case and give an overview of TCS's corporate composition, scope, distribution and management. In chapter fourwe analyze TCS's "Synergy vs. Responsiveness", based on the information presented in chapter two and three. The final part of the paper presents practical recommendations for TCS, based on the analysis made in the previous chapters.

II. Theory

Firms can grow by either increasing sales of their current products in their current markets, or by extending the product range and by moving into new segments and areas. Additionally, companies can expand further by adding new lines of business, thus developing into multi-business corporations. Corporate Level Strategy aims at helping firms with the unique challenges they face along the way. Whether to enter or remain in different lines of business, as well as how to gain competitive advantages in these various fields, needs to be considered. 'Corporate configuration' describes the process of choosing the optimal set of businesses and relating them with one another. Strategists face the task of whether to take a portfolio organisation perspective or an integrated organisation approach to add value to their corporation and lead it to success.

Corporate composition describes what the various businesses of a corporation are and why they were selected. It also deals with the level of involvement a firm wants to have in different business areas and processes. Growth, or diversification, can be reached in two ways. (1) Vertical diversification, also described as forward or backward vertical integration, happens when actions are taken within the firm's current industry, for example by integrating supplier or buyer businesses. (2) Acquiring a related business of the same tier is called horizontal integration. On the other hand, if the company moves outside of its current industry, it diversifies rather than integrates horizontally.

A portfolio matrix is a good tool to investigate growth and profitability potential of, as well as the balance between, a company's various business activities. The two axes are used to describe external opportunity versus internal strength. The corporate scope is shown by the amount of bubbles, while the corporate distribution is indicated by the bubbles' relative sizes. Corporate strategists need to address the question of how to create value for a company beyond the sum of its business units. The answer will build on the reasons why the units were combined in the first place, rather than continuing to let them run separately. The added value that firms achieve by diversifying and integrating other businesses is called 'multi-business synergy' and is a key designator of the corporate composition chosen by a firm.

Corporate management deals with how a corporation should manage its various businesses, e.g. what organisational systems to use. It looks at how to find the right balance between differentiation and integration in order to tackle common challenges and create effective and efficient synergies.

Corporate strategists have the following three integration mechanisms available to build harmony among the various business units: (i) Centralisation, (ii) Coordination or (iii) Standardisation. (i) Centralisation is achieved when one department organises all activities and resources. (ii) If the process of organisation is carried out by more than one department integration can be accomplished through coordination. (iii) Finally, standardisation of activities, resources and product offerings can be used to evade both centralisation and coordination and still benefit from economies of scale and fast competence development. A mix of control and cooperation is required in order to lead and implement the integration. The right blend will depend on the type of multi-business synergies as well as the level of autonomy described in the firm's overall corporate strategy. Multi-business synergy and business responsiveness are partially conflicting demands and therefore create tensions that need to be addressed.

Companies constantly struggle with finding the right balance. While integration is required to achieve synergies, it is rather costly as well as time intensive and lowers the extent to which the various business units can tailor their strategies towards their specific environments.

De Wit and Meyer (2010, p140) agree with many other academics, and state that "for the corporate strategist the challenge is to realise more value creation through multi-business synergies than value destruction through the loss of business responsiveness".

When diversifying into new business areas companies need to have a clear idea of the value added by their actions. Analysis