Abstract
Corporate strategy, the overall plan for a diversified company, is both the darling and the stepchild of contemporary management practice — the darling because CEOs have been obsessed with diversification since the early 1960s, the stepchild because almost no consensus exists about what corporate strategy is, much less about how a company should formulate it.
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Notes
The studies also show that sellers of companies capture a large fraction of the gains from merger. See Michael C. Jensen and Richard S. Ruback, ‘The Market for Corporate Control: The Scientific Evidence’, Journal of Financial Economics, April 1983, p. 5;
and Michael C. Jensen, ‘Takeovers: Folklore and Science’, HBR, November–December 1984, p. 109.
Some recent evidence also supports the conclusion that acquired companies often suffer eroding performance after acquisition. See Frederick M. Scherer, ‘Mergers, Sell-Offs and Managerial Behavior’, in Lacy Glenn Thomas (ed.) The Economics of Strategic Planning (Lexington, Mass.: Lexington Books, 1986) p. 143;
and David A. Ravenscraft and Frederick M. Scherer, ‘Mergers and Managerial Performance’, paper presented at the Conference on Takeovers and Contests for Corporate Control, Columbia Law School, 1985.
This observation has been made by a number of authors. See, for example, Malcolm S. Salter and Wolf A. Weinhold, Diversification Through Acquisition (New York: Free Press, 1979).
See Michael E. Porter, ‘How Competitive Forces Shape Strategy’, HBR March–April 1979, p. 86.
Michael E. Porter, Competitive Advantage (New York: Free Press, 1985).
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© 1989 Macmillan Publishers Limited
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Porter, M.E. (1989). From Competitive Advantage to Corporate Strategy. In: Asch, D., Bowman, C. (eds) Readings in Strategic Management. Palgrave, London. https://doi.org/10.1007/978-1-349-20317-8_17
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