Parenting Advantage(Goold, Campbell)

The Parenting Advantage model is a framework that describes how a parent company can (help) create value. In their
article, !rom "orporate #trategy to Parenting Advantage, $ichael %oold and Andrew "ampbell argue that the parent
company should not only add value to a business unit, but add more value than any other potential parent & they call this'
Parenting Advantage. In their book' "orporate&(evel #trategy' "reating )alue in the $ultibusiness "ompany, they
mention four types of parental value creation'

Four types of parental value creation
*. Stand-alone influence. +ach subsidiary is viewed as a separate profit center. ,sing basic performance
targets, the businesses are controlled and monitored. )alue creation is provided by making strategic decisions
such as the appointment of managers and approving ma-or capital e.penditures.
/. Linage influence. )alue is created by improved co&operation and synergy benefits.
0. Central functions and services. "orporate value is created through the provision of administrative and
managerial services to the businesses.
1. Corporate development. )alue creation through portfolio management.
#ome authors have claimed the role of the corporate center should be minimal. 2edley' The overarching role of the
corporate level is that of portfolio manager' to manage the allocation of scarce financial resources amongst the business
units. 3thers, such as 2amel 4 Prahalad, have emphasi5ed the importance of synergy' The corporate center should not
be -ust another layer of accounting, but must add value by enunciating the strategic architecture.

6hich type of influence is best to ma.imi5e value creation7 The answer is comple. and can be determined upon a number
of factors. These factors include, but are not limited to' corporate purpose, history and culture. !urthermore the answer
depends upon the reconciliation of multiple parado.es of parenting advantage' "ontrol versus +mpowerment,
8esponsiveness versus #ynergy, Portfolio versus "ore "ompetence.