SUBMITTED TO:

PRESENTED BY:

PROF.JAYANTA BOSE

GROUP 10
SANTANU DUTTA(38) PRIYANKA NASKAR(31) BROJA SUNDAR MONDAL(13) SUBHANKAR DEY(41)

 Parenting

Fit Matrix summarizes the various judgments regarding corporate/business unit fit for the corporation as a whole. This matrix emphasizes their fit with the Corporate parent Fit. This matrix composes of 2 dimensions: Positive contributions that the parent can make and the negative effects the parent can make.

Parenting-Fit Matrix
Low
Heartland (Opportunity) Edge-of-Heartland Edge of Heartland (Jagjit industry in the food) Alien Territory (No opportunity) High Low FIT between parenting opportunities and parenting characteristics High Ballast

Value Trap

Chapter 6 Wheelen/Hunger

Prentice Hall, 2004

 Heartland

Businesses Edge-of-Heartland Businesses Ballast Businesses Alien Territory Businesses Value Trap Businesses

Heartland Businesses: Heartland Businesses should be at the heart of the corporations future. These Heartland Businesses have opportunities for improvement by the parent, and the parent understands their critical success factors well. These businesses should have priority for all corporate activities
Edge-of-Heartland Businesses: In these businesses some parenting characteristics fit the business, but other do not. The parent may not have all the characteristics needed by a unit, or the parent may not really understand all of the units strategic factors. E.g.: a unit in this area may be very strong in creating its own image through advertising a critical success factor in its industry. The corporate may however not have this strength and tends to leave this to its advertising agency. If the parent forced the unit to abandon its own creative efforts in favor of using the corporations favorite ad agency, the unit may struggle.

Such business units are likely to consume much of the parents attention, as the parent tries to understand them better and transform them into Heartland Businesses.

Ballast Businesses: Ballast Businesses fit very comfortably with the parent corporation but contain very few opportunities to be improved by the parent. Like cash cows may be important sources of stability and earnings. But if environmental changes, ballast could move to alien territory. Therefore corporate decision makers should consider divesting this unit as soon as they can get a price that exceeds the expected value of future cash flows. E.g.: IBMs mainframe business. Alien Territory Businesses: Alien Territory Businesses have little opportunities to be improved by the corporate parent, and a misfit exists between the parenting characteristics and the units strategic factors. There is little potential for value creation but high potential for value destruction on the part of the parent. The corporation must divest this unit while it still has value.

Value Trap Businesses: Value Trap Businesses fit well with parenting opportunities, but they are a misfit with the parents understanding of the units CSF. This is where the corporate headquarters can make its biggest error. It mistakes what it sees as opportunities for ways to improve the business units profitability or competitive position. E.g.: To make the unit a world-class manufacturer (because the parent has world-class manufacturing skills) it may not notice that the unit is primarily successful because of its unique product development and niche marketing expertise.