The Rationale for Multi-SBU Companies

C. K. Prahalad and Yves L. Doz

in The Oxford Handbook of Strategy

Published in print April 2006 | ISBN: 9780199275212
Published online September 2009 | | DOI:

Series: Oxford Handbooks in Business and Management C

 The Rationale for Multi-SBU Companies

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In the last fifteen years greater recognition has been given to the importance of the CEO and top management in large, diversified companies. The sharp rise in their pay and their increasing public prominence are examples of this. The role of top management is now seen as being essentially entrepreneurial, in other words about wealth creation. An administrative view, involving control, monitoring, and coordination is now seen as insufficient. Top management needs to develop an economic logic for its role, one that explains why the company has chosen this portfolio of businesses, and why management has chosen this particular set of governance and internal management processes. This article explores this task of the top management of a diversified firm. First, it outlines a framework for thinking about wealth creation in a diversified firm. Second, it identifies some of the key dilemmas that the CEO and the top management group face.

Keywords: top management; business portfolio; governance; internal management processes; diversified firm; wealth creation

Article.  11875 words. 

Subjects: Business and Management ; Business Strategy

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