Strategy for the Corporate Level: Where to Invest, What to Cut Back and How to Grow Organisations with Multiple Divisions, 2nd Edition

Chapter Seven Ten Sources of Value from Direct Influence

Corporate headquarters can add value in two ways: directly by influencing or supporting individual business divisions, or less directly by encouraging coordination across divisions. We will call the first “vertical added value” because the value comes vertically down the hierarchy from corporate headquarters. This is our focus in this chapter. The second type we will call “horizontal added value” because it is about encouraging horizontal relationships and coordination.

Vertical added value happens when corporate-level managers guide, direct, impose, persuade or incentivise managers in the business divisions in ways that cause the business divisions to perform better than they would ...