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The Power Of Strategic Integration Essay

2960 words - 12 pages

The Power of
Strategic Integration
How can multibusiness
corporations exploit the
opportunities that take
full advantage of their
capabilities and their
potential to pursue new
Robert A. Burgelman
and Yves L Doz
A,, multibusiness corporations face the strategic imperative
imposed by the stock market: maximizing the profitable growth of
their businesses. Long-term success in meeting that imperative
requires developing new strategy-making capabilities. During the early
1990s, many multibusiness companies focused on improving profitability
through operational integration. They reengineered, focusing
on the capabilities that would improve speed, quality and ...view middle of the document...

To help with those tasks, we propose
a conceptual framework that features two dimensions (scope and reach} affecting
the five forms of strategic integration (overambitious, minimal, scope-driven, reachdriven
and complex). (See "Strategic Integration in the Multibusiness Corporation.")
Robert A. Burgelman is a professor of management at Stanford University's Graduate School of
Business in Stanford, California. Yves L. Doz is dean of exeoutive education and a professor
of global technology and innovation at INSEAD in Fontainebleau. France. Contact the authors at
burgelman_robert @ and yves.doz&
A location on the scope dimension indicates the extent to
which pursuing a new business opportunity requires the collaboration
of existing business units within the corporate strategy.
Intel's chipset and motherboard businesses, for example, need
to collaborate on developing demand for new products for the
company's core microprocessor business.
A location on the reach dimension indicates the extent to
which developing a new business opportunity does require
changing the existing corporate strategy — perhaps by transforming
a business unit or creating a new one. To cite Intel again,
in 1999 the company extended its corporate strategy beyond its
traditional focus on personal computers and pursued business
opportunities in appliances by forming a Home Products Group
within its Intel Architecture Business Group.'
Among the five forms of strategic integration, overambitiou.
s strategic integration and minimal strategic integration
are the two that value-minded companies should avoid.
Overambitious strategic integration corresponds to the opportunity
set defined by maximum scope and reach; it assumes
that a company's available capabilities do not impose trade-offs
between scope and reach. Jim Robinson's effort to turn
American Express into a "financial supermarket" during the
late 1980s and early 1990s is one example of that type of strategic
integration.' Minimal strategic integration corresponds to
the opportunity set defmed by perceived limits on scope and
reach. Traditional strategy-making approaches based on
capital-investment and portfolio-planning decisions are typical.
Two other forms, scope-driven strategic integration and
reach-driven strategic integration, are productive but fail to
maximize the company's growth potential.
The fifth form, complex strategic integration, corresponds
to the maximum-strategic-opportunity set. The maximumstrategic-
opportunity set features as much scope and reach as is
consistent with the trade-offs that the real world imposes. It is
neither overambitious nor overly cautious. Companies achieving
complex strategic integration take into account external constraints
such as regulatory, technological and market forces plus

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