| Summary: | The establishment of a business is surely followed with dreams and hopes for
the growth and the development of the company, so, when its journey is starting to
show any improvement, the management will start to think to make a further
improvementto perform their competitiveness. Mostly, the initial step that they
usually commit is by conduncting a vertical or horizontal integration so that they are
able to become a leader in such industry.
In the further development, in order to maintain and enhance its growth, the
company will performa strategy to diversify with both of its related business units
and any business unit that has no relation to its core business. However, they must be
aware that the policy of a corporate diversification strategy (the parent company) are
required to develop strategies that aimed to create value in the corporate level .
To create value for its shareholders, then the selected business unit under a
corporate management should have a better performance than if they stand alone
(stand-alone business). In order to make a realization of value creation, then the
company should have an insight into the value creation, as well as the presence of
some specific characteristics.
To develop an effective strategic planning processes at the corporate level,
Campbell, Goold and Alexander (1995) has developed a framework which they
called the corporate parenting framework. This framework is inspired by the reality in
which many companies of the corporate level (parent company) experience some
failures due to two crucial issues regarding to what business units should be included
in their portfolio, and what approach that should be used by companies so that their
business unit's performance can be improved, which will finally create a value.
Corporate parenting framework uses a structured analysis approach that
consists of four steps, which are : identifying the characteristics of corporate
parenting, searching for critical success factors and parenting opportunities of each
business unit has, and then mapping it with parenting fit matrix. The position of each
business unit on parenting fit matrix provide inputs for the preparation of the strategy
of each business unit as well as the approach that should be done by corporates for
improving their performance in the future.
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