Essays on Strategic Management - Zeiss Group Case Study

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The paper "Strategic Management - Zeiss Group " is a perfect example of a management case study.   Corporate strategy is the creation of value across different businesses by a company for it to remain competitive and profitable in the industry. Value addition over and above the value which an individual unit of a business independently creates on its own is one of the goals of a corporate strategy and this may involve the investment of resources and the design or alteration of a company’ s system and structure with the aim of skill transfer in the businesses and sharing of activities.

The Zeiss Group is one such company that has adopted a corporate strategy that may see its business growing depending on the success of the strategy (Johnson et al. , 2008). Concentration on a single industry This is a strategy that involves the focussing of resources by a company for it to compete effectively within a product market which ought to be particular in manner. This has quite a few advantages because it allows a company to concentrate most of its resources thus leading to a strong competitive position in the market.

The organisation also enjoys economies of scale that present themselves due to specialization and also the expertise that comes with such a strategy that allows the company to maintain a leadership position or otherwise a competitive position. This strategy was used by Zeiss when in 2005, they acquired SOLA International Incorporation, merging with the Eyeglass lens Division and thereby creating Carl Zeiss Vision International GmbH. The company then solidified the move via obtaining the whole business five years later as it was previously owned by EQT private equity fund and Carl Zeiss, both controlling a 50% stake.

An advantage of acquiring such a competitor include lower costs of operations as witnessed by the company, an increase in bargaining power since the merger led to the increase of the market share by the company and also gave rise to product differentiation in the organisation (Johnston & Bate, 2013). The company however discarded this strategy in favour of diversification. Diversification This is the process through which a company has operations in more than one industry, and this can be done due to the availability of resources.

Value creation through diversification is achieved through the transfer of competencies across businesses, sharing of resources and building superior internal governance in the new venture (Wit & Meyer, 2010). Zeiss company has diversified into products that not only increase value in their eye care products but also increase the value of the company as a whole. Related diversification involves expanding into territories with similar technology and products thus benefitting from the synergy created. Transfer of Competencies Zeiss has been able to use related diversification through its involvement in sports optics, medical technology, and camera lenses.

This has enabled the company to boost its vision care business through the transfer of competencies in manufacturing, research and development and even materials to and from new business. The organisation transfers competencies in the field of R& D since most of the lenses use the same or similar technologies developed by the company’ s team and sharing of such creates and builds value not only in the eyecare industry but also the other industries such as sports optics.

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