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CEOs, Mind Your Own Business! : Why and How Corporate CEOs Should Pay More Attention to Corporate Functions

2013-03 , Campbell, Andrew , Kunisch, Sven , Müller-Stewens, Günter

The corporate office consists of the CEO and the corporate functions. It is the main vehicle for delivering corporate added value. Yet corporate functions often underperform and corporate offices often fail to add value. We argue that this is because CEOs focus most of their attention on portfolio strategy and business issues and give too little attention to guiding and leading their own business - the corporate office. --> http://www.europeanbusinessreview.com/?p=8459

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The Value Traps Facing Corporate Functions

2013-10-01 , Kunisch, Sven , Müller-Stewens, Günter , Campbell, Andrew

Corporate functions are the headquarters functions in a divisionalised company. These functions, such as corporate Finance, HR, IT, Marketing, and Strategy, have been increasing in their numbers, size and influence. While they can add significant value as part of the ‘corporate parent', they also often subtract value, interfering in unhelpful ways and imposing bureaucracy and delays. Our research, with 30 European companies, exposed four typical value traps that are the root causes of subtracted value. These value traps appear to occur because of the different challenges that corporate functions face at different stages in their life cycle.

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Functional Strategies in Decentralized Corporations: Richemont's Group HR Function

2013 , Kunisch, Sven , Düblin, Daniela , Müller-Stewens, Günter

Compagnie Financière Richemont S.A. (Richemont) is the second largest luxury goods company in the world after LVMH (Louis Vuitton - Moët Hennessy S.A.). Offering a wide selection of brands, Richemont faces typical group company challenges. On the one hand, the autonomy of its individual brands called "Maisons" is crucial for the brands' and, thus, the group's success. On the other hand, despite its diversified brand portfolio, each of the Maisons carries out several more or less similar tasks which offer centralization and standardization potential at the group level. In 2000, Richemont's corporate management launched an initiative focused on this potential to create additional value. This led to a new group structure with several centralized group functions. Previously, the group had been completely decentralized. The new corporate functions were supposed to add value to the Maisons, which they could not achieve as stand-alone business divisions. This case study spotlights the development of Richemont as a group company, covering the timeline from 2000, when a new corporate structure was implemented, to 2012. The focus is on the group HR function as one of the corporate functions that was established during the introduction of the new corporate structure. The group HR's functional strategy, as well as the development of its value-adding efforts is provided. In addition, the case study describes the group HR's interfaces and the division of the responsibilities between corporate level and non-corporate level units. Finally, it describes two major initiatives that the group HR carried out in order to strengthen its position as a value source and its acceptance within the group. Using this specific function, the case study explores the role of corporate functions as a specific feature of Richemont's new corporate structure and an important means to create or destroy corporate value. The case can be used as teaching material for strategy classes on corporate strategy, corporate advantage, corporate parenting, and corporate functions. It provides insights into the success factors of corporate-level functional strategies and the levers of a corporate function's value creation. It can be used to discuss the following questions which touch on the fundamental issues of corporate strategy: What can be centralized and what cannot? What is the corporate function's role in setting policy, guiding decentralized activities, and supporting business divisions? How can heads of corporate functions link their functional strategy to the overall corporate strategy? How can they avoid bureaucracy, empire-building, and interference? How can they measure added value? How can they decide which skills are needed at the corporate level? By covering these questions, the case deals with how heads of corporate functions can develop strategies for their functions.