Describe the possible roles that corporate management might play in the strategic planning and management process within individual SBU's in its portfolio. Discuss also the tensions between corporate and SBU management over these issues.

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Dictate the objectives and specific strategies that it wishes each SBU to pursue.

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Allow SBU managers substantial discretion but hold them to performance standards, goals, and criteria.

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Serve as financers of the SBUs' strategic endeavors, being more or less generous with the capital that they need.

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Facilitate sharing of resources and competencies and other synergies among the SBUs.

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There are two types of tensions around these issues. The SBUs may resent what they consider to be excessive interference by corporate parent management in their strategic decision making. On the other hand, corporate management may become concerned that particular SBUs are not performing at the levels expected of them and necessary to maintain the corporation's overall standing with investors. They may worry too that they are straying from the strategic directions required by their assigned roles in the portfolio. Under such circumstances, the parent may be tempted to intervene in SBU strategic decision making, provoking clashes with their executives.

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The SBUs count on the corporate parent for a variety of resources that they do not provide themselves. The foremost is the capital needed to fund their strategies and operations. Others may be centralized R&D, purchasing, legal services, IT capability, and the like. All of these are usually in limited supply and must be rationed among the SBUs seeking them. Individual SBUs may disagree with corporate management about the shares allocated to them.

Describe the Possible Roles That Corporate Management Might Play in the Strategic