Strategic Interaction Pattern for Holding Companies

Abstract

The paper's goal is to explain to strategic pattern of holding companies. The parent company can create value through stand-alone, linkage, functional & service, and developing influences. Parent companies can choose their style and value creation methods on the basis of the amount of their knowledge and understanding of their business. Having taken Goold et.al.'s theory for granted it is assumed that expert in holding companies can help decide the optimum mode(s) of the relationship between the mother company and its business units. This study aims at identifying and measuring the factors affecting the interaction between a parent company and its business units. A model is proposed for the optimum relationship and an appropriate management style to be followed by them at these stages; First, using market attractiveness and business competitive strengths in GE matrix, the portfolio strategy is determined. Next, by measuring the relationship between business units and parent characteristics, the proportion of parent knowledge of the units and the kind of relationship that can be established is determined. Finally, based on the findings from the above two steps, a suitable parenting style is proposed. This study is conducted in a holding company and management styles and approaches for value creation are proposed.

Keywords

• parent company
• strategic management style
• value creation methods