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CS Professional · Strategic Management and Corporate Finance · Managing the Multi-Business Firm and Analyzing Strategic Edge

In the Goold, Campbell and Alexander view of corporate parenting, a parent company creates value for its business units mainly when:

A parent adds value when its own skills and resources match the critical success factors of its businesses. This is the parenting-fit logic: value comes from the parent's real contribution, not from diversification, uniform control or routine sale of good units.

  1. AIts skills and resources fit the critical success factors of the businesses it ownsCorrect
  2. BIt owns as many unrelated businesses as possible to spread risk
  3. CIt keeps all business units under identical centralised budgets
  4. DIt sells the best-performing business unit every year

Explanation

The parenting-fit idea says a parent adds value only if its capabilities match what its businesses need to succeed. Owning many unrelated units or imposing identical controls does not by itself add value and may destroy it.

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