Corporate Theory

Hector Rodriguez

Irvine, CA 92651

September 21, 2016

Dr. Sean D. Jasso

California State University, Fullerton

800 N State College Blvd

Fullerton, California

Dear Dr. Jasso,

After reading the two past articles we are taught on how to approach the market with five forces and Blue Ocean. In “ What Is the Theory of Your Firm” by Todd Zenger we should “focus less on competitive advantage and more on growth”.  Many executives would approach strategy by finding an attractive market and creating places that hold a competitive advantage. Big companies that have strong positions in the market are successful but they do not grow any equity price due to focus on their competitive advantages. In corporate theory, the company that creates value will recognize and create tactical choices for the growth of the company.

In order to create value a company needs to have a vision that can combine unique resources and capabilities with other assets. A great example is companies like Disney and Apple; they really have unique resources and capabilities with other assets. Like every empire that falls, Disney managed to rise after Walt Disney death by hiring Michael Eisner. Eisner studied Walt Disney’s theory and used it to create animated productions, which gained growth from 1.9 billion in 1984 to 28 billion in 1994. Any great company will implement three theories into their corporate theory of value creation. To make sure the company has a good corporate theory it should provide a foresight, insight, and cross-sight. In foresight the company would predict a new consumer demand and predict the development of important technologies.

It is difficult predicting the future and customer demands. Many greats like Nicolas Tesla, Walt Disney, and fashion designers all have a great sense of foresight. Second is insight, where companies thoroughly comprehend their existing assets and activities. The company can distinguish how valuable and rare they are. For example, Disney could identify their insight by recognizing the investment in animation that created unique characters which requires no agents. Cross-sight is the last variable of a great corporate theory. Cross-sight is created by acquiring assets that are meshed with existing ones to create value to your company. An example with Disney would be a broad spectrum of entertainment assets that create value from the foundation of animation. Apple and Disney both carry the three sights of strategy in there corporate theory of value creation.