Corporate parenting Fit Matrix is the exploration of a fit between the resources of the corporate parenting and the strategies of Strategic Business Units (SBUs) therefore as to create value to those SBUs. Fit has the different approaches such as:

  1. Restructurer (changing of skills within the corporate)
  2. Portfolio management approach ((equal funds in businesses; evaluating acquisition targets, shutdown poor businesses, buying wisely)
  3. Sharing resources
  4. Managing synergy (transfer competences, resources and skills among SBUs)

After analyzing the parent and SBUs fit, corporate parenting fit matrix assessed into two dimensions. First is the fit among the resources of parents and key success factors of the SBUs and Fit among the characteristics of the corporate parenting and the resources and opportunities of SBUs. The arrangements of these two dimensions generate further five different positions:

  • Edge-of-Heartland Businesses
  • Heartland Businesses
  • Alien Territory Businesses
  • Ballast Businesses
  • Value Trap Businesses

Corporate Parenting Fit Matrix


Edge-of-Heartland Businesses:

In this position few characteristics of parent fit the businesses and few do not fit. Parent cannot provide all the skills and resource the strategic business units needs. These SBUs needs to capture much of the corporate parenting attention, as the parent strive to comprehend them better and convert them into Heartland Businesses.

Heartland Businesses:

Heartland Businesses be supposed at the heart of the parent’s future opportunities. In this position corporations understand critical success factors of their SBUs very well and these businesses have opportunities for upgrading by their parents. These strategic business units should have main concern for all corporate actions.

Alien Territory Businesses:

In this position parenting characteristics do not fit with its business units’ strategic factors. So, these businesses have modest chances to be improved by their corporate parent. Low significant value creation has observed in these businesses; parent must shutdown these businesses although they have value.

Ballast Businesses:

Characteristics of units positioned in ballast businesses meet with the corporate parents very well but avail few opportunities to be enhanced by their parents. Ballast businesses can be transferred to alien territory as the situation changes. Corporate parent must liquidate these businesses as they get higher expected value.    

Value Trap Businesses:

In this position parents do not understand units’ critical success factors of their strategic units but their opportunities fit very well with them. But this is unreliable as a consequence of the high risk of the corporate parent’s consideration doing more damage than good. The imperative is to let alone these values trap businesses unless the centre can learn, above time to receive adequate experience to build them eventually heartland business. 

Corporate bodies in parenting matrix have diverse roles such as take on an efficient and effective role; assess businesses to be part of the portfolio and enhance businesses strategies.

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