Parenting Advice

Airline industry is an example about industry that has been shaped by entrants with new business models for price sensitive consumers creating new markets. Airliners offering cheap flights booked only from internet are called disruptors. Markides & Oyon (2008) presents that traditional airliners and other companies in different industries facing similar situation have 1-5 question to answer related to new markets. Article by Campbell et al. (1995) discusses parenting, which is a situation that a company owns other companies that diversifies the portfolio, in a way that the parent has something to offer. Depending about what kind of answers are generated from series of questions, parenting literature such as written by Campbell et al. (1995) can provide valuable information to relevant decisions.

Question one is whether to exploit the new markets at all. According to growth/share matrix, business should enter if the business portfolio creates balance in sense of cash, profit and growth performance. Core competence concept states that common technical or operation know-how is the reason to say yes. Parenting framework evaluates value created from the relationship between the parent and newly created separate subsidiary entering the new market. In another words what the existing company can offer to the new subsidiary that a fresh venture started without corporate umbrella would not have. Parenting framework by Campbell et al. (1995) encourages first gaining understanding the new business by identifying its critical success factors, identifying the parenting opportunities, but searching also misfits, and validating the judgments based on historical information about past decisions and their success. A piece of advice is that the upper management which is involved in both businesses cannot behave differently toward different businesses; they are the same people in every meeting. The capabilities of management to really learn new businesses is also very limited...