Hi, welcome back. In week one, we established that corporate strategy really is about two things. First of all, portfolio selection. Which businesses should you be active in? Then in week two, we looked at one particular instance of that. Diversification, that is entering new businesses. In week three, we continued our discussion of portfolio selection by looking at divestiture, exiting from a business. So corporate strategy is about portfolio selection but it's also about portfolio organization. How should you organize to create value across your businesses? And in this week we're going to look at an important instance of that, the role of corporate headquarters. Now, corporate headquarters is important to us because that's where corporate strategy is made, but also they are ultimately responsible for ensuring corporate advantage. How can you create more value from businesses through joint ownership? Let's look at an example. This is a simplified structure of Sony, a Japanese company. Sony is active in many businesses which it has clustered in three groups: electronics, entertainment, for example movies, and financial services. They have a business called Sony Bank. Headquarters is where corporate strategy is made. Oftentimes in the headquarters, you also find corporate management functions including treasury, risk management, taxation, financial reporting, company secretary and legal counsel, government relations and investor relations. These are often referred to as obligatory functions as they relate to the reporting of financial, tax and legal data. Shared services are activities that could have been done at each level of the business, but to benefit from skill are instead done centrally. At Sony, these include marketing and R&D. These shared services are tightly linked to headquarters because headquarters is organizationally responsible for these services and might be in the same physical location. Thus, corporate headquarters sits on top of the businesses and is responsible for corporate strategy. That is the strategy that cuts across all businesses.