Corporate and in-house strategy
Inside a company the question is rarely "is this a good idea?" More often it is "which of our good ideas gets the money?" This lesson covers capital allocation, internal politics and implementation. Its worked example splits a fixed budget.
Key takeaways
- A strategy team inside a company works for the whole group. Its main tool is deciding where the money goes: which businesses grow, which are fixed and which are sold.
- Write the maths of the goal.
- Use what you know about the business.
Key idea
A strategy team inside a company works for the whole group. Its main tool is deciding where the money goes: which businesses grow, which are fixed and which are sold. This is called capital allocation. Its main test is whether the people who run those businesses act on the answer.
What follows describes common patterns, not any one employer's process, unless a source is named. Steps differ by company, country and level and change from year to year. Read the job advert and the employer's own careers page for the exact steps.
Strategy teams usually work close to the chief executive or the finance director. They run or support the yearly plan. They test plans to buy or sell businesses, and they answer one-off questions from the board. Interviews often include a case much like a consulting case. Some add a take-home analysis that you present. Many ask how you would work with leaders who do not report to you. Many teams hire former consultants, so expect the case to be demanding. One habit helps in this role. Many companies report under IFRS, a set of international accounting standards. Under IFRS 8, those whose shares or bonds trade on a public market must report results for each operating segment, meaning each main part of the business. The aim is to let readers judge the different businesses the company runs. Read those segment notes before your interview to see where the group earns its money.
The five moves, inside a company
- 1Pin the question. Ask who asked it (the chief executive, the board, a business unit head), who decides, and which planning or budget date it must meet. An answer that misses the budget cycle waits a year.
- 2Write the maths of the goal. For each business, take its return on capital minus the cost of that capital, and multiply by the capital it uses. This is its economic profit. Value for the group is the sum across businesses. With a fixed pot of money, the question becomes: where does the next unit of money earn the most above its cost?
- 3Use what you know about the business. You know the history, which forecasts were too hopeful last time, and which units share customers, plants or brands. Use it to say where the answer probably sits.
- 4Find the facts that decide it. Internal data is plentiful but contested: each unit has its own version. Agree the numbers with finance first, so the debate is about the choice, not the data.
- 5Say so what. Answer first. Then name the owner, the budget, the milestones and what would make you change course. Inside a company you are still there after the presentation, so a plan nobody will run is a wrong answer.
What is different from a consulting case
- Internal politics. Business unit heads compete for the same money and are judged on their own results. Expect each to defend their numbers. If a unit loses this round, give it a clear way to win the next one.
- Implementation. You will see the results of your advice. Plans need owners, dates and measures. What happens in the first three months matters more than the slide.
- Capital allocation. The pot is fixed, so every yes is a no somewhere else. The cost of a choice is the best option you gave up (its opportunity cost).
- Longer cycles. Decisions follow the yearly plan and board meetings. Timing is part of the answer.
Worked case
A food group has AED 300 million and two units that want AED 200 million each
The prompt
Fictional and illustrative. A food group in the United Arab Emirates has AED 300 million to invest next year. The dairy unit asks for AED 200 million and expects a 14 percent return on it. The snacks unit also asks for AED 200 million and expects 10 percent. The group's cost of capital is 9 percent. Assume each unit earns its stated return on whatever it receives, up to what it asked for. The chief financial officer suggests splitting the money evenly, AED 150 million each, "to keep both teams happy". What do you recommend?
The structure
- Value created a year = sum over units of (return minus cost of capital) x capital received
- Dairy: 14 percent return against a 9 percent cost
- Snacks: 10 percent return against a 9 percent cost
- The constraint: AED 300 million in total, so compare splits
Working it through
1. Dairy, if fully funded
Economic profit is the gap between return and cost, here 5 percentage points, on AED 200 million.
Dairy economic profit (AED millions a year):(14 - 9) ÷ 100 × 200 = 102. Snacks, if fully funded
Here the gap is only 1 point, on AED 200 million.
Snacks economic profit (AED millions a year):(10 - 9) ÷ 100 × 200 = 23. Option 1: dairy first
Give dairy its full AED 200 million and snacks the remaining AED 100 million.
Value created, dairy first (AED millions a year):(14 - 9) ÷ 100 × 200 + (10 - 9) ÷ 100 × 100 = 114. Option 2: the even split
AED 150 million each.
Value created, even split (AED millions a year):(14 - 9) ÷ 100 × 150 + (10 - 9) ÷ 100 × 150 = 95. The price of keeping both teams happy
Compare the two options.
Value given up by the even split (AED millions a year):11 - 9 = 2
The recommendation
Fund dairy in full and give snacks AED 100 million. This split creates about AED 11 million a year of value above the cost of capital. The even split creates AED 9 million, so it costs the group about AED 2 million a year. Snacks earns only a little more than its cost of capital, 10 against 9 percent. So its first AED 100 million should come with a milestone. If snacks shows a return of 12 percent or more on that phase, it gets money first next year. That gives the snacks team a clear way to win, which matters because they have to run the plan.
Risks: Both returns are each unit's own forecast, so check how accurate each unit's forecasts were in past years; Returns may not hold at every level of spending.
Next steps: Ask finance for each unit's forecast against actual results for the last three years; Agree the snacks milestone with its head before the plan goes to the board.
Using this in the interview
- Ask: who decides, what is the total budget, and how are the units judged today?
- Calculate: the return above the cost of capital for each use of money, and the value of each split.
- Say: the split, the value it creates in one number, and how you will keep the support of the unit that gets less.
"I would fund dairy in full. It earns 5 percentage points above our cost of capital, against 1 point for snacks. The even split looks fair but gives up about AED 2 million a year. I would give snacks a funded first phase and a clear target, so they have a way to win next year."
A group has a fixed budget. Unit X earns 4 percentage points above the cost of capital. Unit Y earns 1 point above. What should get the money first?
Why do internal numbers often need agreeing with finance before the strategy discussion?
Sources, checked on 2026-10-02. Official pages only. Hiring steps change, so confirm them on the employer's own page before you rely on them.
- IFRS Foundation, "IFRS 8 Operating Segments", standard summary (official standard setter): https://www.ifrs.org/issued-standards/list-of-standards/ifrs-8-operating-segments/
Sources for this lesson (2)
- Recognized public explanations of case-interview concepts and terms
- IFRS Foundation, "IFRS 8 Operating Segments", standard summary (official standard setter)
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It builds on what you just read, in The same acumen in other roles.
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