Académique Documents
Professionnel Documents
Culture Documents
Strategies in Action
Strategic Management:
Concepts & Cases
11th Edition
Fred David
Ch 5 -1
Chapter Outline
Long-Term Objectives
Types of Strategies
Integration Strategies
Ch 5 -2
Diversification Strategies
Defensive Strategies
Ch 5 -3
Ch 5 -4
Ch 5 -5
Strategies in Action
Ch 5 -6
Long-Term Objectives
Ch 5 -7
Long-Term Objectives
Objectives -Quantifiable
Measurable
Realistic
Understandable
Challenging
Ch 5 -8
Long-Term Objectives
Objectives -Hierarchical
Obtainable
Congruent
Time-line
Ch 5 -9
Long-Term Objectives
Strategists Should Avoid -Managing by Extrapolation
Managing by Crisis
Managing by Subjectives
Managing by Hope
Ch 5 -10
Ch 5 -11
Ch 5 -12
Ch 5 -13
Types of Strategies
A Large Company
Corp
Level
Division Level
Functional Level
Operational Level
Ch 5 -14
Types of Strategies
A Small Company
Company
Level
Functional Level
Operational Level
Ch 5 -15
Types of Strategies
Forward
Integration
Vertical
Integration
Strategies
Backward
Integration
Horizontal
Integration
Ch 5 -16
Ch 5 -17
Ch 5 -18
Ch 5 -19
Backward Integration
Strategies
Ownership or Control -Firms suppliers
Ch 5 -20
Backward Integration
Strategies
Guidelines -Current suppliers expensive or unreliable
# of suppliers is small; # of competitors is large
High growth in industry sector
Firm has both capital & HR to manage new
business
Stable prices are important
Current suppliers have high profit margins
Copyright 2007 Prentice Hall
Ch 5 -21
Horizontal Integration
Strategies
Ownership or Control -Firms competitors
Ch 5 -22
Horizontal Integration
Strategies
Guidelines -Gain monopolistic characteristics w/o federal
government challenge
Competes in growing industry
Increased economies of scale major competitive
advantages
Faltering due to lack of managerial expertise or
need for particular resource
Ch 5 -23
Types of Strategies
Market
Penetration
Intensive
Strategies
Market
Development
Product
Development
Ch 5 -24
Intensive Strategies
Intensive Efforts -Improve competitive position with
existing products
Ch 5 -25
Ch 5 -26
Ch 5 -27
Market Development
Strategies
New Markets -Present products/services to new
geographic areas
Ch 5 -28
Market Development
Strategies
Guidelines -New channels of distribution reliable, inexpensive,
good quality
Firm is successful at what it does
Untapped/unsaturated markets
Excess production capacity
Basic industry rapidly becoming global
Ch 5 -29
Product Development
Strategies
Increased Sales -Improving present products/services
Developing new products/services
Ch 5 -30
Product Development
Strategies
Guidelines -Products in maturity stage of life cycle
Industry characterized by rapid technological
development
Competitors offer better-quality products @
comparable prices
Compete in high-growth industry
Strong R&D capabilities
Copyright 2007 Prentice Hall
Ch 5 -31
Types of Strategies
Related
Diversification
Diversification
Strategies
Unrelated
Diversification
Ch 5 -32
Diversification
Ch 5 -33
Ch 5 -34
Diversification Strategies
Less Popular -More difficult to manage diverse
business activities
Ch 5 -35
Ch 5 -36
Ch 5 -37
Conglomerate Diversification
Strategies
Guidelines -Declining annual sales & profits
Capital & managerial ability to compete in new
industry
Financial synergy between acquired and acquiring
firms
Current markets for present products - saturated
Ch 5 -38
Unrelated Diversification
Ch 5 -39
Ch 5 -40
Ch 5 -41
Ch 5 -42
Types of Strategies
Retrenchment
Defensive
Strategies
Divestiture
Liquidation
Ch 5 -43
Retrenchment Strategies
Ch 5 -44
Retrenchment Strategies
Guidelines -Failed to meet objectives & goals consistency; has
distinctive competencies
Firm is one of weaker competitors
Inefficiency, low profitability, poor employee morale,
pressure for stockholders
Strategic managers have failed
Rapid growth in size; major internal reorganization
necessary
Copyright 2007 Prentice Hall
Ch 5 -45
Divestiture Strategies
Ch 5 -46
Divestiture Strategies
Guidelines -Retrenchment failed to attain improvements
Division needs more resources than are available
Division responsible for firms overall poor
performance
Division is a mis-fit with organization
Large amount of cash is needed and cannot be
raised through other sources
Ch 5 -47
Liquidation Strategies
Selling
Ch 5 -48
Liquidation Strategies
Guidelines -Retrenchment & divestiture failed
Only alternative is bankruptcy
Minimize stockholder loss by selling firms assets
Ch 5 -49
Differentiation Strategies
Focus Strategies
Ch 5 -50
Ch 5 -51
Generic Strategies
Cost Leadership
(Type 1 and Type 2)
Ch 5 -52
Cost Leadership
Ways of ensuring total costs across value
chain are lower than competitors total costs
1.
2.
Ch 5 -53
Cost Leadership
Can be especially effective when:
1.
2.
3.
4.
5.
6.
7.
Ch 5 -54
Generic Strategies
Low Cost Producer Advantage
Ch 5 -55
Generic Strategies
Differentiation (Type 3)
Greater product flexibility
Greater compatibility
Lower costs
Improved service
Greater convenience
More features
Copyright 2007 Prentice Hall
Ch 5 -56
Differentiation
Can be especially effective when:
1.
2.
3.
4.
Ch 5 -57
Generic Strategies
Focused Strategies (Type 4 & 5)
Industry segment of sufficient size
Good growth potential
Not crucial to success of major competitors
Ch 5 -58
Focused Strategy
Can be especially effective when:
1.
2.
3.
4.
5.
Ch 5 -59
Ch 5 -60
Ch 5 -61
Integration difficulties
Inadequate evaluation of target
Large or extraordinary debt
Inability to achieve synergy
Ch 5 -62
R&D partnerships
Cross-distribution agreements
Cross-licensing agreements
Cross-manufacturing agreements
Joint-bidding consortia
Ch 5 -63
Ch 5 -64
Joint Ventures
Guidelines -Synergies between private and publicly held
Domestic with foreign firm, local management can
reduce risk
Complementary distinctive competencies
Resources & risks where project is highly profitable
(e.g. Alaska Pipeline)
Two or more smaller firms competing w/larger firm
Need to introduce new technology quickly
Copyright 2007 Prentice Hall
Ch 5 -65
Ch 5 -66
Ch 5 -67
Recent Mergers
Acquiring Firm
IBM
Philip Morris
U.S. Steel
Oracle
OSIM International Ltd
Adobe Systems
US Airways
United Parcel Service
Copyright 2007 Prentice Hall
Acquired Firm
Ascential Software
PT Hanjaya Mandala Samp
National Steel Corp
PeopleSoft
Brookstone
Macromedia
American West
Overnight Corp.
Ch 5 -68
Ch 5 -69
Ch 5 -70
Outsourcing
Business-process outsourcing
(BPO)
Ch 5 -71
Outsourcing
Benefits
Less expensive
Allows firm to focus on core business
Enables firm to provide better services
Ch 5 -72
Concentric
Diversification
Backward
Integration
Conglomerate
Diversification
Bankruptcy
Cooperative
Arrangements
Combination
Strategy
Cost Leadership
Ch 5 -73
Focus
Diversification
Strategies
Forward Integration
Divestiture
Franchising
First Mover
Advantages
Generic Strategies
Ch 5 -74
Intensive Strategies
Horizontal
Integration
Joint Venture
Hostile Takeover
Leveraged Buyout
Integration
Strategies
Liquidation
Ch 5 -75
Outsourcing
Market Development
Product Development
Market Penetration
Retrenchment
Merger
Vertical Integration
Ch 5 -76