Chapter 5

Strategies in Action

Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Ch 5 -1

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Ch 5 -2

Long Term Objectives

Quantitative

Challenging

Measurable

Hierarchical

Realistic

Obtainable

Understandable

Congruent

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Ch 5 -3

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Ch 5 -4

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Ch 5 -5

Financial vs. Strategic Objectives

Financial Objectives
Growth

in revenues

Growth

in earnings

Higher

dividends

Larger

profit margins

Greater

ROI

Higher

earnings per share

Rising

stock price

Improved

cash flow
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Ch 5 -6

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Ch 5 -7

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Ch 5 -8

The Balanced Scorecard

Robert Kaplan & David Norton
Strategy

evaluation & control technique

Balance

financial measures with

nonfinancial measures
Balance

shareholder objectives with

customer & operational objectives
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Ch 5 -9

Levels of Strategies
Large Company

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Ch 5 -10

Levels of Strategies
Small Company

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Ch 5 -11

Types of Strategies
Forward
Integration

Vertical
Integration
Strategies

Backward
Integration

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Ch 5 -12

Vertical Integration Strategies

Forward
Integration

Gaining ownership or increased

control over distributors or retailers

Backward
Integration

Seeking ownership or increased

control of a firms suppliers

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Ch 5 -13

Types of Strategies
Market
Penetration

Intensive
Strategies

Market
Development

Product
Development

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Ch 5 -14

Intensive Strategies
Market
Penetration

Seeking increased market share for

present products or services in
present markets through greater
marketing efforts

Market
Development

Introducing present products or

services into new geographic areas

Product
Development

Seeking increased sales by

improving present products or
services or developing new ones

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Ch 5 -15

Types of Strategies
Related
Diversification

Diversification
Strategies

Unrelated
Diversification

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Ch 5 -16

Diversification Strategies

Related
Diversification

Adding new but related products or

services

Unrelated
Diversification

Adding new, unrelated products or

services

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Ch 5 -17

Types of Strategies
Retrenchment

Defensive
Strategies

Divestiture

Liquidation

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Ch 5 -18

Defensive Strategies
Retrenchment

Regrouping through cost and asset

reduction to reverse declining sales
and profit

Divestiture

Selling a division or part of an

organization

Liquidation

Selling all of a companys assets, in

parts, for their tangible worth

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Ch 5 -19

Porters Five Generic Strategies

Type 1 Cost Leadership Low cost
Type 2 Cost Leadership Best value
Type 3 Differentiation
Type 4 Focus Low cost
Type 5 Focus Best value

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Ch 5 -20

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Ch 5 -21

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Ch 5 -22

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Ch 5 -23

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Ch 5 -24

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Ch 5 -25