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CHOICES
TOPIC 6
Chapter Outlines
1.
2.
Strategy Variations
3.
Strategic Choice
4.
Alternative Strategies
11-2
Introduction
When an organization does not know where it wants to go, it usually ends
up some place it does not want to be.
Ch 6 -4
Ch 6 -5
Vision
Mission
Objectives
External audit
Internal audit
Participation in
generating
alternative
strategies should be
as broad as possible
Ch 6 -7
Notable quotes
Even if youre on the right track, youll get run
over if you just sit there.
Will Rogers
1.
2.
6-9
3.
6-10
5.
6.
6-11
Long-Term Objectives
Long-term objectives represent the results
expected from pursuing certain strategies.
Strategies represent the actions to be taken to
accomplish long-term objectives.
Long-Term Objectives-contd
1.
2.
3.
4.
5.
6.
7.
Growth in assets
Growth in sales
Growth in profitability
Growth in market share
Growth in diversification
Growth in earning per share
Growth in social responsibility.
Long-Term Objectives-contd
1.
2.
3.
4.
5.
6.
7.
Long-Term Objectives-contd
1.
2.
3.
4.
Long-Term Objectives
Varying Performance Measures
by Organizational Level
Organizational Basis for Annual Bonus/Merit Pay
Level
Corporate
Division
Function
1.
2.
Strategic objectives such as larger market share, quicker on-time delivery than
rivals, shorter design-to-market times than rivals, lower cost than rivals, higher
product quality than rival, achieving technological leadership, achieving ISO
certification, wider geographic coverage than rivals and so on.
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Higher profit margins
Higher Earnings per share
Improved cash flow
Strategic
Objectives
1.
2.
3.
4.
Managing by Hope- decisions are predicted on the hope that they will
work well.
STRATEGY VARIATIONS
2.
3.
4.
TYPES OF STRATEGIES
TYPES OF STRATEGIES-contd
Since the firm have limited resources, decision on the best strategies
must be made and priority must be established.
1. INTEGRATION STRATEGIES
Gain control over distributors, suppliers and
competitors.
Types of Strategies
Forward
Integration
(A)
Integration
Strategies
Backward
Integration
Horizontal
Integration
A. Integration Strategies
1.
2.
3.
2. INTENSIVE STRATEGIES
Require intensive efforts to improve competitive position.
Market penetration increase market share for present
services through greater marketing effort.
Market
development
- introducing
services/product into new geographic area.
present
Types of Strategies
Market
Penetration
(B)
Intensive
Strategies
Market
Development
Product
Development
B. Intensive Strategies
1.
2.
3.
Examples
Market
Penetration
McDonalds is spending
millions on its Shrek the Third
promotion aimed at convincing
consumers it offers healthy
items.
Market
Development
Product
Development
3. DIVERSIFICATION STRATEGIES
adding
new,
Types of Strategies
Related
Diversification
(C)
Diversification
Strategies
Unrelated
Diversification
C. Diversification Strategies
1.
2.
Examples
Related
Diversification
Unrelated
Diversification
4. DEFENSIVE STRATEGIES
Turnaround or reorganizational strategy.
Closure departments, change of portfolio
i.
ii.
iii.
Types of Strategies
Retrenchment
(D)
Defensive
Strategies
Divestiture
Liquidation
D. Defensive Strategies
1.
2.
3.
The
Thus
STRATEGIC CHOICE
STRATEGIC CHOICE
In private sector, the strategic choice would be
difficult for the managers because the final
decison of strategic choice will be finalised by
their top management.Therefore they may
have limitation in strategic choice.
In
6-53
A Comprehensive Strategy-Formulation
Framework
6-55
A Comprehensive Strategy-Formulation
Framework
6-56
A Comprehensive Strategy-Formulation
Framework
6-57
6-58
Ch 6 -59
SWOT Matrix
Four Types of
Strategies
Strengths-Opportunities (SO)
Weaknesses-Opportunities (WO)
Strengths-Threats (ST)
Weaknesses-Threats (WT)
Ch 6 -60
SO Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT
SO
Strategies
Use a firms
internal strengths
to take advantage
of external
opportunities
Ch 6 -61
WO Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT
WO
Strategies
Improving internal
weaknesses by
taking advantage
of external
opportunities
Ch 6 -62
ST Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT
ST
Strategies
Use a firms
strengths
to avoid or
reduce the impact
of external
threats
Ch 6 -63
WT Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT
WT
Strategies
Defensive tactics
aimed at reducing
internal
weaknesses &
avoiding
environmental
threats
Ch 6 -64
SWOT Matrix
Developing the SWOT
List firms key internal
Strengths
List firms key internal
Weaknesses
List firms key external
Opportunities
List firms key external
Threats
Ch 6 -65
SWOT Matrix
Strengths S
Weaknesses W
Leave Blank
List Strengths
List Weaknesses
Opportunities O
SO Strategies
WO Strategies
List Opportunities
Overcoming weaknesses
by taking advantage of
opportunities
Threats T
ST Strategies
WT Strategies
List Threats
Ch 6 -66
Insufficient
capacity (weakness)
Strong R&D
(strength)
Poor employee
morale (weakness)
Acquire Cellfone,
Inc.
Pursue horizontal
integration by buying
competitor's
facilities
Decreasing numbers
+ of young adults
=
(threat)
Strong union
activity
(threat)
Develop a new
employee benefits
package
Ch 6 -67
TUTORIAL
Can you think any example of strategy used by
public sector?
Ch 6 -69
End of Topic 6
ANY
QUESTION?
Ch 6 -70