Amity Business School MBA Strategic Management Module

Amity Business School

MBA (M&S) Class of 2011, Semester III
Strategic Management
Module-III (Strategic Choice )
Vivek Singh Tomar

vstomar@amity.edu
1
Module III (Contents)
• Traditional Approach - Strategic Alternatives
• Various models like BCG, GE Nine Cell Matrix, Hofer’s Model,

Strickland’s Grand Strategy Selection Matrix, Basis of Choice
• Michael Porter’s Approach - Generic competitive strategies, Cost
advantage, differentiation,
• Technology and competitive advantage, substitution, competitor,
complementary products and competitive advantage
• Strategic vision vs. strategic opportunism
• Coevolving and patching.

Learning Objectives
1. Discuss seven different topics for long-term corporate objectives
2. Describe the five qualities of long-term corporate objectives that
make them useful to strategic managers
3. Explain the generic strategies of low-cost leadership, differentiation,
and focus
4. Discuss the importance of the value disciplines
5. List, describe, evaluate, and give examples of 15 grand strategies
that decision makers use in forming their company’s competitive plan
6. Understand the creation of sets of long-term objectives and grand
strategies options
7-3
Long-Term Objectives
• Strategic managers recognize that short-run profit maximization is
rarely the best approach to achieving sustained corporate growth
and profitability
• To achieve long-term prosperity, strategic planners commonly
establish long-term objectives in seven areas:
– Profitability – Productivity
– Competitive Position – Employee Development
– Employee Relations – Productivity
– Tech Leadership – Public Responsibility
7-4
Qualities of Long-Term Objectives
• There are five criteria that should be used in preparing

long-term objectives:
– Flexible
– Measurable
– Motivating
– Suitable
– Understandable
7-5
The Balanced Scorecard

• The balanced scorecard is a set of measures that are directly
linked to the company’s strategy
– Developed by Robert S. Kaplan and David P. Norton, it directs
a company to link its own long-term strategy with tangible goals
and actions.
– The scorecard allows managers to evaluate the company from
four perspectives:
• financial performance
• customer knowledge
• internal business processes
• learning and growth
7-6
The Balance Scorecard
7-7
Generic Strategies
• A long-term or grand strategy must be based on a core
idea about how the firm can best compete in the
marketplace. The popular term for this core idea is
generic strategy.
• 3 Generic Strategies:
1. Striving for overall low-cost leadership in the industry.
2. Striving to create and market unique products for varied
customer groups through differentiation.
3. Striving to have special appeal to one or more groups of
consumers or industrial buyers, focusing on their cost or
differentiation concerns.
7-8
Low-Cost Leadership
• Low-cost producers usually excel at cost reductions and

efficiencies
• They maximize economies of scale, implement cost-cutting
technologies, stress reductions in overhead and in
administrative expenses, and use volume sales techniques
to propel themselves up the earning curve
• A low-cost leader is able to use its cost advantage to
charge lower prices or to enjoy higher profit margins
7-9
Differentiation
• Strategies dependent on differentiation are designed to appeal to
customers with a special sensitivity for a particular product attribute
• By stressing the attribute above other product qualities, the firm
attempts to build customer loyalty
• Often such loyalty translates into a firm’s ability to charge a
premium price for its product
• The product attribute also can be the marketing channels through
which it is delivered, its image for excellence, the features it
includes, and its service network
7-10
Focus
• A focus strategy, whether anchored in a low-cost base or a

differentiation base, attempts to attend to the needs of a particular
market segment
• A firm pursuing a focus strategy is willing to service isolated
geographic areas; to satisfy the needs of customers with special
financing, inventory, or servicing problems; or to tailor the product to
the somewhat unique demands of the small- to medium-sized
customer
• The focusing firms profit from their willingness to serve otherwise
ignored or underappreciated customer segments
7-11
Risks of the Generic Strategies
7-12
Competitive Strategies
Competitive Advantage
Lower Cost Differentiation
Competitive Scope
Broad Cost Leadership Differentiation

Target
Narrow Cost Focus Differentiation

Target Focus
The Value Disciplines
• Operational Excellence • Product Leadership

– This strategy attempts to – Companies that pursue the
lead the industry in price and discipline of product leadership
strive to produce a continuous
convenience by pursuing a
state of state-of-the-art
focus on lean and efficient products and services
operations
• Customer Intimacy
– Customer intimacy means
continually tailoring and
shaping products and
services to fit an increasingly
refined definition of the
customer
Grand Strategies
• Grand strategies, often called master or business
strategies, provide basic direction for strategic actions
• Indicate the time period over which long-rang objectives
are to be achieved
• Any one of these strategies could serve as the basis for
achieving the major long-term objectives of a single firm
• Firms involved with multiple industries, businesses,
product lines, or customer groups usually combine several
grand strategies
7-15
Concentrated Growth
• Concentrated growth is the strategy of the firm that

directs its resources to the profitable growth of a dominant
product, in a dominant market, with a dominant technology
• Concentrated growth strategies lead to enhanced
performance
• Specific conditions favor concentrated growth
• The risks and rewards vary
7-16
Market Development
• Market development commonly ranks second only to
concentration as the least costly and least risky of the 15
grand strategies
• It consists of marketing present products, often with only
cosmetic modifications, to customers in related market
areas by adding channels of distribution or by changing
the content of advertising or promotion
• Frequently, changes in media selection, promotional
appeals, and distribution are used to initiate this approach
7-17
Product Development
• Product development involves the

substantial modification of existing
products or the creation of new but
related products that can be
marketed to current customers
through established channels
7-18
Innovation
• These companies seek to reap the initially high profits
associated with customer acceptance of a new or greatly
improved product
• Then, rather than face stiffening competition as the basis
of profitability shifts from innovation to production or
marketing competence, they search for other original or
novel ideas
• The underlying rationale of the grand strategy of
innovation is to create a new product life cycle and
thereby make similar existing products obsolete
7-19
Horizontal Integration
• When a firm’s long-term strategy is based on
growth through the acquisition of one or more
similar firms operating at the same stage of
the production-marketing chain, its grand
strategy is called horizontal integration
• Such acquisitions eliminate competitors and
provide the acquiring firm with access to new
markets
7-20
Vertical Integration
• When a firm’s grand strategy is to acquire firms that

supply it with inputs (such as raw materials) or are
customers for its outputs (such as warehouses for
finished products), vertical integration is involved
• The main reason for backward integration is the
desire to increase the dependability of the supply or
quality of the raw materials used as production inputs
7-21
Vertical and Horizontal
Integration
7-22
Concentric Diversification
• Concentric diversification involves the acquisition of
businesses that are related to the acquiring firm in terms
of technology, markets, or products
• With this grand strategy, the selected new businesses
possess a high degree of compatibility with the firm’s
current businesses
• The ideal concentric diversification occurs when the
combined company profits increase the strengths and
opportunities and decrease the weaknesses and
exposure to risk
7-23
Conglomerate Diversification
• Occasionally a firm, particularly a very large one, plans acquire
a business because it represents the most promising investment
opportunity available. This grand strategy is commonly known
as conglomerate diversification.
• The principal concern of the acquiring firm is the profit pattern of
the venture
• Unlike concentric diversification, conglomerate diversification
gives little concern to creating product-market synergy with
existing businesses
7-24
Turnaround
The firm finds itself with declining profits
• Among the reasons are economic recessions, production
inefficiencies, and innovative breakthroughs by competitors
• Strategic managers often believe the firm can survive and
eventually recover if a concerted effort is made over a period of a
few years to fortify its distinctive competences. This is
turnaround.
• Two forms of retrenchment:
– Cost reduction
– Asset reduction
7-25
Elements of Turnaround
• A turnaround situation represents absolute and relative-to-industry
declining performance of a sufficient magnitude to warrant explicit
turnaround actions
• The immediacy of the resulting threat to company survival is known
as situation severity
• Turnaround responses among successful firms typically include two
stages of strategic activities: retrenchment and the recovery
response
• The primary causes of the turnaround situation have been
associated with the second phase of the turnaround process, the
recovery response
7-26
Divestiture
• A divestiture strategy involves the sale of a
firm or a major component of a firm
• When retrenchment fails to accomplish the
desired turnaround, or when a nonintegrated
business activity achieves an unusually high
market value, strategic managers often decide to
sell the firm
• Reasons for divestiture vary
7-27
Liquidation
• When liquidation is the grand strategy, the
firm typically is sold in parts, only occasionally
as a whole—but for its tangible asset value
and not as a going concern
• Planned liquidation can be worthwhile
7-28
Bankruptcy
• Liquidation bankruptcy—agreeing to a complete

distribution of firm assets to creditors, most of whom
receive a small fraction of the amount they are owed
• Reorganization bankruptcy—the managers believe
the firm can remain viable through reorganization
• Two notable types of bankruptcy
7-29
Joint Ventures
• Occasionally two or more capable firms lack a

necessary component for success in a particular
competitive environment
• The solution is a set of joint ventures, which are
commercial companies (children) created and operated
for the benefit of the co-owners (parents)
• The joint venture extends the supplier-consumer
relationship and has strategic advantages for both
partners
7-30
Strategic Alliances
• Strategic alliances are distinguished from
joint ventures because the companies
involved do not take an equity position in one
another
• In some instances, strategic alliances are
synonymous with licensing agreements
• Outsourcing arrangements vary
7-31
Consortia, Keiretsus, and Chaebols
• Consortia are defined as large interlocking

relationships between businesses of an industry
• In Japan such consortia are known as keiretsus, in
South Korea as chaebols
• Their cooperative nature is growing in evidence as is
their market success
7-32
Selection of Long-Term Objectives and Grand

Strategy Sets
• When strategic planners study their opportunities,
they try to determine which are most likely to result
in achieving various long-range objectives
• Almost simultaneously, they try to forecast whether
an available grand strategy can take advantage of
preferred opportunities so the tentative objectives
can be met
• In essence, then, three distinct but highly
interdependent choices are being made at one time
Sequence of Selection
and Strategy Objectives
• The selection of long-range objectives and
grand strategies involves simultaneous,
rather than sequential, decisions
• While it is true that objectives are needed to
prevent the firm’s direction and progress
from being determined by random forces, it
is equally true that objectives can be
achieved only if strategies are implemented
7-34
Strickland Grand Strategy

Selection Model
Strategy Analysis & Choice

Grand Strategy Matrix
• Popular tool for formulating alternative strategies

• Based on two evaluative dimensions
 Competitive position
 Market growth
RAPID MARKET GROWTH
Quadrant II Quadrant I
• Market development • Market development
• Market penetration • Market penetration
• Product development • Product development
• Horizontal integration • Forward integration
• Divestiture • Backward integration
• Liquidation • Horizontal integration
WEAK • Concentric STRONG
COMPETITIVE COMPETITIVE
Quadrant III diversification
Quadrant IV
POSITION POSITION
• Retrenchment • Concentric
• Concentric diversification
diversification • Horizontal
• Horizontal diversification
diversification • Conglomerate
• Conglomerate diversification
diversification • Joint ventures
• Liquidation SLOW MARKET GROWTH

• Quadrant I
 Excellent strategic position
 Concentration on current markets and products
 Take risks aggressively when necessary
• Quadrant II
 Evaluate present approach seriously
 How to change to improve competitiveness
 Rapid market growth requires intensive strategy
• Quadrant III
 Compete in slow-growth industries
 Weak competitive position
 Drastic changes quickly
 Cost and asset reduction indicated (retrenchment)
• Quadrant IV
 Strong competitive position
 Slow-growth industry
 Diversification indicated to more promising growth areas
Hofer’s Model
Life Cycle – Market Evolution Matrix

Dimensions
STAGE OF INDUSTRY EVOLUTION
• Early Development
• Rapid Growth/Takeoff
• Shake-Out
• Maturity/Saturation
• Decline/Stagnation
COMPETITIVE POSITION
The Life-Cycle Portfolio The business unit competitive
Matrix position
Strong Average Weak
Developme
nt
The Industry’s stage in the
Growth
evolutionary life cycle
Competitive
shakeout
Maturity
Saturation
Decline
Advantages
• Used to identify developing winners
• Illustrates how businesses are distributed across
the stages of industry evolution
BCG Matrix

Boston Consulting Group Matrix
(BCG)
• Enhances multidivisional firms’ efforts to formulate

strategies
• Autonomous divisions (or profit centers) constitute the
business portfolio
• Firm’s divisions may compete in different industries
requiring separate strategy

(BCG)
• Graphically portrays differences among divisions

• Focuses on market share position and industry growth
rate
• Manage business portfolio through relative market
share position and industry growth rate

(BCG)
• Relative market share position defined:
 Ratio of a division’s own market share in a particular industry to

the market share held by the largest rival firm in that industry.
BCG Matrix Amity Business School
Relative Market Share Position

High Medium Low
1.0 .50 0.0
High
+20
Stars Question Marks

II I
Medium
0
Cash Cows Dogs

III IV
rt s udnI
Low
-20

BCG Matrix
• Question Marks
• Stars
• Cash Cows
• Dogs

BCG Matrix
• Question Marks
 Low relative market share position yet compete in
high-growth industry.
 Cash needs are high
 Case generation is low
 Decision to strengthen (intensive strategies) or
divest

BCG Matrix
• Stars
 High relative market share and high industry
growth rate.
 Best long-run opportunities for growth and profitability
 Substantialinvestment to maintain or strengthen
dominant position
 Integration strategies, intensive strategies, joint ventures

BCG Matrix
• Cash Cows
 High relative market share position, but compete
in low-growth industry
 Generate cash in excess of their needs
 Milked for other purposes
 Maintain strong position as long as possible
 Product development, concentric diversification
 If becomes weak—retrenchment or divestiture

BCG Matrix
• Dogs
 Lowrelative market share position and compete in
slow or no market growth
 Weak internal and external position
 Decision to liquidate, divest, retrenchment
GE Nine Cell Matrix

GE Nine-Cell Matrix Amity Business School
Industry
• Relative Costs
Attractiveness • Profit Margins
• Market Size • Fit with KSFs
• Growth Rate
• Profit Margin 10.0 Strong 6.7 Average 3.3 Weak 1.0
• Intensity of Competition
• Seasonality
• Cyclicality High
• Resource Requirements
6.7
• Social Impact
• Regulation Medium
• Environment
• Opportunities & Threats 3.3
• Relative Market Share
• Reputation/ Image Low
• Bargaining Leverage
• Ability to Match 1.0
Quality/Service
Rating Scale: 1 = Weak ; 10 = Strong
Strategy Implications of
Attractiveness/Strength Matrix
• Businesses in upper left corner
– Accorded top investment priority
– Strategic prescription is grow and build
• Businesses in three diagonal cells
– Given medium investment priority
– Invest to maintain position
• Businesses in lower right corner
– Candidates for harvesting or divestiture
– May be candidates for an overhaul and reposition strategy
The Attractiveness/Strength Matrix

• Allows for intermediate rankings between high and low and
between strong and weak
• Incorporates a wide variety of strategically relevant variables
• Stresses allocating corporate resources to businesses with
greatest potential for
– Competitive advantage and
– Superior performance
Business Level Strategies

Learning Objectives
1. Determine why a business would choose a low-cost,

differentiation, or speed-based strategy
2. Explain the nature and value of a market focus strategy
3. Illustrate how a firm can pursue both low-cost and differentiation
strategies
4. Identify requirements for business success at different stages of
industry evolution
5. Determine good business strategies in fragmented and global
industries
6. Decide when a business should diversify
Levels of Planning at General Electric

Levels and Types of Planning
What Is Business-Level Strategy?
• Business-level strategy
– A plan of action to use the firm’s resources and distinctive
competencies to gain competitive advantage.
• Abell’s “Business Definition” process
– Customer needs – product differentiation (what)
– Customer groups – market segmentation (who)
– Distinctive competencies – competitive actions (how)
Choosing a Generic Business-Level Strategy

• Product/Market/Distinctive-Competency Choices and Generic Competitive
Strategies
Cost Leadership Differentiation Focus

Product Low High Low to high
Differentiation (principally (principally by uniqueness) (price or uniqueness)
by price)
Market Low High Low

Segmentation (mass market) (many market segments) (one or a few
segments)
Distinctive Manufacturing Research and development, Any kind of

Competency and materials management sales and marketing distinctive
competency
Choosing a Business-Level Strategy

• Cost-leadership strategy success is affected by:
– Competitors producing at equal or lower costs.
– The bargaining strength of suppliers.
– Powerful buyers demanding lower prices.
– Substitute products moving into the market.
– New entrants overcoming entry barriers.

• Differentiation strategy success is achieved through:
– An emphasis on product or service quality.
– Innovation in providing new features for which customers will pay
a premium price.
– Responsiveness to customers after the sale.
– Appealing to the psychological desires of customers.

• Differentiation strategy success is affected by:
– Competitors imitating features and services.
– Increases in supplier costs exceeding differentiator’s price
premium.
– Buyers becoming less brand loyal.
– Substitute products adding similar features.
– New entrants overcoming entry barriers related to differentiator’s
competitive advantage.

• Focus strategy success is affected by:
– Competitor entry into focuser’s market segment.
– Suppliers capable of increasing costs affecting only the focuser.
– Buyers defecting from market segment.
– Substitute products attracting customers away from focuser’s
segment.
– New entrants overcoming entry barriers that are the source of the
focuser’s competitive advantage.
Strategic Groups and Business-Level Strategy
• Implications for business-level strategy

– Immediate competitors are companies pursuing same strategy
within the same strategic group.
– Different strategic groups can have a different standing with
respect to the effects of the five competitive forces.
• First mover advantage
– Benefits are first choice of customers and suppliers, setting
standards, building entry barriers.
Choosing an Investment Strategy at the

Business Level
• Investment strategy
– The resources (human, functional, and financial) required to gain
sustainable competitive advantage.
• Competitive position
– Market share is an indicator of competitive strength.
– Distinctive competencies are competitive tools.
• Life Cycle Effects
– An industry’s life cycle stage affects its attractiveness to
investment prospects.
Choosing an Investment Strategy at the Business Level

•Stage of the Industry •Strong Competitive •Weak Competitive
Life Cycle Position Position
•Embryonic •Share building •Share building
•Growth •Growth •Market concentration
•Shakeout •Share increasing •Market concentration or

harvest/liquidation
•Maturity •Hold-and-maintain or profit •Harvest or

liquidation/divestiture
•Decline •Market concentration or harvest •Turnaround, liquidation,

(asset reduction) or divestiture
Evaluating and Choosing Business Strategies: Seeking Sustained

• The two most prominent sources of competitive

advantage can be found in the business’s cost structure
and its ability to differentiate the business from
competitors
• Businesses that have one or more sources/capabilities
that let them
operate at a lower cost will
consistently outperform their
rivals that don’t
Evaluating Cost Leadership Opportunities
• Business success built on cost leadership

requires the business to be able to provide its
product or service at a cost below what its
competitors can achieve
Sustainable Low-Cost Activities
1. Some low-cost advantages reduce the likelihood of

buyers’ pricing pressure
2. Truly sustained low-cost advantages may push
rivals into other areas
3. New entrants competing on price must face an
entrenched cost leader
4. Low-cost advantages should lessen the
attractiveness of substitute products
Sustainable Low-Cost Activities
1. Higher margins allow low-cost producers to

withstand supplier cost increases
2. Many cost-saving activities are easily duplicated
3. Exclusive cost leadership can be a trap
4. Obsessive cost cutting can shrink other competitive
advantages
5. Cost differences often decline over time
Evaluating Differentiation
• Differentiation requires that the business have

sustainable advantages that allow it to provide buyers
with something uniquely valuable to them
• Differentiation usually arises from one or more
activities in the value chain that create a unique value
important to buyers
• Strategists use benchmarking and consider the 5
forces in considering differentiation
Evaluating Speed as a Competitive Advantage
• Speed-based strategies, or rapid response to

customer requests or market and technological
changes, have become a major source of
competitive advantage for numerous firms in
today’s intensely competitive global economy
Speed can be created by:
• Customer responsiveness
• Product development cycles
• Product or service improvements
• Speed in delivery or distribution
• Information Sharing and Technology
Risks of Speed-based Strategy
• Speeding up activities that haven’t been conducted in a fashion

that prioritizes rapid response should only be done after
considerable attention to training, reorganization, and/or
reengineering
• Some industries may not offer much advantage to the firm that
introduces some forms of rapid response
• Customers in such settings may prefer the slower pace or the
lower costs currently available, or they may have long time frames
in purchasing
Evaluating Market Focus as a Way to

• Market focus: the extent to which a business

concentrates on a narrowly defined market
• Small companies, at least the better ones, usually thrive
because they serve narrow market niches
• Market focus allows some businesses to compete on the
basis of low cost, differentiation, and rapid response
against much larger businesses with greater resources
Risks of Market Focus

• The risk of focus is that you attract major
competitors who have waited for your business
to “prove” the market
• Managers evaluating opportunities to build
competitive advantage should link strategies to
• Resources
• Capabilities
• Value chain activities that exploit low cost,
differentiation, and rapid response
Stages of Industry Evolution and Business

Strategy Choices
• The requirements for success in industry segments

change over time
• Strategists can use these changing requirements, which
are associated with different stages of industry evolution,
as a way to isolate key competitive advantages and
shape strategic choices around them
Emerging Industries
• Emerging industries are newly formed or re-formed

industries that typically are created by technological
innovation, newly emerging customer needs, or other
economic or sociological changes
• There are no “rules of the game”
Business Strategies in
Emerging Industries
• Technologies that are most proprietary to the pioneering firms and
technological uncertainty will unfold
• Competitor uncertainty because of inadequate information about
competitors, buyers, and the timing of demand
• High initial costs but steep cost declines
• Few entry barriers
• First-time buyers requiring initial inducement to purchase
• Inability to obtain raw materials and components until suppliers gear up to
meet the industry’s needs
• Need for high-risk capital because of the industry’s uncertain prospects
Emerging Industries
• For success in this industry setting, business strategies require one or

more of these features:
• The ability to shape the industry’s structure
• The ability to rapidly improve product quality and performance features
• Advantageous relationships with key suppliers and promising distribution
channels
• The ability to establish the firm’s technology as the dominant one
• The early acquisition of a core group of loyal customers and then the
expansion of that customer base
• The ability to forecast future competitors
Competitive Advantages and Strategic Choices

in Growing Industries
• Rapid growth brings new competitors into the industry

• At this stage, growth industry strategies that
emphasize brand recognition, product differentiation, and
the financial resources to support both heavy marketing
expenses and the effect of price competition on cash flow
can be key strengths
Growth Industries
• For success in this industry setting, business strategies require

one or more of the following features:
– The ability to establish strong brand recognition
– The ability and resources to scale up to meet increasing demand
– Strong product design skills to be able to adapt products and services
– The ability to differentiate the firm’s product[s] from competitors
entering the market
– R&D resources and skills to create product variations
– The ability to build repeat buying from established customers
– Strong capabilities in sales and marketing
Competitive Advantages and Strategic Choices in Mature

Industries
• As an industry evolves, its rate of growth eventually declines

• Firms working with the mature industry strategies sell
increasingly to experienced, repeat buyers who are now making
choices among known alternatives
• Competition becomes more
oriented to cost and service
as knowledgeable buyers
expect similar price and features
Mature Industries
• Strategy elements of successful firms in maturing industries often
include the following:
• Product line pricing
• Emphasis on process innovation that
permits low-cost product design,
manufacturing methods, and distribution
synergy
• Emphasis on cost reduction
• Careful buyer selection to focus on
buyers who are less aggressive, more
closely tied to the firm, and able to buy more from the firm
• Horizontal integration to acquire rival firms whose weaknesses can be
used to gain a bargain price
• International expansion to markets where attractive growth and limited
competition still exist
Competitive Advantages and Strategic Choices in

Declining Industries
• Declining industries are those that make products or services for which
demand is growing slower than demand in the economy as a whole or is
actually declining
• Focus on higher growth
or a higher return
• Emphasize product innovation
and quality improvement
• Emphasize production and
distribution efficiency
• Gradually harvest the business
Competitive Advantage in
Fragmented Industries
• A fragmented industry is one in which no firm has a significant

market share and can strongly influence industry outcomes
• Tightly managed decentralization
• “Formula” facilities
• Increased value added
• Specialization
• Bare bones/no frills
Competitive Advantage in
Global Industries
• A global industry is one that comprises firms whose

competitive positions in major geographic or national
markets are fundamentally affected by their overall global
competitive positions
– License foreign firms to produce and distribute the firm’s products
– Maintain a domestic production base and export products to foreign
countries
– Establish foreign-based plants and distribution to compete directly in
the markets of one or more foreign countries
Four Generic Global

Competitive Strategies
• Broad-line global competition
• Global focus strategy
• National focus strategy
• Protected niche strategy
Grand Strategy Selection Matrix

Model of Grand Strategy Clusters

Building Value as a Basis for Choosing

Diversification or Integration
• The grand strategy selection matrix and model of

grand strategy clusters are useful tools to help
dominant product company managers evaluate
and narrow their choices among alternative
grand strategies
• Dominant product company managers who choose
diversification or integration eventually create another
management challenge

Amity Business School MBA Strategic Management Module

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Amity Business School

Amity Business School

Vivek Singh Tomar

Module III (Contents)

• Traditional Approach - Strategic Alternatives

• Various models like BCG, GE Nine Cell Matrix, Hofer’s Model,

• Coevolving and patching.

Qualities of Long-Term Objectives

• There are five criteria that should be used in preparing

The Balanced Scorecard

• Low-cost producers usually excel at cost reductions and

• A focus strategy, whether anchored in a low-cost base or a

Broad Cost Leadership Differentiation

Narrow Cost Focus Differentiation

The Value Disciplines

• Operational Excellence • Product Leadership

• Concentrated growth is the strategy of the firm that

• Product development involves the

• When a firm’s grand strategy is to acquire firms that

• Liquidation bankruptcy—agreeing to a complete

• Occasionally two or more capable firms lack a

Consortia, Keiretsus, and Chaebols

• Consortia are defined as large interlocking

Selection of Long-Term Objectives and Grand

Strickland Grand Strategy

Strategy Analysis & Choice

• Popular tool for formulating alternative strategies

Strategy Analysis & Choice

Strategy Analysis & Choice

Grand Strategy Matrix

Strategy Analysis & Choice

Grand Strategy Matrix

Strategy Analysis & Choice

Grand Strategy Matrix

Life Cycle – Market Evolution Matrix

The Industry’s stage in the

Strategy Analysis & Choice

• Enhances multidivisional firms’ efforts to formulate

Strategy Analysis & Choice

• Graphically portrays differences among divisions

Strategy Analysis & Choice

• Relative market share position defined:

 Ratio of a division’s own market share in a particular industry to

Relative Market Share Position

Stars Question Marks

Cash Cows Dogs

Strategy Analysis & Choice

Strategy Analysis & Choice

Strategy Analysis & Choice

Strategy Analysis & Choice

Strategy Analysis & Choice

GE Nine Cell Matrix

The Attractiveness/Strength Matrix

Business Level Strategies

1. Determine why a business would choose a low-cost,

Levels of Planning at General Electric

What Is Business-Level Strategy?

Choosing a Generic Business-Level Strategy

Cost Leadership Differentiation Focus

Market Low High Low

Distinctive Manufacturing Research and development, Any kind of

Choosing a Business-Level Strategy