1 / 24

Chapter 6

Chapter 6. Strategy Formulation: Corporate Strategy. Corporate Directional Strategies. Corporate Strategy. Growth Strategies: Most widely pursued strategies External mechanisms: Mergers Transaction involving two or more firms in which stock is exchanged but only one firm survives.

scarlett-mcmillan
Download Presentation

Chapter 6

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 6 Strategy Formulation: Corporate Strategy

  2. Corporate Directional Strategies

  3. Corporate Strategy Growth Strategies: • Most widely pursued strategies • External mechanisms: • Mergers • Transaction involving two or more firms in which stock is exchanged but only one firm survives. • Acquisition • Purchase of a firm that is absorbed as an operating subsidiary of the acquiring firm. • Strategic Alliance • Partnership of two or more firms to achieve strategically significant objectives that are mutually beneficial.

  4. Corporate Strategy 2 Basic Growth Strategies: • Concentration • Current product line in one industry • Diversification • Into other product lines in other industries

  5. Corporate Strategy Basic Concentration Strategies: • Vertical growth • Horizontal growth

  6. Corporate Strategy Concentration: Vertical growth • Vertical integration • Full integration • Taper integration • Quasi-integration • Backward integration • Forward integration

  7. Corporate Strategy Concentration: Horizontal Growth • Horizontal integration

  8. Corporate Strategy Basic Diversification Strategies: • Concentric Diversification • Conglomerate Diversification

  9. Corporate Strategy Diversification: Concentric: • Growth into related industry • Search for synergies

  10. Corporate Strategy Diversification: Conglomerate: • Growth into unrelated industry • Concern with financial considerations

  11. Corporate Strategy Exporting Licensing Franchising Joint Ventures Acquisitions Green-Field Development Production Sharing Turnkey Operations BOT Concept Management Contracts International Entry Options

  12. Corporate Strategy Stability Strategies: • Pause/proceed with caution • No change • Profit strategies

  13. Corporate Strategy Retrenchment Strategies: • Turnaround • Captive Company Strategy • Selling out • Bankruptcy • Liquidation

  14. Corporate Strategy Portfolio Analysis • How much of our time and money should we spend on our best products to ensure that they continue to be successful? • How much of our time and money should we spend developing new costly products, most of which will never be successful?

  15. Corporate Strategy Portfolio Analysis BCG (Boston Consulting Group) Matrix • Product life cycle and funding decisions • Question marks • Stars • Cash cows • Dogs

  16. BCG Matrix

  17. GE Business Screen Long-term industry attractiveness Business strength/competitive position

  18. C Winners Winners A Question B High Marks D Winners E Average Businesses F Industry Attractiveness Medium Losers H Losers G Low Profit Producers Losers Strong Average Weak Business Strength/Competitive Position General Electric’s Business Screen

  19. Hofer-Schendel Portfolio Matrix

  20. International Portfolio Analysis 2 Factors: • Country’s attractiveness • Market size, rate of growth, regulation • Competitive strength • Market share, product fit, contribution margin, market support

  21. Competitive Strengths Low High Dominate/Divest Invest/Grow High Joint Venture Selective Country Attractiveness Strategies Harvest/Divest Low Combine/License Portfolio Matrix for Plotting Products by Country

  22. Corporate Strategy Portfolio Analysis Advantages: • Top management evaluates each of firm’s businesses individually • Use of externally-oriented data to supplement management judgment • Raises issue of cash flow availability • Facilitates communication

  23. Corporate Strategy Portfolio Analysis Disadvantages: • Difficult to define product/market segments • Standard strategies can miss opportunities • Illusion of scientific rigor • Value-laden terms

  24. Corporate Strategy Horizontal Strategy: • Corporate strategy that cuts across business unit boundaries to build synergy across business units to improve the competitive position of one or more business units.

More Related