Here are some ideas on Strategies First .... Broad Generic Strategies

1. Here are some ideas on Strategies First .... Broad Generic Strategies Then ... Grand Strategies

2. Generic Strategies Low-cost Leadership Differentiation Focus

3. Requirements for Generic Competitive Strategies

4. Requirements for Generic Competitive Strategies ... Cont.

5. Risks of the Generic Strategies

6. Out of the Box????? Types of Grand Strategies • Concentrated growth • Market development • Product development • Innovation • Horizontal integration • Vertical integration • Conglomerate diversification • Turnaround • Divestiture • Liquidation • Bankruptcy • Joint ventures • Strategic alliances • Concentric diversification

7. Characteristics of a Concentrated Growth Strategy • Involves focusing resources on the profitable growth of a single product, in a single market, with a single dominant technology • Rationale – Firm develops and exploits its expertise in a delimited competitive arena • Determinants of competitive market success • Ability to assess market needs • Knowledge of buyer behavior • Customer price sensitivity • Effectiveness of promotion

8. Conditions Favoring a Concentrated Growth Strategy • Firm’s industry is resistant to major technological advancements • Firm’s target markets are not product saturated • Firm’s markets are sufficiently distinctive to dissuade competitors in adjacent markets from entering firm’s segment • Firm’s inputs are stable in price and quantity and available in the amounts and at the times needed • Firm’s industry is stable • Firm’s competitive advantages are based on efficient production or distribution channels

9. Concentration (Increasing use of present products in present markets) • Increasing present customers’ rate of use • Increasing size of purchase • Advertising other uses • Giving price incentives for increased use • Attracting competitors’ customers • Establishing sharper brand recognition • Increasing promotional effort • Initiating price cuts • Attracting nonusers to buy the product • Introducing trial use thru’ sampling, price incentives, etc. • Pricing up or down • Advertising new uses

10. Market development • Consists of marketing present products, often with only cosmetic modifications to customers in related market areas by • Adding channels of distribution or • Changing content of advertising or promotion

11. Market Development (Selling present products in new markets.) • Opening additional geographic markets • Regional expansion • National expansion • International expansion • Attracting other market segments • Developing product versions to appeal to other segments • Entering other channels of distribution • Advertising in other media Out of the Box?????

12. Product development • Involves substantial modification of existing products or creation of new but related products • Based on penetrating existing market by • Incorporating product modifications into existing items or • Developing new products connected to existing products

13. Product Development (Developing new products for present markets) • Developing new product features • Adapt (to other ideas, developments) • Modify (change color, motion, sound, odor, form, shape) • Magnify (stronger, longer, thicker, extra value) • Minify (smaller, shorter, lighter) • Substitute (other ingredients, process, power) • Rearrange (other patterns, layout, sequence, components) • Combine (blend, alloy, assortment, ensemble, combine units, etc.) • Developing quality variations • Developing additional models and sizes (product proliferation) Out of the Box?????

14. Innovation Strategy Involves creating a new product life cycle, thereby making similar existing products obsolete Out of the Box????? Ha-Ha ... It is !!!!!!!!

15. Horizontal and Vertical Integration Strategies Horizontal Integration • Based on growthvia acquisition of one or more similar firms operating at the same stage of the production-marketing chain Vertical Integration • Involves acquiring firms... • That supply acquiring firm with inputs (backward integration) or • Are customers for firm’s outputs (forward integration)

16. Vertical and Horizontal Integrations Textile producer Textile producer Shirt manufacturer Shirt manufacturer Clothing store Clothing store Acquisitions or mergers of suppliers or customer businesses are vertical integration Acquisitions or mergers of competing businesses are horizontal integrations

17. Motivations for Diversification • Increase firm’s stock value • Increase growth rate of firm • Investment is better use of funds than using them for internal growth • Improves stability of earnings and sales • Balance or fill out product line • Diversify product line • Acquire a needed resource quickly • Achieve tax savings • Increase efficiency and profitability

18. Diversification Strategies Concentric Diversification • Involves acquisition of businesses related to acquiring firm in terms of technology, markets, or products Conglomerate Diversification • Involves acquisition of a business because it represents a promising investment opportunity • Primary motivation is profit pattern of venture • Difference between the approaches • Concentric diversification emphasizes commonality whereas conglomerate diversification emphasizes profits for each individual unit

19. Turnaround Strategy Involves a concerted effort over a period of time to fortify a firm’s distinctive competencies, returning it to profitability

20. Turnaround Strategy A turnaround strategy is done through Cost reduction Asset reduction

21. Divestiture and Liquidation Strategies Divestiture Strategy • Involves selling a firm or a major component of a firm • Reasons for divestiture • Partial mismatches between acquired firm and parent firm • Corporate financial needs • Government antitrust action Liquidation Strategy • Involves selling parts of a firm, usually for its tangible asset value and not as a going concern

22. The Strategy of Bankruptcy • Two approaches • Liquidation – Involves complete distribution of a firm’s assets to creditors, most of whom receive a small fraction of amount owed • Reorganization – Involves creditors temporarily freezing their claims while a firm reorganizes and rebuilds its operations more profitably • Advantage of a reorganization bankruptcy • Proactive option offering maximum repayment of a firm’s debt in the future if a recovery strategy is successful I am not sure if we want to recommend this!!! 

23. Corporate Combination Strategies Joint Ventures • Involves establishing a third company (child), operated for the benefit of the co-owners (parents) Strategic Alliance • Involves creating a partnership between two or more companies that contribute skills and expertise to a cooperative project • Exists for a defined period • Does not involve the exchange of equity

24. The Top Five Strategic Reasons for Outsourcing • Improve business focus • Access to world-class capabilities • Accelerated reengineering benefits • Shared risks • Free resources for other purposes