1. CHAPTER 7 Strategy Formulation: Corporate Strategy STRATEGIC MANAGEMENT & BUSINESS POLICY11TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER

2. Corporate Strategy • 3 Key Issues – • Firm’s directional strategy(Growth, Stability, Retrenchment) • Firm’s portfolio strategy • Firm’s parenting strategy

3. Corporate Directional Strategies

4. Corporate Strategy • Directional Strategy – • Orientation toward growth • Expansion, contraction, status quo • Concentration or diversification • Internal development or acquisitions, mergers, or alliances

5. Corporate Strategy • Directional Strategy – • 3 Grand Strategies • Growth strategies • Stability strategies • Retrenchment strategies

6. Corporate Strategy • Growth Strategies -- • External mechanisms • Mergers • Acquisitions • Strategic alliances

7. Corporate Strategy • Growth Strategies -- • 2 Basic forms • Concentration • Diversification

8. Corporate Strategy • Basic Concentration Strategies -- • Vertical growth • Horizontal growth

9. Corporate Strategy • Vertical Growth -- • Vertical integration • Full integration • Taper integration • Quasi-integration • Long-term contract

10. Corporate Strategy • Vertical Growth -- • Backward integration • Forward integration

11. Corporate Strategy • Concentration -- • Horizontal Growth • Horizontal integration

12. Corporate Strategy • Basic Diversification Strategies -- • Concentric Diversification • Conglomerate Diversification

13. Corporate Strategy • Concentric Diversification -- • Growth into related industry • Search for synergies

14. Corporate Strategy • Conglomerate diversification -- • Growth into unrelated industry • Concern with financial considerations

15. Corporate Strategy • International Entry Options -- • Exporting • Licensing • Franchising • Joint Ventures • Acquisitions • Green-Field Development

16. Corporate Strategy • International Entry Options -- • Production Sharing • Turnkey Operation • BOT Concept (Build, Operate, Transfer) • Management Contracts

17. Corporate Strategy • Stability Strategies -- • Pause/proceed with caution • No change • Profit strategies

18. Corporate Strategy • Retrenchment Strategies -- • Turnaround • Captive Company Strategy • Selling out • Bankruptcy • Liquidation

19. Corporate Strategy • Portfolio Analysis -- • Resource commitment on best products to ensure continued success • Resource commitment on new costly products high risk

20. BCG Matrix (Portfolio Analysis)

21. GE Business Screen (Portfolio Analysis) 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

22. Corporate Strategy • Corporate Parenting Strategy -- • Strategic factors • performance improvement • Analyze fit