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6 Business Growth and Strategy
<ul><li>Strategic management </li></ul><ul><ul><li>strategic and day-to-day management </li></ul></ul><ul><ul><li>the comp...
Strategic Analysis <ul><li>Porter's five forces model </li></ul><ul><ul><li>the five forces </li></ul></ul><ul><ul><ul><li...
Industry competitors Porter's Five Forces Model Source: Michael E. Porter  Competitive Strategy: Techniques for Analyzing ...
Industry competitors Rivalry among existing firms Porter's Five Forces Model Source: Michael E. Porter  Competitive Strate...
Potential entrants Industry competitors Rivalry among existing firms Threat of new entrants Porter's Five Forces Model Sou...
Substitute products Potential entrants Industry competitors Rivalry among existing firms Threat of new entrants Threat of ...
Suppliers Substitute products Potential entrants Industry competitors Rivalry among existing firms Threat of new entrants ...
Buyers Suppliers Substitute products Potential entrants Industry competitors Rivalry among existing firms Threat of new en...
Strategic Analysis <ul><li>Porter's five forces model </li></ul><ul><ul><li>the five forces </li></ul></ul><ul><ul><ul><li...
Strategic Analysis <ul><li>Porter's five forces model </li></ul><ul><ul><li>the five forces </li></ul></ul><ul><ul><ul><li...
Strategic Analysis <ul><li>Value chain analysis </li></ul><ul><ul><li>nature of value chain analysis </li></ul></ul><ul><u...
Inbound logistics The value chain Firm infrastructure Technological development Human resource management Procurement Oper...
Strategic Choice <ul><li>Environment or market-based strategy </li></ul><ul><ul><li>types </li></ul></ul><ul><ul><ul><li>c...
<ul><li>Growth by internal expansion </li></ul><ul><ul><li>product differentiation </li></ul></ul><ul><ul><li>vertical int...
Alternative growth strategy GROWTH OF A FIRM Internal expansion External expansion (1) Differentiation Horizontal expansio...
Growth Strategy <ul><li>Growth by internal expansion </li></ul><ul><ul><li>financing internal growth </li></ul></ul><ul><u...
Growth Strategy <ul><li>Growth by internal expansion (cont.) </li></ul><ul><ul><li>growth through vertical integration </l...
Growth Strategy <ul><li>Growth through mergers and takeovers </li></ul><ul><ul><li>types of merger and takeover </li></ul>...
Financing Growth and Investment <ul><li>Sources of business finance </li></ul><ul><ul><li>internal sources </li></ul></ul>...
<ul><li>The role of the Stock Exchange </li></ul><ul><ul><li>primary market </li></ul></ul><ul><ul><li>secondary market </...
<ul><li>Is the stock market efficient? </li></ul><ul><ul><li>the efficient market hypothesis </li></ul></ul><ul><ul><ul><l...
Staying Small <ul><li>EU definition of SMEs </li></ul><ul><ul><li>by number of employees </li></ul></ul><ul><ul><ul><li>mi...
EU SME definitions
EU SME definitions
EU SME definitions
EU SME definitions
Staying Small <ul><li>Competitive advantage and small firms </li></ul><ul><ul><li>flexibility </li></ul></ul><ul><ul><li>q...
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Business growth and strategy

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  • Transcript of "Business growth and strategy"

    1. 1. 6 Business Growth and Strategy
    2. 2. <ul><li>Strategic management </li></ul><ul><ul><li>strategic and day-to-day management </li></ul></ul><ul><ul><li>the components of strategic management </li></ul></ul><ul><ul><ul><li>strategic analysis </li></ul></ul></ul><ul><ul><ul><li>strategic choice </li></ul></ul></ul><ul><ul><ul><li>strategic implementation </li></ul></ul></ul><ul><li>Importance of the business environment </li></ul><ul><ul><li>PEST analysis </li></ul></ul>Strategic Analysis
    3. 3. Strategic Analysis <ul><li>Porter's five forces model </li></ul><ul><ul><li>the five forces </li></ul></ul><ul><ul><ul><li>the bargaining power of suppliers </li></ul></ul></ul><ul><ul><ul><li>the bargaining power of buyers </li></ul></ul></ul><ul><ul><ul><li>the threat of potential new entrants </li></ul></ul></ul><ul><ul><ul><li>the threat of substitutes </li></ul></ul></ul><ul><ul><ul><li>the extent of competitive rivalry </li></ul></ul></ul>
    4. 4. Industry competitors Porter's Five Forces Model Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
    5. 5. Industry competitors Rivalry among existing firms Porter's Five Forces Model Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
    6. 6. Potential entrants Industry competitors Rivalry among existing firms Threat of new entrants Porter's Five Forces Model Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
    7. 7. Substitute products Potential entrants Industry competitors Rivalry among existing firms Threat of new entrants Threat of substitutes Porter's Five Forces Model Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
    8. 8. Suppliers Substitute products Potential entrants Industry competitors Rivalry among existing firms Threat of new entrants Bargaining power of suppliers Threat of substitutes Porter's Five Forces Model Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
    9. 9. Buyers Suppliers Substitute products Potential entrants Industry competitors Rivalry among existing firms Threat of new entrants Bargaining power of suppliers Bargaining power of buyers Threat of substitutes Porter's Five Forces Model Source: Michael E. Porter Competitive Strategy: Techniques for Analyzing Industries and Competitors, (The Free Press, 1980)
    10. 10. Strategic Analysis <ul><li>Porter's five forces model </li></ul><ul><ul><li>the five forces </li></ul></ul><ul><ul><ul><li>the bargaining power of suppliers </li></ul></ul></ul><ul><ul><ul><li>the bargaining power of buyers </li></ul></ul></ul><ul><ul><ul><li>the threat of potential new entrants </li></ul></ul></ul><ul><ul><ul><li>the threat of substitutes </li></ul></ul></ul><ul><ul><ul><li>the extent of competitive rivalry </li></ul></ul></ul><ul><ul><li>factors affecting each of the forces </li></ul></ul>
    11. 11. Strategic Analysis <ul><li>Porter's five forces model </li></ul><ul><ul><li>the five forces </li></ul></ul><ul><ul><ul><li>the bargaining power of suppliers </li></ul></ul></ul><ul><ul><ul><li>the bargaining power of buyers </li></ul></ul></ul><ul><ul><ul><li>the threat of potential new entrants </li></ul></ul></ul><ul><ul><ul><li>the threat of substitutes </li></ul></ul></ul><ul><ul><ul><li>the extent of competitive rivalry </li></ul></ul></ul><ul><ul><li>factors affecting each of the forces </li></ul></ul><ul><ul><li>limitations of the five forces model </li></ul></ul>
    12. 12. Strategic Analysis <ul><li>Value chain analysis </li></ul><ul><ul><li>nature of value chain analysis </li></ul></ul><ul><ul><li>primary activities </li></ul></ul><ul><ul><ul><li>inbound logistics </li></ul></ul></ul><ul><ul><ul><li>operations </li></ul></ul></ul><ul><ul><ul><li>outbound logistics </li></ul></ul></ul><ul><ul><ul><li>marketing and sales </li></ul></ul></ul><ul><ul><ul><li>service </li></ul></ul></ul><ul><ul><li>secondary activities </li></ul></ul><ul><ul><ul><li>procurement </li></ul></ul></ul><ul><ul><ul><li>technological development </li></ul></ul></ul><ul><ul><ul><li>human resources management </li></ul></ul></ul><ul><ul><ul><li>firm infrastructure </li></ul></ul></ul>
    13. 13. Inbound logistics The value chain Firm infrastructure Technological development Human resource management Procurement Operations Outbound logistics Marketing and sales After-sales service
    14. 14. Strategic Choice <ul><li>Environment or market-based strategy </li></ul><ul><ul><li>types </li></ul></ul><ul><ul><ul><li>cost leadership </li></ul></ul></ul><ul><ul><ul><li>differentiation </li></ul></ul></ul><ul><ul><ul><li>focus </li></ul></ul></ul><ul><ul><li>importance of establishing:- </li></ul></ul><ul><ul><ul><li>the basis of a firm's competitive advantages </li></ul></ul></ul><ul><ul><ul><li>the nature of the target market </li></ul></ul></ul><ul><li>Resource-based strategy </li></ul><ul><ul><li>exploiting core competencies </li></ul></ul><ul><ul><li>defining & establishing core competencies </li></ul></ul>
    15. 15. <ul><li>Growth by internal expansion </li></ul><ul><ul><li>product differentiation </li></ul></ul><ul><ul><li>vertical integration </li></ul></ul><ul><ul><li>diversification </li></ul></ul><ul><li>Growth by external expansion: mergers and takeovers </li></ul><ul><ul><li>horizontal mergers </li></ul></ul><ul><ul><li>vertical mergers </li></ul></ul><ul><ul><li>conglomerate mergers </li></ul></ul>Growth Strategy
    16. 16. Alternative growth strategy GROWTH OF A FIRM Internal expansion External expansion (1) Differentiation Horizontal expansion (same product, increase in market share) (1) Horizontal integration Mergers of firms producing the same product (2) Vertical integration Different products, but belonging to different stages of same product (2) Vertical integration Mergers of firms producing at different stages of same process (3) Conglomerate Diversification - introduction of totally different products (3) Conglomerate Diversification - merger of firms producing totally unrelated products
    17. 17. Growth Strategy <ul><li>Growth by internal expansion </li></ul><ul><ul><li>financing internal growth </li></ul></ul><ul><ul><ul><li>borrowing </li></ul></ul></ul><ul><ul><ul><li>share issue </li></ul></ul></ul><ul><ul><ul><li>ploughing-back profit </li></ul></ul></ul><ul><ul><ul><li>the takeover constraint </li></ul></ul></ul>
    18. 18. Growth Strategy <ul><li>Growth by internal expansion (cont.) </li></ul><ul><ul><li>growth through vertical integration </li></ul></ul><ul><ul><ul><li>backward integration ('upstream' integration) </li></ul></ul></ul><ul><ul><ul><li>forward integration ('downstream' integration) </li></ul></ul></ul><ul><ul><li>why vertically integrate? </li></ul></ul><ul><ul><ul><li>economies of scale </li></ul></ul></ul><ul><ul><ul><li>reduced uncertainty </li></ul></ul></ul><ul><ul><ul><li>monopoly power </li></ul></ul></ul><ul><ul><ul><ul><li>barriers to entry </li></ul></ul></ul></ul><ul><ul><li>growth through diversification </li></ul></ul><ul><ul><ul><li>advantages </li></ul></ul></ul><ul><ul><ul><ul><li>when existing market is saturated </li></ul></ul></ul></ul><ul><ul><ul><ul><li>spreads risks </li></ul></ul></ul></ul>
    19. 19. Growth Strategy <ul><li>Growth through mergers and takeovers </li></ul><ul><ul><li>types of merger and takeover </li></ul></ul><ul><ul><ul><li>horizontal </li></ul></ul></ul><ul><ul><ul><li>vertical </li></ul></ul></ul><ul><ul><ul><li>conglomerate </li></ul></ul></ul><ul><ul><li>motives for mergers and takeovers </li></ul></ul><ul><ul><ul><li>growth </li></ul></ul></ul><ul><ul><ul><li>economies of scale </li></ul></ul></ul><ul><ul><ul><li>monopoly power </li></ul></ul></ul><ul><ul><ul><li>increased market valuation </li></ul></ul></ul><ul><ul><ul><li>reduced uncertainty </li></ul></ul></ul><ul><ul><ul><li>other motives </li></ul></ul></ul><ul><ul><li>effects of mergers on consumers </li></ul></ul>
    20. 20. Financing Growth and Investment <ul><li>Sources of business finance </li></ul><ul><ul><li>internal sources </li></ul></ul><ul><ul><ul><li>ploughed-back profit </li></ul></ul></ul><ul><ul><li>external sources </li></ul></ul><ul><ul><ul><li>banks </li></ul></ul></ul><ul><ul><ul><ul><li>mainly short- and medium-term finance </li></ul></ul></ul></ul><ul><ul><ul><li>stock market </li></ul></ul></ul><ul><ul><ul><ul><li>longer-term finance </li></ul></ul></ul></ul><ul><ul><ul><li>problem of 'short-termism' </li></ul></ul></ul><ul><ul><li>international sources </li></ul></ul>
    21. 21. <ul><li>The role of the Stock Exchange </li></ul><ul><ul><li>primary market </li></ul></ul><ul><ul><li>secondary market </li></ul></ul><ul><ul><li>advantages </li></ul></ul><ul><ul><ul><li>brings together savers & firms seeking finance </li></ul></ul></ul><ul><ul><ul><li>regulates firms and helps encourage confidence </li></ul></ul></ul><ul><ul><ul><li>facilitates mergers and takeovers </li></ul></ul></ul><ul><ul><ul><li>reduces transaction costs of investment finance </li></ul></ul></ul><ul><ul><li>disadvantages </li></ul></ul><ul><ul><ul><li>cost of getting listed </li></ul></ul></ul><ul><ul><ul><li>possible short-termism and instability </li></ul></ul></ul>Financing Growth and Investment
    22. 22. <ul><li>Is the stock market efficient? </li></ul><ul><ul><li>the efficient market hypothesis </li></ul></ul><ul><ul><ul><li>share prices reflect information about companies' current and expected future performance </li></ul></ul></ul><ul><ul><li>implications of stock market efficiency </li></ul></ul><ul><ul><ul><li>benefit of speculation diminishes as efficiency increases </li></ul></ul></ul><ul><ul><ul><li>perfect efficiency and share prices following a 'random walk' </li></ul></ul></ul>Financing Growth and Investment
    23. 23. Staying Small <ul><li>EU definition of SMEs </li></ul><ul><ul><li>by number of employees </li></ul></ul><ul><ul><ul><li>micro enterprises </li></ul></ul></ul><ul><ul><ul><li>small enterprises </li></ul></ul></ul><ul><ul><ul><li>medium enterprises </li></ul></ul></ul><ul><ul><li>by turnover </li></ul></ul>
    24. 24. EU SME definitions
    25. 25. EU SME definitions
    26. 26. EU SME definitions
    27. 27. EU SME definitions
    28. 28. Staying Small <ul><li>Competitive advantage and small firms </li></ul><ul><ul><li>flexibility </li></ul></ul><ul><ul><li>quality of service </li></ul></ul><ul><ul><li>production efficiency and low overheads </li></ul></ul><ul><ul><li>product development and innovation </li></ul></ul><ul><li>Problems facing small businesses </li></ul><ul><ul><li>selling and marketing </li></ul></ul><ul><ul><li>funding R&D </li></ul></ul><ul><ul><li>management skills </li></ul></ul><ul><ul><li>less ability to gain economies of scale </li></ul></ul>
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