Corporate strategy
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Corporate strategy

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Corporate strategy Corporate strategy Presentation Transcript

  • A.A.MOHAMED FAISAL Corporate strategy
  • INTRODUCTION
    • According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen areas or industries.
    • According to W. Chan Kim and Renée Mauborgne, an organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous value-cost trade off by simultaneously pursuing both differentiation and low cost.
    • Firms must learn to compete differently if they are to achieve strategic competitiveness in the 21 st -century competitive landscape. To provide an idea of what this means, new ways of competing may include:
    • bringing new good and services to market more quickly
    • The use of new technologies (e.g., Amazon.com)
    • Diversifying the product line (e.g., Barnes and Nobles into music as a catalyst for growth)
    The New Reality - #1
    • Shifting product emphasis (e.g., U-Haul’s new focus on accessory sales) (i.e., Dual Branding)
    • Consolidation (e.g., the merger of Exxon and Mobil)
    • Combining online selling with physical stores (e.g., CompUSA’s new strategy)
    The New Reality - #2
    • Dell Model for Growth
    • Have New Business Model (maybe changes every 5 years?)
    • Identify Core Competencies and then improve the four capabilities
    • Outsource non-core competencies
    • Create a “Brand Management Company”
    The New Reality - #3
  • Brief Overview of Corporate Strategy
    • Those strategies concerned with the broad and long-term questions of what business(es) the organization is in and what it wants to do with those businesses
  • 1. What businesses should the corporation/enterprise be in? 2. How should the corporate/G.O. office manage the array of business units (GBU’s/SBU’s/ Wholly owed subsidiaries) Corporate Strategy is what makes the corporate whole add up to more than the sum of its business unit parts Key Questions of Corporate/Firm-level Strategies
  • 21 st Century Organization Strategies for Growth and Profitability Multi-International: One Consumer Products Company (Corporate Level) Driving Growth (8) Funding Growth (5) Creating the Best Place To Work (10) Global Scope Consumer Promotion 360 0 Marketing Superior Knowledge of Customers/Consumers Strong Alliances/ Partnerships with Customers Coverage of Trade Acquisitions/JV’s Focus on Product Quality Innovative New Products/Services Vision Direction : Guiding Core Values, Philosophies, Principles, Mission, & Others Regionalization With Local Control Lean & Flat Structures Shared Leadership, Coaching & Feedback Horizontal, Structures, Systems, & Processes: Integration/communication/coordination Empower People Stimulating Careers Streamline and obtain A Seamless Supply Chain/ Demand Side (Value Chain) Integration Use of Technologies to create Cost Savings IS/SAP/ Consolidated Partnership Move to “Global” And “Local” Regional Business HPWS Community Involvement Recognition & Financial Rewards Demand Side Strategies: Supply Chain Strategies: Source: Barry A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
  • Corporate (and International) Strategies
    • Three directions for corporate strategy
      • Growth
        • M&A , JV, and SA (external growth)
        • International (internal growth)
      • Stability (internal growth)
      • Renewal (internal growth)
        • Retrenchment
        • Turnaround
        • Increase the four capabilities via core competencies
  • Organizational Growth: External and/or Internal
    • External and Internal Growth Strategy
      • One that involves the attainment of specific growth objectives by increasing the level of an organization’s capabilities
      • Typical growth strategies include goals for:
        • Increase in sales revenues
        • Profits
        • Other balanced scorecard performance measures
  • Types of Growth Strategies Organizational Growth Horizontal Integration: Along Value Chain International Concentration
    • Diversification
    • Related Businesses
    • Unrelated Businesses
    • Vertical Integration
    • Related Businesses
    • Unrelated Businesses
  • Concentration Customers Product(s) Product-Market Exploitation Product Development Market Focused Development Product/Market Diversification
  • Another Possible Way for Growth
  • The “Right” People or the “Right” Organization?
    • What are our basic Principles, Philosophies
    • and Core Values?
    • What do we believe in?
    • What policies and practices are consistent
    • with these Values and Philosophies?
    • What can we do for the customer better
    • than our competitors?
    • Given our core capabilities, how can we deliver
    • value (EVA) to customers in a way our
    • competitors cannot easily imitate?
    • Senior management “manages” the values
    • and culture of the firm.
    A Values-Based View of Strategy Fundamental Values or Beliefs Design Management Practices That Reflect and Embody These Values Use These to Build Core Capabilities Invent a Strategy That is Consistent with the Values and Uses the Talents & your four Capabilities to Compete in New and Unusual Ways Senior Management’s Role
  • Another Way: Diversification Related Diversification Product Similarities Distribution Channels Value Chain Capabilities/ Core Competencies Customer Use Similar Technology
  • Levels and Types of Diversification Low Levels of Diversification Moderate to High Levels of Diversification Very High Levels of Diversification Related linked (mixed) < 70% of revenues from dominant business, and only limited links exist A B C Single business > 95% of revenues from a single business unit A Dominant business Between 70% and 95% of revenues from a single business unit B A Unrelated-Diversified Business units not closely related A B C < 70% of revenues from dominant business; all businesses share product, technological and distribution linkages Related constrained A B C
  •