Multi business strategy
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Multi business strategy Multi business strategy Presentation Transcript

  • Business and Multibusiness Strategy Prepared by: Eka Darmadi Lim 3094802
  • 2 Study Question 1: What are the foundations of strategic competitiveness? Basic concepts of strategy (cont.): – Strategy — a comprehensive action plan that identifies long-term direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage. – Strategic intent — focusing all organizational energies on a unifying and compelling goal.
  • 3 Study Question 1: What are the foundations of strategic competitiveness? Basic concepts of strategy (cont.): – Strategic management — the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage.
  • 4 Study Question 1: What are the foundations of strategic competitiveness?  Goal of strategic management is to create above-average returns for investors. – Returns exceeding those for alternative opportunities at equivalent risk. – Earning above-average returns depends in part on the organization’s competitive environment.
  • 5 Study Question 2: What is the strategic management process? Strategy formulation – The process of creating strategy. – Involves assessing existing strategies, organization, and environment to develop new strategies and strategic plans capable of delivering future competitive advantage.
  • 6 Figure 9.1 Strategy formulation and implementation in the strategic management process.
  • 7 Figure 9.6 Porter’s generic strategies framework: soft-drink industry examples.
  • 8 Study Question 4: How are strategies formulated? Porter’s generic strategies for gaining competitive advantage: – Differentiation strategy – Cost leadership strategy – Focused differentiation strategy – Focused cost leadership strategy
  • Cost leadership strategy Business success built on cost leadership requires the business to be able to provide its product or service at a cost below what its competitors can achieve 9
  • Cost leadership strategy Management 8/e - Chapter 9 10
  • Sustainable Low-Cost Activities 1. Some low-cost advantages reduce the likelihood of buyers’ pricing pressure 2. Truly sustained low-cost advantages may push rivals into other areas 3. New entrants competing on price must face an entrenched cost leader 4. Low-cost advantages should lessen the attractiveness of substitute products 5. Higher margins allow low-cost producers to withstand supplier cost increases 11
  • Risks of a Cost Leadership Strategy 1. Many cost-saving activities are easily duplicated 2. Exclusive cost leadership can be a trap 3. Obsessive cost cutting can shrink other competitive advantages 4. Cost differences often decline over time 12
  • Evaluating a Business’s Differentiation Opportunities Management 8/e - Chapter 9 13
  • Evaluating Speed as a Competitive Advantage Speed-based strategies, or rapid response to customer requests or market and technological changes, have become a major source of competitive advantage for numerous firms in today’s intensely competitive global economy 14
  • Management 8/e - Chapter 9 15
  • Speed can be created by:  Customer responsiveness  Product development cycles  Product or service improvements  Speed in delivery or distribution  Information Sharing and Technology 16
  • Risks of Speed-based Strategy  Speeding up activities that haven’t been conducted in a fashion that prioritizes rapid response should only be done after considerable attention to training, reorganization, and/or reengineering  Some industries may not offer much advantage to the firm that introduces some forms of rapid response 17
  • Risks of Speed-based Strategy  Customers in such settings may prefer the slower pace or the lower costs currently available, or they may have long time frames in purchasing 18
  • Emerging Industries  Emerging industries are newly formed or re-formed industries that typically are created by technological innovation, newly emerging customer needs, or other economic or sociological changes 19
  • Business Strategies in Emerging Industries  Technologies that are most proprietary to the pioneering firms and technological uncertainty will unfold  Competitor uncertainty because of inadequate information about competitors, buyers, and the timing of demand  High initial costs but steep cost declines 20
  • Business Strategies in Emerging Industries  First-time buyers requiring initial inducement to purchase  Inability to obtain raw materials and components until suppliers gear up to meet the industry’s needs  Need for high-risk capital because of the industry’s uncertain prospects 21
  • The Portfolio Approach  The portfolio approach is a historical starting point for strategic analysis and choice in multibusiness firms  Boston Consulting Group (BCG) pioneered an approach called portfolio techniques that attempted to help managers 22
  • The Portfolio Approach “balance” the flow of cash resources among their various businesses while identifying their basic strategic purpose within the overall portfolio 23
  • 24 Study Question 4: How are strategies formulated?  Portfolio planning approach – Designed to help managers decide on investing scarce organizational resources among competing business opportunities. – Useful for multibusiness or multiproduct situations.
  • 25 Study Question 4: How are strategies formulated? BCG matrix – Ties strategy formulation to analysis of business opportunities according to … • Industry or market growth rate – Low versus high • Market share – Low versus high
  • 26 Figure 9.7 The BCG matrix approach to corporate strategy formulation.
  • 27 Study Question 4: How are strategies formulated? BCG matrix — business conditions and related strategies: – Stars • High share/high growth businesses. • Preferred strategy — growth. – Cash cows • High share/low growth businesses. • Preferred strategy — stability or modest growth.
  • 28 Study Question 4: How are strategies formulated? BCG matrix—business conditions and related strategies (cont.): – Question marks • Low share/high growth businesses. • Preferred strategy — growth for promising question marks and restructuring or divestiture for others. – Dogs • Low share/low growth businesses. • Preferred strategy — retrenchment by divestiture.
  • 29 Study Question 4: How are strategies formulated?  Types of adaptive strategies: – Prospector strategy • Pursuing innovation and new opportunities in the face of risk and with prospects for growth. – Defender strategy • Protecting current market share by emphasizing existing products and current share without seeking growth. – Analyzer strategy • Maintaining stability of a core business while exploring selective opportunities for innovation and change. – Reactor strategy • Merely responding to competitive pressure in order to survive.
  • Thank You For Your Attention  30