© 2001 Prentice Hall 
Ch. 5-1 
Strategic Management 
Concepts & Cases 
8th edition 
Fred R. David 
Chapter 5: 
Strategies ...
© 2001 Prentice Hall 
Ch. 5-2 
Comprehensive Strategic Management Model 
Vision 
& 
Mission 
Statements 
Chapter 2 
Extern...
© 2001 Prentice Hall 
Ch. 5-3 
Strategies in Action 
“Planning. Doing things today to make us 
better tomorrow. Because th...
© 2001 Prentice Hall 
Ch. 5-4 
Strategies in Action 
“If you don’t invest for the long term, 
there is no short term.” 
—G...
© 2001 Prentice Hall 
Ch. 5-5 
Strategies in Action 
“Innovate or evaporate. Particularly in 
technology-driven businesses...
© 2001 Prentice Hall 
Ch. 5-6 
Strategies in Action 
Companies embrace strategic planning. 
• Quest for higher revenues an...
© 2001 Prentice Hall 
Ch. 5-7 
Strategies in Action 
Long-Term Objectives: 
• Results expected from pursuing 
certain stra...
© 2001 Prentice Hall 
Ch. 5-8 
Strategies in Action 
Nature of Long-Term Objectives 
 Quantitative 
 Measurable 
 Reali...
© 2001 Prentice Hall 
Ch. 5-9 
Strategies in Action 
Nature of Long-Term Objectives (Cont’d) 
Objectives are associated wi...
© 2001 Prentice Hall 
Ch. 5-10 
Strategies in Action 
Nature of Long-Term Objectives (Cont’d) 
Objectives are the basis fo...
© 2001 Prentice Hall 
Ch. 5-11 
Strategies in Action 
Nature of Long-Term Objectives (Cont’d) 
Strategists should avoid: 
...
© 2001 Prentice Hall 
Ch. 5-12 
Strategies in Action 
Nature of Long-Term Objectives (Cont’d) 
Strategists should avoid: 
...
© 2001 Prentice Hall 
Ch. 5-13 
Strategies in Action 
Nature of Long-Term Objectives (Cont’d) 
Strategists should avoid: 
...
© 2001 Prentice Hall 
Ch. 5-14 
Strategies in Action 
Nature of Long-Term Objectives (Cont’d) 
Strategists should avoid: 
...
© 2001 Prentice Hall 
Ch. 5-15 
Strategies in Action 
Vertical Integration Strategies 
• Forward integration 
• Backward i...
© 2001 Prentice Hall 
Ch. 5-16 
Strategies in Action 
Defined 
• Gaining 
ownership or 
increased control 
over distributo...
© 2001 Prentice Hall 
Ch. 5-17 
Strategies in Action 
Guidelines for Forward Integration 
 Present distributors are expen...
© 2001 Prentice Hall 
Ch. 5-18 
Strategies in Action 
Defined 
• Seeking 
ownership or 
increased control 
of a firm’s 
su...
© 2001 Prentice Hall 
Ch. 5-19 
Strategies in Action 
Guidelines for Backward Integration 
 When present suppliers are ex...
© 2001 Prentice Hall 
Ch. 5-20 
Strategies in Action 
Defined 
• Seeking 
ownership or 
increased control 
over competitor...
© 2001 Prentice Hall 
Ch. 5-21 
Strategies in Action 
Guidelines for Horizontal Integration 
 Firm can gain monopolistic ...
© 2001 Prentice Hall 
Ch. 5-22 
Strategies in Action 
Intensive Strategies 
• Market penetration 
• Market development 
• ...
© 2001 Prentice Hall 
Ch. 5-23 
Strategies in Action 
Defined 
• Seeking increased 
market share for 
present products 
or...
© 2001 Prentice Hall 
Ch. 5-24 
Strategies in Action 
Guidelines for Market Penetration 
 Current markets not saturated 
...
© 2001 Prentice Hall 
Ch. 5-25 
Strategies in Action 
Defined 
• Introducing 
present products 
or services into 
new geog...
© 2001 Prentice Hall 
Ch. 5-26 
Strategies in Action 
Guidelines for Market Development 
 New channels of distribution th...
© 2001 Prentice Hall 
Ch. 5-27 
Strategies in Action 
Defined 
• Seeking increased 
sales by improving 
present products 
...
© 2001 Prentice Hall 
Ch. 5-28 
Strategies in Action 
Guidelines for Product Development 
 Products in maturity stage of ...
© 2001 Prentice Hall 
Ch. 5-29 
Strategies in Action 
Diversification Strategies 
• Concentric diversification 
• Conglome...
© 2001 Prentice Hall 
Ch. 5-30 
Strategies in Action 
Defined 
• Adding new, but 
related, products 
or services 
Example ...
© 2001 Prentice Hall 
Ch. 5-31 
Strategies in Action 
Guidelines for Concentric Diversification 
 Competes in no- or slow...
© 2001 Prentice Hall 
Ch. 5-32 
Strategies in Action 
Defined 
• Adding new, 
unrelated products 
or services 
Example 
• ...
© 2001 Prentice Hall 
Ch. 5-33 
Strategies in Action 
Guidelines for Conglomerate Diversification 
 Declining annual sale...
© 2001 Prentice Hall 
Ch. 5-34 
Strategies in Action 
Defined 
• Adding new, 
unrelated products 
or services for 
present...
© 2001 Prentice Hall 
Ch. 5-35 
Strategies in Action 
Guidelines for Horizontal Diversification 
 Revenues from current p...
© 2001 Prentice Hall 
Ch. 5-36 
Strategies in Action 
Defensive Strategies 
• Joint venture 
• Retrenchment 
• Divestiture...
© 2001 Prentice Hall 
Ch. 5-37 
Strategies in Action 
Defined 
• Two or more 
sponsoring firms 
forming a separate 
organi...
© 2001 Prentice Hall 
Ch. 5-38 
Strategies in Action 
Guidelines for Joint Venture 
 Combination of privately held and pu...
© 2001 Prentice Hall 
Ch. 5-39 
Strategies in Action 
Defined 
• Regrouping 
through cost and 
asset reduction to 
reverse...
© 2001 Prentice Hall 
Ch. 5-40 
Strategies in Action 
Guidelines for Retrenchment 
 Firm has failed to meet its objective...
© 2001 Prentice Hall 
Ch. 5-41 
Strategies in Action 
Defined 
• Selling a division 
or part of an 
organization 
Example ...
© 2001 Prentice Hall 
Ch. 5-42 
Strategies in Action 
Guidelines for Divestiture 
 When firm has pursued retrenchment but...
© 2001 Prentice Hall 
Ch. 5-43 
Strategies in Action 
Defined 
• Selling all of a 
company’s assets, 
in parts, for their ...
© 2001 Prentice Hall 
Ch. 5-44 
Strategies in Action 
Guidelines for Liquidation 
 When both retrenchment and divestiture...
© 2001 Prentice Hall 
Ch. 5-45 
Michael Porter’s Generic Strategies 
Cost Leadership Strategies 
Differentiation Strategie...
© 2001 Prentice Hall 
Ch. 5-46 
Key Terms & Concepts 
• Acquisition 
• Backward integration 
• Bankruptcy 
• Combination s...
© 2001 Prentice Hall 
Ch. 5-47 
Key Terms & Concepts (Cont’d) 
• Intensive strategies 
• Joint venture 
• Leveraged buyout...
© 2001 Prentice Hall 
Ch. 5-48 
Key Terms & Concepts (Cont’d) 
• Product and service 
planning 
• Production/operations 
f...
Upcoming SlideShare
Loading in...5
×

Strategies in Action

901

Published on

For educational purpose only

Published in: Education
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
901
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
94
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Strategies in Action

  1. 1. © 2001 Prentice Hall Ch. 5-1 Strategic Management Concepts & Cases 8th edition Fred R. David Chapter 5: Strategies in Action PowerPoint Slides By: Anthony F. Chelte Western New England College
  2. 2. © 2001 Prentice Hall Ch. 5-2 Comprehensive Strategic Management Model Vision & Mission Statements Chapter 2 External Audit Chapter 3 Strategies In Action Chapter 5 Internal Audit Chapter 4 Generate, Evaluate, Select Strategies Chapter 6 Implement Strategies: Mgmt Issues Chapter 7 Implement Strategies: Marketing, Fin/Acct, R&D, CIS Chapter 8 Measure & Evaluate Performance Chapter 9
  3. 3. © 2001 Prentice Hall Ch. 5-3 Strategies in Action “Planning. Doing things today to make us better tomorrow. Because the future belongs to those who make the hard decisions today.” —Eaton Corporation—
  4. 4. © 2001 Prentice Hall Ch. 5-4 Strategies in Action “If you don’t invest for the long term, there is no short term.” —George David—
  5. 5. © 2001 Prentice Hall Ch. 5-5 Strategies in Action “Innovate or evaporate. Particularly in technology-driven businesses, nothing quite recedes like success.” —Bill Saporito—
  6. 6. © 2001 Prentice Hall Ch. 5-6 Strategies in Action Companies embrace strategic planning. • Quest for higher revenues and profits
  7. 7. © 2001 Prentice Hall Ch. 5-7 Strategies in Action Long-Term Objectives: • Results expected from pursuing certain strategies  Tme frame —2 to 5 years
  8. 8. © 2001 Prentice Hall Ch. 5-8 Strategies in Action Nature of Long-Term Objectives  Quantitative  Measurable  Realistic  Understandable  Challenging  Hierarchical  Obtainable  Congruent among organizational units
  9. 9. © 2001 Prentice Hall Ch. 5-9 Strategies in Action Nature of Long-Term Objectives (Cont’d) Objectives are associated with a time line and stated in terms: • Growth in assets • Growth in sales • Profitability • Market share • Diversification • Integration • EPS • Social responsibility
  10. 10. © 2001 Prentice Hall Ch. 5-10 Strategies in Action Nature of Long-Term Objectives (Cont’d) Objectives are the basis for: • Designing jobs • Organizing activities • Providing direction • Organizational synergy • Standards for evaluation
  11. 11. © 2001 Prentice Hall Ch. 5-11 Strategies in Action Nature of Long-Term Objectives (Cont’d) Strategists should avoid: • Managing by extrapolation “If it ain’t broke, don’t fix it.”
  12. 12. © 2001 Prentice Hall Ch. 5-12 Strategies in Action Nature of Long-Term Objectives (Cont’d) Strategists should avoid: • Managing by crisis: Reactive vs. proactive
  13. 13. © 2001 Prentice Hall Ch. 5-13 Strategies in Action Nature of Long-Term Objectives (Cont’d) Strategists should avoid: • Managing by subjectives: Mystery approach to decision making  Subordinates are left to figure out what is happening and why
  14. 14. © 2001 Prentice Hall Ch. 5-14 Strategies in Action Nature of Long-Term Objectives (Cont’d) Strategists should avoid: • Managing by hope: Good times are just around the corner
  15. 15. © 2001 Prentice Hall Ch. 5-15 Strategies in Action Vertical Integration Strategies • Forward integration • Backward integration • Horizontal integration
  16. 16. © 2001 Prentice Hall Ch. 5-16 Strategies in Action Defined • Gaining ownership or increased control over distributors or retailers Example • General Motors is acquiring 10% of its dealers. Forward Integration
  17. 17. © 2001 Prentice Hall Ch. 5-17 Strategies in Action Guidelines for Forward Integration  Present distributors are expensive, unreliable, or incapable of meeting firm’s needs  Availability of quality distributors is limited  When firm competes in an industry that is expected to grow markedly  Advantages of stable production are high  Present distributor have high profit margins
  18. 18. © 2001 Prentice Hall Ch. 5-18 Strategies in Action Defined • Seeking ownership or increased control of a firm’s suppliers Example • Motel 8 acquired a furniture manufacturer. Backward Integration
  19. 19. © 2001 Prentice Hall Ch. 5-19 Strategies in Action Guidelines for Backward Integration  When present suppliers are expensive, unreliable, or incapable of meeting needs  Number of suppliers is small and number of competitors large  High growth in industry sector  Firm has both capital and human resources to manage new business  Advantages of stable prices are important  Present supplies have high profit margins
  20. 20. © 2001 Prentice Hall Ch. 5-20 Strategies in Action Defined • Seeking ownership or increased control over competitors Example • Hilton recently acquired Promus. Horizontal Integration
  21. 21. © 2001 Prentice Hall Ch. 5-21 Strategies in Action Guidelines for Horizontal Integration  Firm can gain monopolistic characteristics without being challenged by federal government  Competes in growing industry  Increased economies of scale provide major competitive advantages  Faltering due to lack of managerial expertise or need for particular resources
  22. 22. © 2001 Prentice Hall Ch. 5-22 Strategies in Action Intensive Strategies • Market penetration • Market development • Product development
  23. 23. © 2001 Prentice Hall Ch. 5-23 Strategies in Action Defined • Seeking increased market share for present products or services in present markets through greater marketing efforts Example • Ameritrade, the on-line broker, tripled its annual advertising expenditures to $200 million to convince people they can make their own investment decisions. Market Penetration
  24. 24. © 2001 Prentice Hall Ch. 5-24 Strategies in Action Guidelines for Market Penetration  Current markets not saturated  Usage rate of present customers can be increased significantly  Market shares of competitors declining while total industry sales increasing  Increased economies of scale provide major competitive advantages
  25. 25. © 2001 Prentice Hall Ch. 5-25 Strategies in Action Defined • Introducing present products or services into new geographic area Example • Britain’s leading supplier of buses, Henlys PLC, acquires Blue Bird Corp. North America’s leading school bus maker. Market Development
  26. 26. © 2001 Prentice Hall Ch. 5-26 Strategies in Action Guidelines for Market Development  New channels of distribution that are reliable, inexpensive, and good quality  Firm is very successful at what it does  Untapped or unsaturated markets  Capital and human resources necessary to manage expanded operations  Excess production capacity  Basic industry rapidly becoming global
  27. 27. © 2001 Prentice Hall Ch. 5-27 Strategies in Action Defined • Seeking increased sales by improving present products or services or developing new ones Example • Apple developed the G4 chip that runs at 500 megahertz. Product Development
  28. 28. © 2001 Prentice Hall Ch. 5-28 Strategies in Action Guidelines for Product Development  Products in maturity stage of life cycle  Competes in industry characterized by rapid technological developments  Major competitors offer better-quality products at comparable prices  Compete in high-growth industry  Strong research and development capabilities
  29. 29. © 2001 Prentice Hall Ch. 5-29 Strategies in Action Diversification Strategies • Concentric diversification • Conglomerate diversification • Horizontal diversification
  30. 30. © 2001 Prentice Hall Ch. 5-30 Strategies in Action Defined • Adding new, but related, products or services Example • National Westminister Bank PLC in Britain bought the leading British insurance company, Legal & General Group PLC. Concentric Diversification
  31. 31. © 2001 Prentice Hall Ch. 5-31 Strategies in Action Guidelines for Concentric Diversification  Competes in no- or slow-growth industry  Adding new & related products increases sales of current products  New & related products offered at competitive prices  Current products are in decline stage of the product life cycle  Strong management team
  32. 32. © 2001 Prentice Hall Ch. 5-32 Strategies in Action Defined • Adding new, unrelated products or services Example • H&R Block, the top tax preparation agency, said it will buy discount stock brokerage Olde Financial for $850 million in cash. Conglomerate Diversification
  33. 33. © 2001 Prentice Hall Ch. 5-33 Strategies in Action Guidelines for Conglomerate Diversification  Declining annual sales and profits  Capital and managerial talent to compete successfully in a new industry  Financial synergy between the acquired and acquiring firms  Exiting markets for present products are saturated
  34. 34. © 2001 Prentice Hall Ch. 5-34 Strategies in Action Defined • Adding new, unrelated products or services for present customers Example • The New York Yankees baseball team are merging with the New Jersey Nets basketball team. Horizontal Diversification
  35. 35. © 2001 Prentice Hall Ch. 5-35 Strategies in Action Guidelines for Horizontal Diversification  Revenues from current products/services would increase significantly by adding the new unrelated products  Highly competitive and/or no-growth industry w/low margins and returns  Present distribution channels can be used to market new products to current customers  New products have counter cyclical sales patterns compared to existing products
  36. 36. © 2001 Prentice Hall Ch. 5-36 Strategies in Action Defensive Strategies • Joint venture • Retrenchment • Divestiture • Liquidation
  37. 37. © 2001 Prentice Hall Ch. 5-37 Strategies in Action Defined • Two or more sponsoring firms forming a separate organization for cooperative purposes Example • Lucent Technologies and Philips Electronic NV formed Philips Consumer Communications to make and sell telephones. Joint Venture
  38. 38. © 2001 Prentice Hall Ch. 5-38 Strategies in Action Guidelines for Joint Venture  Combination of privately held and publicly held can be synergistically combined  Domestic forms joint venture with foreign firm, can obtain local management to reduce certain risks  Distinctive competencies of two or more firms are complementary  Overwhelming resources and risks where project is potentially very profitable (e.g., Alaska pipeline)  Two or more smaller firms have trouble competing with larger firm  A need exists to introduce a new technology quickly
  39. 39. © 2001 Prentice Hall Ch. 5-39 Strategies in Action Defined • Regrouping through cost and asset reduction to reverse declining sales and profit Example • Singer, the sewing machine company, declared bankruptcy. Retrenchment
  40. 40. © 2001 Prentice Hall Ch. 5-40 Strategies in Action Guidelines for Retrenchment  Firm has failed to meet its objectives and goals consistently over time but has distinctive competencies  Firm is one of the weaker competitors  Inefficiency, low profitability, poor employee morale, and pressure from stockholders to improve performance.  When an organization’s strategic managers have failed  Very quick growth to large organization where a major internal reorganization is needed.
  41. 41. © 2001 Prentice Hall Ch. 5-41 Strategies in Action Defined • Selling a division or part of an organization Example • Harcourt General, the large US publisher, is selling its Neiman Marcus division. Divestiture
  42. 42. © 2001 Prentice Hall Ch. 5-42 Strategies in Action Guidelines for Divestiture  When firm has pursued retrenchment but failed to attain needed improvements  When a division needs more resources than the firm can provide  When a division is responsible for the firm’s overall poor performance  When a division is a misfit with the organization  When a large amount of cash is needed and cannot be obtained from other sources.
  43. 43. © 2001 Prentice Hall Ch. 5-43 Strategies in Action Defined • Selling all of a company’s assets, in parts, for their tangible worth Example • Ribol sold all its assets and ceased business. Liquidation
  44. 44. © 2001 Prentice Hall Ch. 5-44 Strategies in Action Guidelines for Liquidation  When both retrenchment and divestiture have been pursued unsuccessfully  If the only alternative is bankruptcy, liquidation is an orderly alternative  When stockholders can minimize their losses by selling the firm’s assets
  45. 45. © 2001 Prentice Hall Ch. 5-45 Michael Porter’s Generic Strategies Cost Leadership Strategies Differentiation Strategies Focus Strategies
  46. 46. © 2001 Prentice Hall Ch. 5-46 Key Terms & Concepts • Acquisition • Backward integration • Bankruptcy • Combination strategy • Concentric diversification • Conglomerate diversification • Cooperative arrangements • Cost leadership • Differentiation • Diversification strategies • Divestiture • Focus • Forward integration • Franchising • Generic strategies • Horizontal diversification • Horizontal integration • Integration strategies
  47. 47. © 2001 Prentice Hall Ch. 5-47 Key Terms & Concepts (Cont’d) • Intensive strategies • Joint venture • Leveraged buyout • Liquidation • Merchant banking • Market development • Market penetration • Merger • Outsourcing • Product development • Retrenchment • Takeover • Vertical integration
  48. 48. © 2001 Prentice Hall Ch. 5-48 Key Terms & Concepts (Cont’d) • Product and service planning • Production/operations functions • Profitability ratios • Research and development • Selling • Social responsibility • Staffing • Synergy • Test marketing
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×