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Learning Outcomes• Explain the relationship between forms of ownership andstrategic choice• Explain the importance of clar...
OwnershipMission and strategic intentScope and diversityThe global dimensionCorporate purpose and aspirationsBases of SBU ...
DEVELOPMENTSTRATEGIESWhich direction?Market developmentProduct developmentDiversification:relatedunrelatedBases of choice ...
Source: Based on the work of Cliff Bowman.See C.Bowman and D.Faulkner. Competitive and Corporate Strategy, Irwin, 1996.PRI...
1 Low price/low added value Likely to be segment specific2 Low price Risk of price war and lowmargins/need to be cost lead...
Low price strategies could besuccessful if:• The competitor is the cost leader... but is this sustainable?• All sources of...
The Success of DifferentiationStrategies depends on• Clear identification of who the customer is• Understanding what is va...
Focused Differentiation• Global market developments increase the needfor focus• Clear definition of market segments in ter...
Key Questions in Strategic Choice• Strategic choices need to take account of theenvironment and build on core competences•...
Key Questions in Strategic Choice• Strategic choices need to take account of theenvironment and build on core competences•...
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Strategic choice

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Strategic choice

  1. 1. Learning Outcomes• Explain the relationship between forms of ownership andstrategic choice• Explain the importance of clarity of mission or strategicintent on strategic choice• Explain the importance of determining ‘what business weare in’• Explain different bases of competitive advantage in terms of‘routes’ on the strategic clockAt the end of this session you will:
  2. 2. OwnershipMission and strategic intentScope and diversityThe global dimensionCorporate purpose and aspirationsBases of SBU strategyEnhancing SBU strategy: corporate parentingPortfolio managementFinancial strategyThe role of the corporate parentThe parenting matrixAchieving competitive advantagePrice-based strategiesDifferentiation strategiesFocus strategiesBases of strategic choice
  3. 3. DEVELOPMENTSTRATEGIESWhich direction?Market developmentProduct developmentDiversification:relatedunrelatedBases of choice Alternative Directions Alternative MethodsWhat basis? How?Corporate purposeand aspirationsSBU genericcompetitivestrategiesThe role of thecorporate parentInternal developmentAcquisitionJoint Development/alliancesProtect and buildMarket penetrationDevelopment strategies
  4. 4. Source: Based on the work of Cliff Bowman.See C.Bowman and D.Faulkner. Competitive and Corporate Strategy, Irwin, 1996.PRICE HighLowDifferentiationFocuseddifferentiationLow price/low added valueStrategiesdestined forultimate failurePERCEIVEDADDEDVALUE4568HybridLowprice7HighLow123The strategy clock:Bowman’s competitive strategy options
  5. 5. 1 Low price/low added value Likely to be segment specific2 Low price Risk of price war and lowmargins/need to be cost leader3 Hybrid Low cost base and reinvestment inlow price and differentiation4 Differentiation(a) Without price premium Perceived added value by user,yielding market share benefits(b) With price premium Perceived added value sufficient tobear price premium5 Focused differentiation Perceived added value to a particularsegment, warranting price premium6 Increased price/standard Higher margins if competitors do notvalue follow/risk of losing market share7 Increased price/low value Only feasible in monopoly situation8 Low value/standard price Loss of market shareThe strategy clock
  6. 6. Low price strategies could besuccessful if:• The competitor is the cost leader... but is this sustainable?• All sources of cost advantages are exploited,developing competences in low costmanagement... but the danger is a low (perceived) valueproduct or service• A competitor has cost advantage overcompetitors in a price sensitive markets segment... but this may mean focusing on that marketsegment
  7. 7. The Success of DifferentiationStrategies depends on• Clear identification of who the customer is• Understanding what is valued by the customer• Clear identification of who the competitors are andthe value they offer• Bases of differentiation which are difficult toimitate• The recognition that bases of differentiation mayneed to change
  8. 8. Focused Differentiation• Global market developments increase the needfor focus• Clear definition of market segments in terms ofcustomers needs is required• Within a market segment choices of strategicdirection relate to competitors within thatsegment• Multi-focused strategies may be possible in somemarkets• New ventures started through focus strategiesmay be difficult to grow• Differences between segments may be erodedmaking bases of focus redundant
  9. 9. Key Questions in Strategic Choice• Strategic choices need to take account of theenvironment and build on core competences• Strategic choices need to take account of theexpectations and influence of stakeholders• Strategic direction and methods should build onbroad strategic choices• Resources and competences should be developedto deliver and sustain the chosen strategies
  10. 10. Key Questions in Strategic Choice• Strategic choices need to take account of theenvironment and build on core competences• Strategic choices need to take account of theexpectations and influence of stakeholders• Strategic direction and methods should build onbroad strategic choices• Resources and competences should be developedto deliver and sustain the chosen strategies

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