Business strategy covers the plans and actions that a company undertakes to achieve its goals and objectives. These strategies are designed to create value for the organization and its stakeholders while gaining a competitive advantage in the market. Business strategies are crucial for the success of a company as they guide decision-making processes and provide a roadmap for achieving desired outcomes. There are several types of business strategies that companies can use to achieve their goals. These include: Integration Strategies: These strategies involve merging or acquiring other companies to gain access to new markets, technologies, or resources. Integration strategies can be vertical, horizontal, or conglomerate. Intensive Strategies: These strategies focus on increasing market share and profitability within existing markets. This may involve expanding product lines, increasing marketing efforts, or improving distribution channels. Diversification Strategies: These strategies involve expanding into new markets or industries. This can be done through related diversification, where the company enters a new market that is related to its existing business, or unrelated diversification, where the company enters a completely new market. Defensive Strategies: These strategies are designed to protect the company from external threats. This may involve reducing costs, divesting non-core businesses, or implementing anti-takeover measures. Overall, the choice of business strategy will depend on the company's goals, resources, and competitive environment. By selecting the right strategy and implementing it effectively, companies can position themselves for long-term success.

1. MODULE 7:
STRATEGY FORMULATION:
BUSINESS STRATEGIES
STRATEGIC
MANAGEMENT
DR. EMMANUEL DOTONG
Associate Professor of Business
ejdotong@alum.up.edu.ph
STRATEGIC TOOLS AND MODELS

2. Module
Coverage
01
02
03
Business Strategies
Integration Strategies
Intensive Strategies
MODULE 7:
STRATEGY FORMULATION:
BUSINESS STRATEGIES
04
05
Diversification Strategies
Defensive Strategies

3. 01
BUSINESS STRATEGIES
Definition and Approaches

4. A set of guiding principles that, when communicated
and adopted in the organization, generates a desired
pattern of decision making, leading to business
actions that result in a competitive advantage for the
company.
BUSINESS STRATEGIES
DEFINITION

5. BUSINESS STRATEGIES
INTEGRATION STRATEGIES
Tactics employed by a company to increase its control over its supply chain,
production processes, or market reach through methods such as vertical or
horizontal integration, thereby enhancing its competitive advantage and stability.
INTENSIVE STRATEGIES
Directs attention towards the existing products and markets while employing
tactics such as market penetration, market development, and product
development with the objective of augmenting market share or profitability.
DIVERSIFICATION STRATEGIES
A growth strategy where a company expands into new markets or introduces
new products or services, often unrelated to its existing business scope, to
spread risks and increase potential for revenue growth.
DEFENSIVE STRATEGIES
Proactive measures taken by companies to protect their market share, profitability,
and business operations from potential threats such as competition, changing
consumer behavior, or market volatility.
FOUR MAJOR STRATEGIES

6. 02
INTEGRATION STRATEGIES
Definition, Objectives, and Approaches

7. INTEGRATION STRATEGIES
POSITIVE
DIFFRENTATION
Integration strategies can result
in unique products or services
that set the company apart
from its competitors.
INCREASED CONTROL
AND PREDICTABILITY
A company can have more control
over its supply chain, leading to
more predictability and access to
real-time information.
MARKET SHARE
EXPANSION
A company can expand its
reach and access a larger
customer base.
DEFINITION AND PURPOSE
Strengthen a company's standing in the market and boost operational
efficiency by taking control of different elements of the supply chain
or by merging with or acquiring other firms within the same industry.

8. A company merging with or
acquiring other businesses within
the same industry and at the same
stage of the supply chain
A business tactic where a company
takes control of multiple stages of
its production process.
INTEGRATION STRATEGIES
HORIZONTAL INTEGRATION
This strategy aims to achieve
economies of scale, broaden market
share, or enter new markets.
An example would be Facebook's
acquisition of Instagram and
WhatsApp, expanding its social media
platform offerings.
VERTICAL INTEGRATION
Involves everything from sourcing raw
materials to manufacturing and
retailing, thereby reducing reliance on
external entities.
An example of this strategy is Apple
Inc., which designs, manufactures, and
retails its own products.
DEFINITION AND OBJECTIVES

9. INTEGRATION STRATEGIES
TWO TYPES OF VERTICAL INTEGRATION
SUPPLIER MANUFACTURER COMPANY DISTRIBUTOR CONSUMER
FORWARD INTEGRATION
Involves a company expanding its operations into
activities that are situated closer to the beginning
of the supply chain. This typically means gaining
control over suppliers and raw materials.
A company extends its operations or control over
activities that are closer to the end consumer or
customer. This often involves moving "forward" in
the supply chain towards distribution and sales.
BACKWARD INTEGRATION
BACKWARD INTEGRATION FORWARD INTEGRATION

10. 03
INTENSIVE STRATEGIES
Definition, Objectives, and Approaches

11. INTENSIVE STRATEGIES
Business strategies designed to achieve
growth within the current business scope.
They focus on increasing sales for existing
products or services in existing markets or
new markets.
DEFINITION AND OBJECTIVES
Intensive strategies often involve making the most of a
company's existing strengths and capabilities.
LEVERAGE EXISTING CAPABILITIES
They typically involve less drastic changes and can often be
achieved with existing resources.
COST-EFFECTIVENESS
Through market penetration and development, companies can
increase their market share, which can lead to increased
profitability.
INCREASED MARKET SHARE
Can lead to innovation, which can provide a competitive
advantage and attract new customers.
INNOVATION AND COMPETITIVE ADVANTAGE
OBJECTIVES:

12. INTENSIVE STRATEGIES
Product
Development
Market
Development
Market
Penetration
INTENSIVE
STRATEGIES
THREE APPROACHES

13. A company creates new or improved products for existing
markets. This strategy is often used when the market is
saturated or competitive and the company needs to create a
competitive advantage by offering innovative or superior
products.
For example, a smartphone company might use a product
development strategy by launching new models with enhanced
features to attract more customers within their existing
market.
PRODUCT DEVELOPMENT STRATEGY
DEFINITION AND OBJECTIVES

14. MARKET DEVELOPMENT STRATEGY
DEFINITION AND OBJECTIVES
Aims to boost sales and revenue by selling existing products or services
in new markets, which could be new geographical areas, different
demographic segments, or new distribution channels. It requires
comprehensive market research and targeted marketing to understand
and reach new customers.
For example, a company that has been successful in selling its software
in the United States might use a market development strategy to start
selling its existing software in Europe.

15. MARKET PENETRATION STRATEGY
80%
60%
Male Users
Female Users
DEFINITION AND OBJECTIVES
Aims to increase the market share of the company by sell more of its
existing products or services to its current markets. This can be
achieved by attracting a larger share of the existing customers, enticing
customers from competitors, or increasing usage among current
customers.
For instance, a coffee shop might use a market penetration strategy by
offering a loyalty card to encourage repeat purchases and increase the
frequency of visits among its current customers.
STRATEGIES:
Price reductions, increased marketing efforts, sales promotions, or
product improvements.
150,000 Likes
1,750,000 Views
800,000 Views
2,900,000 Followers
45%
55%
Male Female

16. 04
DIVERSIFICATION STRATEGIES
Definition, Objectives, and Approaches

17. DIVERSIFICATION
STRATEGIES
Diversification strategies refer to the growth initiatives
where an organization broadens its scope by venturing
into new markets with distinct products that diverge
from its existing portfolio. These strategies are typically
employed when the potential for growth in current
markets is depleted or to counterbalance the risks
associated with a heavy dependence on a singular
market.
Risk Reduction: Diversification can spread risk across
different products and markets, reducing the impact if one
product or market performs poorly.
Growth Opportunities: It opens up new opportunities for
growth that may not be available in the company's current
markets.
Increased Sales and Profits: By reaching new markets
with new products, diversification can lead to increased sales
and profits.
Competitive Advantage: It can provide a competitive
advantage if the company can leverage its existing
capabilities and resources to succeed in the new market.
DEFINITION AND OBJECTIVES

18. CONCENTRIC DIVERSIFICATION STRATEGY
Involves adding related products or markets to the existing business
portfolio. The new products or services have a technological or marketing
synergy with the existing product lines, even though they may appeal to a
different consumer group.
CONGLOMERATE DIVERSIFICATION STRATEGY
A company grows through acquiring businesses that are completely
unrelated to its current product or market. The company is essentially
entering an entirely new industry.
HORIZONTAL DIVERSIFICATION STRATEGY
The company seeks to add new products or services that are not related
to the existing ones but that may appeal to its current customers. The
products are different, but effectively cater to the same customer base.
DIVERSIFICATION STRATEGIES
THREE DIVERSIFICATION APPROACHES

19. 05
DEFENSIVE STRATEGIES
Definition, Objectives, and Approaches

20. A strategic move made by a company to protect its market share,
competitive position, or business operations during challenging times.
It is often used in response to external threats such as intense
competition, market saturation, economic downturns, or regulatory
changes.
DEFENSIVE STRATEGIES
DEFINITION AND OBJECTIVES
By focusing on maintaining its current market position, a
company can prevent competitors from eroding its market
share.
PROTECT MARKET SHARE
They typically involve less drastic changes and can often be
achieved with existing resources.
PRESERVE RESOURCES
During volatile market conditions, defensive strategies can
provide stability and predictability.
MAINTAIN STABILITY
OBJECTIVES:

21. COST LEADERSHIP STRATEGY
Seeks to make a company the most
cost-effective producer in its industry
by enhancing operational efficiency,
leveraging economies of scale, or
adopting advanced technologies. This
allows the company to offer lower
prices while maintaining profits, or to
keep similar pricing as competitors
but with higher profit margins.
LIQUIDATION STRATEGY
Involves closing a business, selling its
assets, and using the funds to repay
creditors. Remaining values are given to
shareholders. It's often used when a
company can't meet its financial
obligations or chooses to completely exit
the market.
RETRENCHMENT STRATEGY
Aims to reduce their size or diversity to cut
expenses and improve efficiency. This is
typically used in response to poor
performance, economic downturns, or
during restructuring efforts to focus on
core operations
DIVESTITURE STRATEGY
Involves a company selling off a business
unit, division, or assets, usually to focus
on its core operations, reduce debt, or
allocate resources more effectively. This
can help a company streamline operations,
reduce complexity, and improve financial
performance.
DEFENSIVE STRATEGIES
FOUR APPROACHES

22. END Thank you for Listening!
ASSOC. PROF. EMMANUEL DOTONG
Management Consultant
ejdotong@alum.up.edu.ph