Defining the Strategic Framework

1. STRATEGIC
INITIATIVES

2. • A Strategic initiative is an endeavour intended to achieve three
interrelated outcomes:
 A boundary-spanning vision or “Strategic intent”
 Realization of important benefits to “strategic” stakeholders
and
 Transformation of the organization
• Strategic initiatives are the means through which a vision is
translated into practice. Strategic initiatives are collections of
finite-duration discretionary projects and programs, outside of the
organization’s day-to-day operational activities, that are designed
to help the organization achieve its targeted performance.
Strategic Initiatives

3. A Strategy of a corporation forms a
comprehensive master plan that
states how the corporation will
achieve its mission and objectives.
It maximizes competitive advantage
and minimizes competitive
disadvantage.
Strategies

4. CORPORATE
BUSINESS
FUNCTIONAL
ThreeTypes of Strategy

5. Describes a company’s overall
direction in terms of its general
attitude toward growth and the
management of its various business
and product lines.
Corporate strategies typically fit
within the three main categories of
stability, growth, and retrenchment.
Corporate strategy

6. CADBURY following a CS of
retrenchment by selling its
marginally profitable soft drink
business and concentrating on its
very successful confectionary
business.
Example (CS)

7. Usually occurs at the business unit or product
level, and it emphasizes improvement of the
competitive position of a corporation’s products
or services in the specific industry or market
segment served by that business unit.
TWO OVERALL CATEGORIES
Competitive strategy
Cooperative strategy
Business strategy

8. STAPLES, US office supply store chain,
used competitive strategy to differentiate
its retail stores from its competitors by
adding services to its stores such as
copying, UPS shipping, etc.
BRITISH AIRWAYS followed cooperative
strategy by forming an alliance with
American Airlines in order to provide
global service.
Example (BS)

9. Intel, manufacturer of
microprocessors, uses its alliance
(cooperative strategy) with
Microsoft to differentiate itself
(competitive strategy) from AMD,
its primary competitor.
Cooperative strategy may thus be used
to provide a competitive advantage.

10. Is the approach taken by a functional area
to achieve corporate and business unit
objectives and strategies by maximizing
resource productivity.
It is concerned with developing and
nurturing a distinctive competence to
provide a company or business unit with a
competitive advantage.
Functional strategy

11. Examples of research and development (R&D)
functional strategies are technological
followership (imitation of the products of other
companies) and technological leadership
(pioneering an innovation).
MAGIC CHEF had been a successful appliance
maker by spending little on R&D but by quickly
imitating the innovations of other competitors.
This helped the company to keep its costs lower
than those of its competitors and consequently
to compete with lower prices.
Example (FS)

12. 1.Integration
2.Intensive
3.Diversification
4.Defensive
Types of Strategy

13. • Management Control
Types of Integration strategies
1. Integration Strategy
Integration
Strategy
Vertical
Integration
Forward
Backward
Horizontal
Integration

14. Integration Strategy

15. is the degree to which a firm owns its upstream suppliers
and its downstream buyers.
o Vertical Integration: Backward
o A company exhibits backward vertical integration when it
controls subsidiaries (suppliers) that produce some of the
inputs used in the production of its products.
o Control of these subsidiaries is intended to create a stable
supply of inputs used in the production of its products.
o Vertical Integration: Forward
o A company tends toward forward vertical integration
when it controls distribution centers and retailers where its
products are sold.
Integration Strategy:Vertical

16. Example:Vertical Integration
Ford River Rouge
Complex
Tire Company
Glass Company
Metal Company
Tesco
• Livestock
• Fruits
• Vegetables
Apple Inc.
• Processor
• Software

17.  it is a strategy of seeking ownership of or
increased control over a firm’s competitors.
 Growth strategy.
 Mergers, acquisitions and takeovers among
competitors allow for increased economies
of scale and enhanced transfer of resources
and competencies.
Integration Strategy: Horizontal

18. Horizontal integration is accomplished by expansion into
additional business activities that are within the same
level of the value chain.
Using the gemstones as an example, a wholesale jeweler
could acquire or merge with another wholesale jeweler in
an attempt to horizontally integrate the company.
Example: Horizontal Integration

19. The strategies require intensive efforts if a
firm’s competitive position with existing
products is to improve.
Types:
2. Intensive Strategy
Intensive
Strategy
Market
Penetration
Market
Development
Product
Development

20.  Market Penetration
A market penetration strategy seeks to increase market share for
present products or services in present markets through greater marketing
efforts.
Market penetration includes increasing the number of salespersons,
increasing advertising expenditures, offering extensive sales promotion
items, or increasing publicity efforts.
 Market Development
Market development involves introducing present products or
services into new geographic areas.
 Product Development
Product development is a strategy that seeks increased sales by
improving or modifying present products or services.
Product development usually entails large research and development
expenditures.
Intensive Strategy

21. oTypes
Advantage:
•Lessen the risk of being in a single industry
Disadvantage:
•More difficult to manage
3. Diversification Strategies
Diversification
Strategies
Related
Unrelated

22.  When value chains posses competitively
valuable cross-business strategic fits
A process that takes place when a business
expands its activities into product lines that are
similar to those it currently offers.
Either through acquisition of competitors or
through internal development of new
products/services.
Related Diversification

23. An unrelated diversification strategy favors
capitalizing on a portfolio of businesses that are
capable of delivering excellent financial
performance in their respective industries,
rather than striving to capitalize on value chain
strategic fits among the businesses.
A form of diversification when the business
adds new or unrelated product lines and
penetrates new markets
Unrelated Diversification

24. A management approach designed to
reduce the risk of loss
Types:
4. Defensive Strategies
Defensive
Strategies
Retrenchment
Divestiture
Liquidation

25.  Retrenchment
 Sometimes called a turnaround or reorganizational strategy
 Occurs when an organization regroups through cost and asset reduction to reverse
declining sales
 Entail selling off land and buildings to raise needed cash, pruning product lines, closing
marginal businesses, closing obsolete factories, automating processes, reducing the
number of employees, and instituting expense control systems and profits
 Divestiture
 Selling a division or part of an organization
 Often is used to raise capital for further strategic acquisitions or investments.
 Can be part of an overall retrenchment strategy to rid an organization of businesses that
are unprofitable, that require too much capital, or that do not fit well with the firm’s other
activities
 Liquidation
 Selling all of a company’s assets, in parts, for their tangible worth
 A recognition of defeat and consequently can be an emotionally difficult strategy
Defensive Strategies

26. THANKYOU………
THE END