Strategic Management | Master in Business Administration

1. STRATEGIES IN ACTION
By: Twinkle Constantino and James Leo Ng

2. OBJECTIVES

3. FINANCIAL OBJECTIVES
STRATEGIC
OBJECTIVES
ROI VS

4. Ultimately, the best way to sustain competitive
advantage over the long run is to relentlessly
pursue strategic objectives that strengthen a firm’s
business position over rivals. Financial objectives
can best be met by focusing first and foremost on
achievement of strategic objectives that improve a
firm’s competitiveness and market strength.
- Fidel R. David

5. TYPES OF STRATEGIES

6. STRATEGY
1
2
3
4

7. Integration1

8. Forward Integration
Gaining ownership or increased
control over distributors or retailers

10. Backward Integration
Seeking ownership or increased
control of a firm’s suppliers

12. Horizontal Integration
Seeking ownership or increased
control over competitors

14. Intensive2

15. Market Penetration
Seeking increased market share for
present products or services in
present markets through greater
marketing efforts

17. Market Development
Introducing present products or
services into new geographic area

19. Product Development
Seeking increased sales by improving
present products or services or
developing new ones

21. Diversification3

22. Related Diversification
Adding new but related products or
services

24. Unrelated Diversification
Adding new, unrelated products or
services

26. Defensive4

27. Retrenchment
Regrouping through cost and asset
reduction to reverse declining sales
and profit

29. Divestiture
Selling a division or part of an
organization

31. Liquidation
Selling all of a company’s asset, in
parts, for their tangible worth

33. PORTER’S STRATEGY

34. BIG
Company
small
Company

35. MEANS FOR ACHIEVING STRATEGIES

36. an action or system by which a result isan action or system by which a result is
brought about; a method.brought about; a method.

37. WAYS

38. COOPERATION AMONG
COMPETITORS

39. JOINT VENTURE/PARTNERING

40. MERGER AND ACQUISITIONS

41. FIRST MOVER ADVANTAGE

42. OUTSOURCING

43. 1. COOPERATION AMONG COMPETITORS
Firms must contribute something distinctive :
technology, distribution, basic research or
manufacturing capacity.

47. 2. JOINT VENTURE/PARTNERING
Occurs when two or more companies form a
temporary partnership or consortium for the purpose of
capitalizing some opportunity.
Involves two or more businesses pooling their resources
and expertise to achieve a particular goal. The risks and rewards of
the enterprise are also shared.

48. JOINT VENTURES ARE EFFECTIVE WHEN
• A privately owned organization forms one with a public
organization.
• A domestic organization works with a foreign company.
• The distinct competencies of the firms complement each
other especially well.
• Some project is potentially profitable but requires much
risk.
• Two or more smaller firms wish to compete against a
larger firm.
• There is a need to introduce a new technology quickly.

49. JOINT VENTURES CAUSE OF FAILURE
•Managers who must collaborate daily in operating the
venture are not involved in forming or shaping the
venture.
• The venture may benefit the partnering companies but
may not benefit customers, who then complain about
poorer service or criticize the companies in other ways.
• The venture may not be supported equally by both
partners. If supported unequally, problems arise.
• The venture may begin to compete more with one of the
partners than the other.

50. 3. MERGER AND ACQUISITIONS
Commonly used ways to pursue strategies
Merger - occurs when two organizations of about
equal size unite to form one enterprise.
Acquisition - occurs when a large organization
purchases (acquires) a smaller firm, or vice versa.
When a merger or acquisition is not
desired by both parties, it can be
called a takeover or hostile
takeover. In contrast, if the
acquisition is desired by both firms,
it is termed a friendly merger.

51. REASONS FOR CONSIDERING MERGERS
& ACQUISITIONS
 Provide improved capacity utilization
 Better use of existing sales force
 Reduce managerial staff
 Gain economies of scale
 Smooth out seasonal trends in sales
 Gain new technology
 Access to new suppliers, distributors,
customers, products, creditors

52. REASONS WHY MANY MERGERS AND ACQUISITIONS
FAIL
• Integration difficulties
• Inadequate evaluation of target
• Large or extraordinary debt
• Inability to achieve synergy
• Too much diversification
• Managers overly focused on acquisitions
• Too large an acquisition
• Difficult to integrate different
organizational cultures
• Reduced employee morale due to
layoffs and relocations

53. POTENTIAL BENEFITS OF MERGING WITH OR ACQUIRING
ANOTHER FIRM
• To provide improved capacity utilization
• To make better use of the existing sales force
• To reduce managerial staff
• To gain economies of scale
• To smooth out seasonal trends in sales
• To gain access to new suppliers, distributors, customers,
products, and creditors
• To gain new technology
• To reduce tax obligations

54. 4. FIRST MOVER ADVANTAGE
- entering a new market or developing a
new product or service prior to rival firms.
- benefits a firm may achieve by entering
a new market or developing new products or
services prior to rival firm.

56. BENEFITS OF A FIRM BEING THE FIRST MOVER
1. Secure access and commitments to rare resources
2. Gain new knowledge of critical success factors and issues
3. Gain market share and position in the best locations
4. Establish and secure long-term relationships with
customers, suppliers, distributors, and investors
5. Gain customer loyalty and commitments

57. 5. OUTSOURCING
involves companies taking over the functional
operations, such as human resources, information
systems, payroll, accounting, customer service, and
even marketing of other firms.

58. STRATEGIC MANAGEMENT IN NON-PROFIT AND
GOVERNMENTAL ORGANIZATIONS
• Educational Institutions
• Medical Organizations
• Government Agencies and Departments
• Small Firms

59. THANK YOU!