04 Strategic Management, Chapter 4 Complete, And Clean
04 Strategic Management, Chapter 4 Complete, And Clean
Collaboration
Growth Stage - Strategies - Joint
Business Level Growth/Expansion Venture, Merger & CORPORATE BUSINESS FUNCTIONAL
Strategy Acquisition, Strategic
Alliance
Maturity Stage -
Functional Level
Stability Strategy For implementation of the
corporate and business strategies,
Business level strategies are functional strategies are
Corporate level strategies are
formulated for each formulated in business areas like
meant to provide ‘direction’ to product/process division known as
the company. production/operations,
strategic business unit. marketing, finance, human
Decline Stage -
resources etc.
Retrenchment/
Turnaround Strategy
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Basic Features of
grand strategies and meant for Corporate
providing direction to the company. Strategies
Generic
Strategies
Stays with its seeks significant The firm
growth- The firm
current retrenches some combines the
These strategies were initially discussed by businesses and above strategic
William F Glueck and Lawrence R Jauch. of the activities
product markets; in some business alternatives in
maintains the (es), or) or drops some
Discussed by existing level of permutation/com
maybe within the the business as
They are also known with name effort; and is current such through sell- bination so as to
of - Glueck and Jauch satisfied with businesses; suit the specific
Strategies out or liquidation.
incremental requirements of
growth. NOT a do the firm.
Corporate level nothing strategy.
strategies It ensures the correct alignment
of the firm with its maybe by
Introduction correct entering new
environment. It also serves as
alignment the design for filling the business that are
strategic planning gap. related to
existing
businesses;
Helps the managers to handle
Help to environmental uncertainties and
managers complexities. or by entering
new businesses
that are
Competitive It helps build the relevant competitive unrelated to
Corporate strategy advantages advantages for the firm. existing
ensures the growth of businesses.
the firm because of
the following It is to harness the opportunities available
arguments: Harness the in the environment, countering the threats
opportunities embedded therein.
Stability
Expansion
Basic Corporate
Strategies
Retrenchment
-Combinan
Horizontal
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A firm opting for stability
strategy stays with the same
Stability Strategy business, same product
SAME market posture and functions,
maintaining same level of
effort as at present.
Stability strategy is
Meaning & Concept not a ‘do nothing’ The endeavour is to enhance
strategy. functional efficiencies in an
INCREMENTAL WAY incremental way, through
better deployment and
utilization of resources.
One of the important
goals of a business keeping track of new
enterprise is stability developments For Whom? Small Orgs.
– Stability strategy does not
NO REDFINITION involve a redefinition of the
business of the corporation.
MANY ALTERNATIVES
altering its propositions
regarding products, markets
and functions and pick the
one that suits it most.
Internal Growth
Strategy External
Vertically Horizontal
Market Integrated Integrated
Development Vertical Merger Advantage
Diversification Diversification
Forward and
Product Backward Co-generic
Development Merger Disadvanatge
Integration
Conglomerate
Merger
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Expansion or growth
through Intensification and
Igor Ansoff Product –
market Expansion grid
Diversification
Intensification involving new
products and
new markets
Commonly
followed Focus Approach Other points Focus Methods Other points Focus: Methods
Markets
Utilizes Increase Targets
Concentrates company Involves Add product existing Includes using
market share. current features, products to
on growing resources to significant customers different
existing enhance the changes to product new customer distribution
using refinement. groups or
products in the profitability existing established channels, modifying
current products or regions. advertising content,
and market Increase distribution
market. share of creating new, channels. or changing
product usage. promotional media.
current related items.
Develop a new-
offerings. generation
Increase the product.
frequency
used. Expand
Develop new geographically
product for Target new
the same segments.
Increase the market.
quantity used.
Find new
application for
current users.
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Growth by Diversification
Strategy Overview
Effective Utilizing
Entering new utilization of resources like Synergistic
Innovative, Greater growth products, Concentric
Expansion into entrepreneurial, and profitability excess capacity manufacturing advantages
various products services, or or capabilities.
seeking new prospects facilities, funds,
or fields, using markets with marketing
internal opportunities compared to different skills,
and challenges. intensification. channels,
resources. technology, and prestige, and
knowledge. Improving sales
manpower. Conglomerate
and profits by
adding related or
new products,
leveraging
technology or
market linkages. Expansion though
Innovation
Expansion or
Growth through
Diversification -
overview
Concentric Conglomerate
Diversification Diversification Innovation
(Related) (Unrelated)
Forward and
Backward Increases
Productivity
Integration
Gives
Competitive
Advantage:
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Concentric
Diversification
Understood in
Related Linked Spin off Benefits two directions,
In concentric
diversification, The new Vertical
the new product is a there are integration
amounts to spin-off from benefits of
related business is
linked to the the existing synergy with
diversification. facilities and the current
existing
businesses products/proc operations. Horizontal
through esses. integration
process,
technology or
marketing.
Vertically
Integrated
Diversification
The
engage in remains characteristic Forward
Backward Integration Integration
businesses vertically feature of
that are within the vertical
related to the same process integrated
existing sequence and diversification
business of moves forward is that the Purpose For example Definition Application Example
the firm. or backward in Strategy
firm does not
the value chain jump outside
the vertically
linked product To create an A large Moving
process chain. supermarket Includes A coffee bean
effective Enhance profits and forward in the entering into
supply chain chain considers manufacturer
control over product value chain to distribution
by becoming production through to purchase a enter merging with
number of channels or or establishing
an input establishment of businesses related retail
provider. businesses that farms that that utilize a coffee café
would provide it sectors. chain.
improve supply existing
capability or reduce a significant
products.
production costs. amount of fresh
produce.
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Forward Integration
Strategy
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Acquisitions and mergers (two
or more companies combines).
Innovation
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Expansion Through
Different Types of Strategic Alliances
Mergers
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Strategic Exits –
Retrenchment Focuses on internal
Strategies retrenchment.
Nature of Turnaround
Strategy:
Aims to enhance
Types of internal efficiency of
Main focus Retrenchment the organization.
Strategies:
Persistent negative
cash flow from
Identifies problem business
areas and diagnoses Divestment (or
Turnaround Divestiture) Liquidation Turnaround Strategy
causes of business Strategy: Strategy:
issues. Strategy: Uncompetitive
products or services
LIQUIDATION
Mismanagement
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