Professional Documents
Culture Documents
Strategies in Action
Ch 5 -1
Ch 5 -2
Long Term Objectives
Quantitative Challenging
Measurable Hierarchical
Realistic Obtainable
Understandable Congruent
Ch 5 -3
Ch 5 -4
Ch 5 -5
Financial vs. Strategic Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Larger profit margins
Greater ROI
Higher earnings per share
Rising stock price
Improved cash flow
Ch 5 -6
Financial vs. Strategic Objectives
Strategic Objectives
Larger market share
Quicker on-time delivery than rivals
Shorter design-to-market times than rivals
Lower costs than rivals
Higher product quality than rivals
Wider geographic coverage than rivals
Achieving technological leadership
Consistently getting new or improved
products to market ahead of rivals
Ch 5 -7
Not Managing by Objectives
Managing by Extrapolation – “If it ain’t
broke, don’t fix it”
Managing by Crisis – The true measure of a
good strategist is the ability to fix problems
Managing by Subjectives – “Do your own
thing, the best way you know how”
Managing by Hope – The future is full of
uncertainty and if at first you don’t succeed,
then you may on the second or third try
Ch 5 -8
The Balanced Scorecard
Ch 5 -10
Levels of Strategies –
Small Company
Ch 5 -11
Types of Strategies
Forward
Integration
Vertical Backward
Integration Integration
Strategies
Horizontal
Integration
Ch 5 -12
Vertical Integration Strategies
Forward Gaining ownership or increased
Integration control over distributors or retailers
Ch 5 -13
Types of Strategies
Market
Penetration
Intensive Market
Strategies Development
Product
Development
Ch 5 -14
Intensive Strategies
Seeking increased market share for
Market present products or services in
Penetration present markets through greater
marketing efforts
Ch 5 -15
Types of Strategies
Related
Diversification
Diversification
Strategies
Unrelated
Diversification
Ch 5 -16
Diversification Strategies
Unrelated
Adding new, unrelated products or
Diversification services
Ch 5 -17
Types of Strategies
Retrenchment
Defensive Divestiture
Strategies
Liquidation
Ch 5 -18
Defensive Strategies
Regrouping through cost and asset
Retrenchment reduction to reverse declining sales
and profit
Ch 5 -19
Retrenchment Strategy
Bankruptcy types
Chapter 7 – liquidation
Chapter 9 – municipalities
Chapter 11 – reorganization
Ch 5 -20
Porter’s Five Generic Strategies
Type 3 Differentiation
Ch 5 -21
Ch 5 -22
Type 1 or 2 Cost Leadership Strategy
Conditions
Vigorous price competition
Plentiful supply of identical products
Little product differentiation
Products used in same ways
Low cost to switch
Large buyers with power
Industry newcomers use low prices to attract
buyers
Ch 5 -23
Type 3 Differentiation Strategy
Conditions
Many ways to differentiate and buyers
perceive the differences as having
value
Diverse buyer needs and uses
Few rival firms following similar
differentiation approach
Fast paced technological change and
evolving product features
Ch 5 -24
Type 4 or 5 Focus Strategy
Conditions
Large, profitable, and growing target market
niche
Industry leaders do not consider the niche
crucial to their success
Industry leaders consider it costly or difficult
to meet the needs of this niche
Industry has many niches and segments
Few rivals are specializing on this target
segment
Ch 5 -25
Means for Achieving Strategies
Merger / acquisition
Outsourcing
Ch 5 -26
Strategic Management in Nonprofit and
Governmental Organizations
Educational Institutions
Medical Organizations
Governmental Agencies and
Departments
Ch 5 -27