Chapter 5 Strategies in Action - FSM by malj


									Module 5
Strategies in Action

                       Ch 5 -1
Ch 5 -2
Long Term Objectives

n   Quantitative     n   Challenging

n   Measurable       n   Hierarchical

n   Realistic        n   Obtainable

n   Understandable   n   Congruent
                                        Ch 5 -3
Ch 5 -4
Ch 5 -5
Financial vs. Strategic Objectives
Financial Objectives
nGrowth    in revenues
nGrowth    in earnings
nHigher   dividends
nLarger   profit margins
nGreater   ROI
nHigher   earnings per share
nRising   stock price
nImproved    cash flow
                                     Ch 5 -6
Financial vs. Strategic Objectives
Strategic Objectives
n   Larger market share
n   Quicker on-time delivery than rivals
n   Shorter design-to-market times than rivals
n   Lower costs than rivals
n   Higher product quality than rivals
n   Wider geographic coverage than rivals
n   Achieving technological leadership
n   Consistently getting new or improved
    products to market ahead of rivals
                                                 Ch 5 -7
Not Managing by Objectives
nManaging   by Extrapolation – “If it ain’t
broke, don’t fix it”
nManaging  by Crisis – The true measure of a
good strategist is the ability to fix problems
nManaging   by Subjectives – “Do your own
thing, the best way you know how”
nManaging   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

Robert Kaplan & David Norton –

nStrategy   evaluation & control technique
nBalance financial measures with
nonfinancial measures
nBalance shareholder objectives with
customer & operational objectives
                                         Ch 5 -9
Levels of Strategies –
Large Company

                         Ch 5 -10
Levels of Strategies –
Small Company

                         Ch 5 -11
Types of Strategies


   Vertical            Backward
 Integration          Integration


                                    Ch 5 -12
Vertical Integration Strategies
Forward       Gaining ownership or increased
Integration   control over distributors or retailers

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

Horizontal    Seeking ownership or increased
Integration   control over competitors

                                               Ch 5 -13
Types of Strategies


 Intensive              Market
 Strategies           Development


                                    Ch 5 -14
Intensive Strategies
              Seeking increased market share for
Market        present products or services in
Penetration   present markets through greater
              marketing efforts

Market        Introducing present products or
Development   services into new geographic areas

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

                                            Ch 5 -15
Types of Strategies




                                        Ch 5 -16
Diversification Strategies

Related           Adding new but related products or
Diversification   services

                  Adding new, unrelated products or
Diversification   services

                                                Ch 5 -17
Types of Strategies


 Defensive             Divestiture


                                     Ch 5 -18
Defensive Strategies
               Regrouping through cost and asset
Retrenchment   reduction to reverse declining sales
               and profit

Divestiture    Selling a division or part of an

               Selling all of a company’s assets, in
Liquidation    parts, for their tangible worth

                                                  Ch 5 -19
Retrenchment Strategy

n   Bankruptcy types
    q Chapter 7 – liquidation
    q Chapter 9 – municipalities

    q Chapter 11 – reorganization

    q Chapter 12 – family farmers

    q Chapter 13 – small businesses

                                      Ch 5 -20
Porter’s Five Generic Strategies

n Type 1 Cost Leadership – Low cost
n Type 2 Cost Leadership – Best value

n Type 3 Differentiation

n Type 4 Focus – Low cost

n Type 5 Focus – Best value

                                Ch 5 -21
Ch 5 -22
Type 1 or 2 Cost Leadership Strategy
n   Vigorous price competition
n   Plentiful supply of identical products
n   Little product differentiation
n   Products used in same ways
n   Low cost to switch
n   Large buyers with power
n   Industry newcomers use low prices to attract
                                             Ch 5 -23
Type 3 Differentiation Strategy
n   Many ways to differentiate and buyers
    perceive the differences as having
n   Diverse buyer needs and uses
n   Few rival firms following similar
    differentiation approach
n   Fast paced technological change and
    evolving product features
                                       Ch 5 -24
Type 4 or 5 Focus Strategy
n   Large, profitable, and growing target market
n   Industry leaders do not consider the niche
    crucial to their success
n   Industry leaders consider it costly or difficult
    to meet the needs of this niche
n   Industry has many niches and segments
n   Few rivals are specializing on this target

                                                 Ch 5 -25
Means for Achieving Strategies

n Cooperation among competitors
n Joint venture / partnering

n Merger / acquisition

n First mover advantages

n Outsourcing

                                  Ch 5 -26
Strategic Management in Nonprofit and
Governmental Organizations

nEducational   Institutions
nMedical   Organizations
nGovernmental    Agencies and

                                  Ch 5 -27

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