1. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -1 Chapter 5 Strategies in Action Strategic Management: Concepts & Cases 13 th Edition Fred David

2. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -2

3. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -3 Long Term Objectives Quantitative Measurable Realistic Understandable Challenging Hierarchical Obtainable Congruent

4. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -4

5. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -5

6. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -6 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

7. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -7 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

8. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -8 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

9. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -9 The Balanced Scorecard Robert Kaplan & David Norton – Strategy evaluation & control technique Balance financial measures with nonfinancial measures Balance shareholder objectives with customer & operational objectives

10. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -10 Levels of Strategies – Large Company

11. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -11 Levels of Strategies – Small Company

12. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -12 Types of Strategies Vertical Integration Strategies Forward Integration Backward Integration Horizontal Integration

13. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -13 Vertical Integration Strategies Forward Integration Gaining ownership or increased control over distributors or retailers Backward Integration Seeking ownership or increased control of a firm’s suppliers Horizontal Integration Seeking ownership or increased control over competitors

14. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -14 Types of Strategies Intensive Strategies Market Penetration Market Development Product Development

15. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -15 Intensive Strategies Market Penetration Seeking increased market share for present products or services in present markets through greater marketing efforts Market Development Introducing present products or services into new geographic areas Product Development Seeking increased sales by improving present products or services or developing new ones

16. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -16 Types of Strategies Diversification Strategies Related Diversification Unrelated Diversification

17. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -17 Diversification Strategies Related Diversification Adding new but related products or services Unrelated Diversification Adding new, unrelated products or services

18. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -18 Types of Strategies Defensive Strategies Retrenchment Divestiture Liquidation

19. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -19 Defensive Strategies Retrenchment Regrouping through cost and asset reduction to reverse declining sales and profit Divestiture Selling a division or part of an organization Liquidation Selling all of a company’s assets, in parts, for their tangible worth

20. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -20 Retrenchment Strategy Bankruptcy types  Chapter 7 – liquidation  Chapter 9 – municipalities  Chapter 11 – reorganization  Chapter 12 – family farmers  Chapter 13 – small businesses

21. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -21 Porter’s Five Generic Strategies Type 1 Cost Leadership – Low cost Type 2 Cost Leadership – Best value Type 3 Differentiation Type 4 Focus – Low cost Type 5 Focus – Best value

22. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -22

23. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -23 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

24. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -24 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

25. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -25 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

26. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -26 Means for Achieving Strategies Cooperation among competitors Joint venture / partnering Merger / acquisition First mover advantages Outsourcing

27. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -27 Strategic Management in Nonprofit and Governmental Organizations Educational Institutions Medical Organizations Governmental Agencies and Departments

28. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -28 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.