Strategic Management Chapter 7 Cher, Daisy, Sara, Sarah, Sean

What is Corporate Strategy? Strategy concerned with the choices of business(es) to be in and what to do with those businesses ▫Single-business Organization ▫Multiple-business Organization *It’s important to know the distinction between these two types of organizations because it influences an organization’s overall strategic direction, what corporate strategy is used, and how that strategy is implemented and managed.

Corporate Strategy The corporate strategy establishes the overall direction that the organization hopes to go and the other organizational strategies (functional and competitive) provide the means for making sure the organization gets there. ▫Corporate ▫Competitive ▫Functional

Corporate Strategic Directions What are they? 1) Moving and organizing forward 2) Keeping an organization as is 3) Reversing an organization’s decline

Growth Strategy A strategy that expands the products offered or markets served by an organization or expands its activities or operations either through current business(es) or through new business(es)

Types of Growth Strategy Concentration ▫Product-market exploitation ▫Product-development ▫Market-development Vertical integration strategy ▫Ex: eBay, CVS, Coach, Apple, etc. Horizontal integration ▫When is this an appropriate strategy? Diversification ▫Related diversification ▫Unrelated diversification International

Implementing Growth Strategies Choosing a strategy is only part of the picture, the strategy must also be implemented. ▫1) Mergers-acquisitions ▫2) Internal Developing ▫3) Strategic Partnering  Joint Venture, Long-term Contract, Strategic Alliance

Stability Strategy A strategy which an organization maintains its current size and current activities Involves not growing, but also not allowing the organization to decline When is stability an appropriate strategic choice? ▫When an industry is in a period of rapid upheaval ▫When an industry is facing slow or no growth opportunities ▫When an organization has experienced rapid growth and needs “down” time ▫When large firms are in the maturity stage of the industry life cycle ▫When you are a small business

Renewal Strategies Strategies that reverse the decline and put the organization back on a more appropriate path to successfully achieve its strategic goals What leads to performance declines? There are two renewal strategies: Retrenchment strategies Turnaround strategy You can implement these strategies in two ways: Cost cutting Restructuring ▫Divestment, Spin-off, Liquidation, Downsizing, Bankrupcy

Evaluating Corporate Strategies How do you know it’s all working? ▫EVALUATE ▫Without evaluation, strategic managers wouldn’t have a clue as to whether the implemented strategies are working

Evaluation Techniques 1) Corporate goals 2) Efficiency, effectiveness, and productivity measures 3) Benchmarking 4) Portfolio analysis ▫BCG Matrix ▫McKinsey-GE Stoplight Matrix ▫Product-Market Evolution Matrix

Changing Corporate Strategies If evaluation of corporate strategies shows that they aren’t having the intended results then some changes are needed ▫Ex: Microsoft *Remember that an organization’s corporate strategy is important to establishing the overall direction the organization wants to go

Take-aways 1) Corporate strategy is concerned with what businesses to be in and what to do with those businesses. It also establishes the direction that the organization hopes to go. 2) The growth strategy expands products offered, markets served, and activities or operations of businesses. You must choose a growth strategy and implement it! 3)A stability strategy is when an organization maintains current size and activities. 4) A renewal strategy reverses a decline and puts an organization on a more appropriate path to achieve its strategic goals. 5) To know that a corporate strategy is working it must be evaluated and then changed if the evaluation shows that it isn’t working.