1. Chapter Eight
Corporate Strategies

2. Concentration Strategies
Market Penetration
Market Development
Product Development
Response: Everybody wants to be a superhero.
Penetration: gaining additional share of existing markets with existing products. Pepsi challenge blind taste test.
Market Development: existing products in new markets. Nintendo Wii in nursing homes.
Product Development: New products to serve existing markets. Gillette Fusion is first six-blade razor, now new delivery mechanisms, new types of razors.
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3. Strategies for Growth Acquisition: Takes place when one company
purchases another company
The acquired company is (generally) smaller
than the firm that purchases it
Merger: Joining of two companies into one
Involves similarly sized companies
Takeover
A special type of acquisition when the target firm did not solicit the acquiring firm’s bid for outright ownership.
Gold and Nugget: Why code names?
Wall Street Trailer:
If shareholders don’t gain value from acquisitions, then why do firms acquire other firms?
--Increase market power
--Learn and gain new capabilities
--Reduce speed to market
--Reshape the competitive landscape
--Overcome entry barriers
--Reduce dependence on specific markets (GE Capital:
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4. How is this like a marriage? Cultures: Stanford Telecomms story.
Integration challenges such as:
Melding two disparate corporate cultures
Linking different financial and control systems
Resolving problems regarding the status of the newly acquired firm’s executives
Loss of key personnel weakens the acquired firm’s capabilities and reduces its value
Inadequate Due Diligence
High debt leaves the acquiring firm inflexible
Managers over-invest their time in acquisitions

5. Strategies for Getting Smaller
Retrenchment: Reducing the size of part of a firm’s operations, often through laying off employees
Divestment: Selling off part of a firm’s operations
Spin-off: Creating a new company whose stock is owned by investors out of a piece of a bigger company
Liquidation: Shutting down portions of a firm’s operations, often at a tremendous financial loss
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6. Portfolio Planning BCG Matrix
TEAMS: Put each of your CAPSIM products into one of these categories.
Limitations to portfolio planning:
Oversimplifies the reality of competition by focusing on just two dimensions when analyzing a company’s operations within an industry
Can create motivational problems among employees
Does not help identify new opportunities
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