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Chapter 5 Strategies in Action

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Presentation on theme: "Chapter 5 Strategies in Action"— Presentation transcript:

1 Chapter 5 Strategies in Action
Strategic Management: Concepts & Cases 13th Edition Fred David


3 Long Term Objectives Quantitative Measurable Realistic Understandable
Challenging Hierarchical Obtainable Congruent



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 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 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 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 Levels of Strategies – Large Company

11 Levels of Strategies – Small Company

12 Horizontal Integration
Types of Strategies Forward Integration Vertical Integration Strategies Backward Integration Horizontal Integration

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 Types of Strategies Market Penetration Market Development
Intensive Strategies Market Development Product Development

15 Intensive Strategies Market Penetration Market Development
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 Diversification Strategies
Types of Strategies Related Diversification Diversification Strategies Unrelated Diversification

17 Diversification Strategies
Related Diversification Adding new but related products or services Unrelated Diversification Adding new, unrelated products or services

18 Types of Strategies Retrenchment Divestiture Liquidation
Defensive Strategies Divestiture Liquidation

19 Defensive Strategies Retrenchment Divestiture Liquidation
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 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 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

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

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

25 Means for Achieving Strategies
Cooperation among competitors Joint venture / partnering Merger / acquisition First mover advantages Outsourcing

26 Strategic Management in Nonprofit and Governmental Organizations
Educational Institutions Medical Organizations Governmental Agencies and Departments

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