1. Chapter 5 Strategies in Action
Strategic Management: Concepts & Cases
13th Edition
Fred David
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3. Long Term Objectives Quantitative Measurable Realistic Understandable
Challenging
Hierarchical
Obtainable
Congruent
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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
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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
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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
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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
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10. Levels of Strategies – Large Company
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11. Levels of Strategies – Small Company
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12. Horizontal Integration
Types of Strategies
Forward Integration
Vertical Integration Strategies
Backward Integration
Horizontal Integration
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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
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14. Types of Strategies Market Penetration Market Development
Intensive Strategies
Market Development
Product Development
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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
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16. Types of Strategies Related Diversification Unrelated Diversification
Diversification Strategies
Unrelated
Diversification
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17. Diversification Strategies
Related Diversification
Adding new but related products or services
Unrelated Diversification
Adding new, unrelated products or services
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18. Types of Strategies Retrenchment Divestiture Liquidation
Defensive Strategies
Divestiture
Liquidation
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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
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20. Retrenchment Strategy
Bankruptcy types
Chapter 7 – liquidation
Chapter 9 – municipalities
Chapter 11 – reorganization
Chapter 12 – family farmers
Chapter 13 – small businesses
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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
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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
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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
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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
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26. Means for Achieving Strategies
Cooperation among competitors
Joint venture / partnering
Merger / acquisition
First mover advantages
Outsourcing
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27. Strategic Management in Nonprofit and Governmental Organizations
Educational Institutions
Medical Organizations
Governmental Agencies and Departments
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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.
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