1. Bus 411 Day 8 Copyright 2005 Prentice Hall1

2. Ch 1 -2 Agenda Question? Assignment 2 DUE Assignment 3 Posted  IFE and Ratio analysis  Due Feb 27 @ 12:30 PM  Bus 411 assignment three.pdf Bus 411 assignment three.pdf Begin Discussion on Strategies in Action

3. Copyright 2005 Prentice Hall Ch 3 -3

4. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -4 Chapter 5 Strategies in Action Strategic Management: Concepts & Cases 13 th Edition Fred David

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

6. CHAPTER OBJECTIVES Discuss the value of establishing long-term objectives. Identify 16 types of business strategies. Identify numerous examples of organizations pursuing different types of strategies. Discuss guidelines when particular strategies are most appropriate to pursue. Discuss Porter’s five generic strategies. Describe strategic management in nonprofit, governmental, and small organizations. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 2 -6

7. Discuss joint ventures as a way to enter the Russian market. Discuss the Balanced Scorecard. Compare and contrast financial with strategic objectives. Discuss the levels of strategies in large versus small firms. Explain the First Mover Advantages concept. Discuss recent trends in outsourcing. Discuss strategies for competing in turbulent, high velocity markets. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 2 -7

8. Copyright 2005 Prentice Hall Ch 3 -8 Strategies for taking the hill won’t necessarily hold it. – Amar Bhide Strategies in Action The early bird may get the worm, but the second mouse gets the cheese. – Unknown

9. Copyright 2005 Prentice Hall Ch 3 -9 Strategies in Action -- Quest for higher revenues -- Quest for higher profits Companies Embrace Strategic Planning

10. Copyright 2005 Prentice Hall Ch 3 -10 Results expected from pursuing certain strategies Strategies represent actions to accomplish long-term objectives Long-Term Objectives

11. Copyright 2005 Prentice Hall Ch 3 -11 A SMART way to Look at Objectives 1.Specific – Objectives should specify what they want to achieve. 2.Measurable – You should be able to measure whether you are meeting the objectives or not. 3.Achievable - Are the objectives you set, achievable and attainable? 4.Realistic – Can you realistically achieve the objectives with the resources you have? 5.Time – When do you want to achieve the set objectives?

12. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -12 Long Term Objectives Quantitative Measurable Realistic Understandable Challenging Hierarchical Obtainable Congruent

13. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -13

14. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -14

15. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -15 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

16. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -16 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

17. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -17 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

18. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -18 The Balanced Scorecard Robert Kaplan & David Norton – Strategy evaluation & control technique Balance financial measures with nonfinancial measures Balance shareholder objectives with customer & operational objectives

19. Balanced Scorecard Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 2 -19 Adapted from Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996): 76.

20. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -20 Levels of Strategies – Large Company

21. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -21 Levels of Strategies – Small Company

22. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -22 Types of Strategies Vertical Integration Strategies Forward Integration Backward Integration Horizontal Integration

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

24. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -24 Types of Strategies Intensive Strategies Market Penetration Market Development Product Development

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

26. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -26 Types of Strategies Diversification Strategies Related Diversification Unrelated Diversification

27. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -27 Diversification Strategies Related Diversification Adding new but related products or services Unrelated Diversification Adding new, unrelated products or services

28. Growth Strategies

29. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -29 Types of Strategies Defensive Strategies Retrenchment Divestiture Liquidation

30. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -30 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

31. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -31 Defensive Strategy Bankruptcy types  Chapter 7 – liquidation  Chapter 9 – municipalities  Chapter 11 – reorganization  Chapter 12 – family farmers  Chapter 13 – small businesses

32. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -32 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

33. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -33

34. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -34 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

35. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -35 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

36. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -36 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

37. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -37 Means for Achieving Strategies Cooperation among competitors Joint venture / partnering Merger / acquisition First mover advantages Outsourcing

38. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -38 Strategic Management in Nonprofit and Governmental Organizations Educational Institutions Medical Organizations Governmental Agencies and Departments

39. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -39 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.