Chapter 7 Strategy Formulation Corporate Strategy 4s462r

CHAPTER 7 Strategy Formulation: Corporate Strategy

STRATEGIC MANAGEMENT & BUSINESS POLICY Group 7

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Corporate Strategy

3 Key Issues – Firm’s

directional strategy

Firm’s

portfolio strategy

Firm’s

parenting strategy

2

Corporate Strategy

Directional Strategy – Orientation

toward growth

Expansion,

contraction, status quo Concentration or diversification Internal development or acquisitions, mergers, or alliances

3

Corporate Strategy

Directional Strategy –

3 Grand Strategies Growth

strategies

Stability

strategies

Retrenchment

strategies

4

Corporate Directional Strategies

5

Corporate Strategy

Growth Strategies -External

mechanisms

Mergers Acquisitions Strategic

alliances

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Corporate Strategy

Growth Strategies -2

Basic forms Concentration Diversification

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Corporate Strategy

Basic Concentration Strategies -Vertical

growth

Horizontal

growth

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Corporate Strategy

Vertical Growth -Vertical

integration

Full

integration Taper integration Quasi-integration Long-term contract

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Corporate Strategy

Vertical Growth -Backward Forward

integration

integration

10

Corporate Strategy

Concentration -Horizontal

Growth

Horizontal

integration

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Corporate Strategy

International Entry Options -Exporting Licensing Franchising t

Ventures Acquisitions Green-Field Development

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Corporate Strategy

International Entry Options -Production

Sharing Turnkey Operation BOT Concept (Build, Operate, Transfer) Management Contracts

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Corporate Strategy

Basic Diversification Strategies -Concentric

Diversification

Conglomerate

Diversification

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Corporate Strategy

Concentric Diversification -Growth

into related industry Search for synergies

15

Corporate Strategy

Conglomerate diversification -Growth

into unrelated industry Concern with financial considerations

16

Corporate Strategy

Stability Strategies -Pause/proceed No

with caution

change

Profit

strategies

17

Corporate Strategy

Retrenchment Strategies -Turnaround Captive

Company Strategy Selling out Bankruptcy Liquidation

18

Corporate Strategy

Portfolio Analysis -Resource

commitment on best products to ensure continued success Resource

commitment on new costly products high risk

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BCG Matrix (Portfolio Analysis)

20

GE Business Screen (Portfolio Analysis)

C Winners A High

Winners B

Question Marks D

Winners E Medium

Average Businesses F Losers

Losers G Low

Profit Producers Strong

H

Losers Average

Weak

Business Strength/Competitive Position 21

Corporate Strategy

Corporate Parenting Strategy -Strategic

factors Performance improvement Analyze fit

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End of Presentation

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