Chapter 5 Strategies in Action Strategic Management Concepts

Chapter 5 Strategies in Action Strategic Management: Concepts & Cases 13 th Edition Fred David Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1

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Long Term Objectives n Quantitative n Challenging n Measurable n Hierarchical n Realistic n Obtainable n Understandable n Congruent Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 3

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Financial vs. Strategic Objectives Financial Objectives n. Growth in revenues n. Growth in earnings n. Higher dividends n. Larger profit margins n. Greater ROI n. Higher earnings per share n. Rising stock price n. Improved cash flow Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5

The Balanced Scorecard Robert Kaplan & David Norton – n. Strategy evaluation & control technique n. Balance financial measures with nonfinancial measures n. Balance shareholder objectives with customer & operational objectives Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 6

Levels of Strategies – Large Company Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 7

Levels of Strategies – Small Company Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8

Types of Strategies Forward Integration Vertical Integration Strategies Backward Integration Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 9

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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 10

Types of Strategies Market Penetration Intensive Strategies Market Development Product Development Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 11

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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 12

Types of Strategies Related Diversification Strategies Unrelated Diversification Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 13

Diversification Strategies Related Diversification Unrelated Diversification Adding new but related products or services Adding new, unrelated products or services Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14

Types of Strategies Retrenchment Defensive Strategies Divestiture Liquidation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15

Defensive Strategies Retrenchment Divestiture Liquidation Regrouping through cost and asset reduction to reverse declining sales and profit Selling a division or part of an organization Selling all of a company’s assets, in parts, for their tangible worth Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 16

Porter’s Five Generic Strategies Type 1 Cost Leadership – Low cost n Type 2 Cost Leadership – Best value n Type 3 Differentiation n Type 4 Focus – Low cost n Type 5 Focus – Best value n Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 17