1 Pertemuan Keempat Corporate Strategy Decisions

2 Corporate Growth Strategies Expansion; –Expansion by increasing penetration of current product-markets –Expansion by developing new product for current customers –Expansion by selling existing products to new segments or countries –Expansion by diversifying through organizational relationships or networks Diversification: –Vertical integration –Forward integration –Backward integration –Related or non related diversification

3 Expansions by Increasing Penetration and Developing New Products Requires actions such as making product or service improvements, cutting costs and prices, outspending competitors on advertising or promotions. A second type is through a product development strategy emphasizing the introduction of product-line extension or new product or service aimed at current customers

4 Expansion by Existing Products and Diversifying Examples: theaters, orchestras and other performing arts organizations. This may involve the creation of marketing programs aimed at non user or occasional user segments. The second type by building organizational networks. Such as Japanese keiretsu and korean chaebol.

5 Diversification Vertical integration; –Forward vertical integration; when a firm moves downstream in terms of the product flow –Backward integration; when a firm moves upstream by acquiring a supplier –Related diversification; when a firm develops or acquires another business that has products or customers in common with its current business

6 Allocating Corporate Resources Porfolio Models: –Boston Consulting Groups –Resource allocation and strategy implications –Alternative portfolio models Value Based Planning: –Discounted cash flow model

7 Conclusions: A clearly defined corporate mission answers the question “what business should we be in?” It provides guidance to a firm’s managers concerning what alternative product categories and market segments fit best with the firm’s competencies, resources and objectives. The four major paths to corporate growth: market penetration, market development, and diversification strategies.