Session 5 Corporate Strategies
Corporate Strategies Stability strategy Development strategies –integration strategies –intensive strategies –diversification strategies Withdrawal strategies
Integration Strategies horizontal integration –Control (merge & acquisition) the competitors Advantages and disadvantages In such cases: –Monopolize the market in certain area –Great potential of the industry –Scale economy –Have the necessary funds and HR
Forward integration –Control the sales channel In such Cases –Current sales partner not reliable –High growth rate of the industry –Have the funds and HR for that action –Know the customer’s needs Vertical Integration
Backward integration –Control the suppliers In such Cases –The current suppliers not reliable –Too few suppliers –High growth rate of the industry –Have the funds and HR to do this action –Price is critical for the industry
Advantages and disadvantages of vertical integration. Discussion: outsourcing and networks
Ansoff matrix
Intensive Strategies market penetration –Increase the market share by more marketing efforts market development –Entering new market by current products and services product development –Increase sales by modifying the current products or developing new products
Diversification Strategies related diversification (Concentric diversification) –Add new but related products or services In such Cases –The new products will push the sales of current products –The balanced seasonal fluctuation –Current products at the declining stage
Value chain activity purchasetechnologyoperationSalechannelservice business A business B business C business D business E Collective purchase to increase bargaining power Common technology and share R&D Common brand ， collective promotion or service No strategic connection
Unrelated diversification (conglomerate diversification) –Add new and unrelated products In such cases –Main business on the declining stage –Current market is mature –For profits
Withdrawal strategy retrenchment divestiture liquidation