Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -1 Chapter 5 Strategies in Action Strategic Management: Concepts & Cases 12 th Edition Fred David

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -2 Long-Term Objectives Objectives –  Quantifiable  Measurable  Realistic  Understandable  Challenging

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -3 Long-Term Objectives Objectives –  Hierarchical  Obtainable  Congruent  Timeline

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -4 Varying Performance Measures by Organizational Level

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -5 Financial vs. Strategic Objectives Financial Objectives  Growth in revenues  Growth in earnings  Higher dividends  Higher profit margins  Higher earnings per share  Improved cash flow

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -6 Not Managing by Objective  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 first you don’t succeed, then you may on the second or third try.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -7 The Balanced Scorecard Robert Kaplan & David Norton –  Strategy evaluation & control technique  Balance financial measures with nonfinancial measures  Balance shareholder objectives with customer & operational objectives

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -8

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -9 Types of Strategies Operational Level Functional Level Division Level Corp Level A Large Company

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Types of Strategies Vertical Integration Strategies Forward Integration Backward Integration Horizontal Integration

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Types of Strategies Intensive Strategies Market Penetration Market Development Product Development

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Types of Strategies Diversification Strategies Related Diversification Unrelated Diversification

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Types of Strategies Defensive Strategies Retrenchment Divestiture Liquidation

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Natural Environment Perspective Songbirds and Coral Reefs in Trouble Songbirds – 76 songbird species have dramatically declined in numbers Coral Reefs – Trawl fishing destroys coral reefs  Total area of fully protected marine habitats in the US is only 50 square miles (93 million acres of national wildlife refuges and national parks)

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Examples Forward Integration Southwest Airlines selling tickets through Galileo Backward Integration Hilton Hotels could acquire a large furniture manufacturer Horizontal Integration Huntington Bancshares and Sky Financial Group merged

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Examples Market Penetration McDonald’s selling millions of “Shrek the Third” items to a healthier image Market Development Burger King opened its first restaurant in Japan Product Development Google introduced “Google Presents” to compete with PowerPoint

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Examples Related Diversification MGM Mirage is opening its first non- casino luxury hotel Unrelated Diversification Ford Motor Company entered the industrial bank business Retrenchment Discovery Channel closed 103 mall- based and stand-alone stores

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Examples Divestiture Whirlpool sold its struggling Hoover floor-care business to Techtronic Industries Liquidation Follow Me Charters sold all of its assets and ceased doing business

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Michael Porter’s Generic Strategies Cost Leadership Strategies (Low-Cost & Best-Value) Differentiation Strategies Focus Strategies (Low-Cost Focus & Best-Value Focus)

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -20

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -21

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -22

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch First Mover Advantages  Benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Outsourcing  Companies taking over the functional operations of other firms Business-Process Outsourcing (BPO)

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Global Perspective Joint Ventures Mandatory for All Foreign Firms in India India’s experiencing fastest growth in over 18 years Second fastest (behind China) growth rate at 10.7% Also experiencing 6.6% inflation Gap between rich and poor widening Joint venture mandatory Vast majority of joint ventures fail Tourism also growing

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch Strategic Management in Nonprofit and Governmental Organizations  Educational Institutions  Medical Organizations  Governmental Agencies and Departments

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 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.