Chapter 5 Strategies in Action Week 5

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -2 Long Term Objectives Quantitative Measurable Realistic Understandable Challenging Hierarchical Obtainable Congruent

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -3

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -4 Financial vs. Strategic Objectives Financial Objectives Growth in revenues Growth in earnings Higher dividends Larger profit margins Greater ROI Higher earnings per share Rising stock price Improved cash flow Strategies Objectives Larger Market Share Quicker on-time delivery Shorter design to market Lower cost Higher product quality Wider Greographic coverage Achieving technology leadership

Not Managing By Objectives Avoid manage business based on:  Managing by extrapolation  Managing by crisis  Managing by subjectives  Managing by hope Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -5

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -6 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 © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -7 Levels of Strategies –

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -8 Types of Strategies Vertical Integration Strategies Forward Integration Backward Integration

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -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 Ch Types of Strategies Intensive Strategies Market Penetration Market Development Product Development

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

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

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

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

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -16

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

Cost Leadership Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -18

Differentiation Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -19

Focus Strategies Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -20

Means for achieving strategies Cooperation Among Competitor  Join Venture  Merger/Acquisition First mover advantage Outsourcing Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -21

THANK U Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 5 -22