Strategy in action- Corporate Strategy Business Strategy Chapter 5 Strategy in action- Corporate Strategy Business Strategy Functional Strategy

Chapter objectives After finish this chapter student will understanding what is: Corporate level strategy Business level strategy Functional level strategy Tools to develop strategy

Level of strategic plan Most of company develop strategy into 3 different level: Corporate level strategy Business level strategy Functional level strategy

Functional Strategies (R&D, Manufacturing, marketing, finance, Corporate Strategies Business Strategies Functional Strategies (R&D, Manufacturing, marketing, finance, human resource, …etc Level of Strategic plan Responsibility of corporate level Responsibility of business level Responsibility of head of functional department within business unit

Corporate level strategy Sometime called grand strategy or master strategy. Address overall of the organization strategic direction. For the organization which has a various strategic business unit, it may set the direction to each business unit differently (SBU-strategic business unit)

Type of corporate level strategies Growth strategy Concentration Market Penetration Market Development Product Development Diversification Concentric diversification Conglomerate diversification Integration Horizontal Integration Vertical Integration Stability strategy Retrenchment strategy Harvest Turnaround Divestiture Bankruptcy Liquidation

Growth strategy Involves organizational expansion in sales, earnings, and other criteria such as business units, product variety, customers, and geographic location. There are 3 type: Concentration Diversification Integration

Concentration strategy or intensive strategy, focus on effecting the growth of a single product or service or small number of closely related products or services. Current Products New Products Market Penetration Product Development Market development (Diversification) Current Markets New Markets

Diversification strategy entails effecting growth through the development of new areas that are clearly distinct from current business. Concentric diversification- firm seek new products that have technological or market synergies with existing product line. Conglomerate diversification-firm seek new businesses that have no relationship to its current technology, products, or markets.

Integration strategy involves expanding its operations line to related activities or the similar activities but to acquire more markets or products.

Horizontal and Vertical strategy Suppliers Background Integration Competitors Organizations Competitors Horizontal Integration Forward Integration Buyers

Stability strategy engages maintaining the statue in competition because of several reasons: If company doing well –not take risk from growing Difficult to growth according to resources stretched –no need to growth Market growth is slow– stay in the current market share.

Retrenchment Strategy or defensive strategy focus on the desire or need to reduce organizational operation, usually through cost reduction or asset reductions. There are five sub strategy. Harvest Turnaround Divestiture Bankruptcy Liquidation

Tools for developing corporate strategy 1- BCG Growth Matrix 2- GE 9 Cell

1- BCG Growth Matrix

2- GE 9 Cell

Business level strategy involves a distinctive positioning that firm established to competes successfully in a particular market.

Porter’s generic strategies

cost advantage strategy a firm tries to become the lower cost producer in the industry. However, its product must be seen as comparable to products of the quality and other expectations of the buyers. In differentiation strategy, a firm tries to produce something that is unique with respect to certain dimensions that are widely valued by buyers. The firm may position itself to cater to some or all of those dimensions. For providing these valued attributes the firm will charge a premium.

segmentation strategy or called focus strategy concentrates on a narrow segment and within that segment attempts to achieve either cost leadership or differentiate. Focus strategy are most effective when consumers have distinctive preferences or requirements and when rival firms are not attempting to specialize in the same target segment.

Functional Level strategy Involves business function operations to support business and corporate strategy. It focus on operation plan within marketing, productions, finance, human resource and...division.

Means for achieving strategy Joint Venture/Partnering Joint Venture is a popular strategy that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity. Cooperative arrangements include R&D partnerships, cross-distribution arrangement, cross-licensing arrangement, cross-manufacturing agreement, and joint-bidding consortia.

Merger/Acquisition This is two commonly used ways to pursue strategies. Merger occur when two organizations of about equal size unite to form one enterprise. An acquisition occur when a large organization purchases (acquires) a smaller firm, or vice versa.

Review and discussion Describe briefly type of strategy that you just already learned. Group Discussion -break a class into group (3-5) Topics: Suppose you are a manager of tourism company. -If your company is a global firm (big) what type of business strategy you will use to compete in the market? why? how to do it? -If your company is a local firm (small) what type of business strategy you will use to compete in the market? why? how to do it?