1. Strategy Actions BUS
R. Okumoto

2. Example: Strategy Actions
Generic Strategies
Technology Strategy
Segmentation Strategy
Competitive Strategy
Substitution Strategy
Horizontal Strategy
Business Unit Strategy
Diversification Strategy
Interrelationship or Portfolio Strategy
Defensive Strategy
Offensive Strategy
Leader Strategy
Me-Too Strategy
Chaining Strategy
M&A Strategy versus Organic Strategy
Niche / Notch Strategy
Business R. Okumoto

3. Strategy Actions Emerging / Growth Markets Mature Markets
Declining Markets
Business R. Okumoto

4. Emerging / Growth Markets
Strategy Action
Key Words
Strategy Objective
Situation Analysis
Framework Elements
Possible Risks
Technology Leadership Strategy
Improving Value Activities – speed / Cycle times – elimination of redundancies – inducing rapid changes – 1st Mover advantage – reduce barriers to entry – low cost substitution
Lower costs – Develop Unique position or customer demand – Create a differentiated position – Create a defensible position - Own the Market / Largest Market Share
Applied to either Product or Process Technologies to reduce costs or create a differentiation advantage
> Lower Cost Product
> Lower Cost Process
> !st Mover Advantage
> Create Unique Product
> High Development costs
> Possible market rejection
> Long acceptance cycle
> Pioneer
Technology Follower Strategy (Me – Too)
Newly Established Leader – Market opportunity- a lot of competitors
Capture key market position by moving faster and with less investment than Leader – Potential to capture No. 1 Spot -
There is an established Leader in the Market -
Copy-Like to reduce R&D
Copy-Like Marketing
Lower cost
Easier to use
Lower cost to Market
Leader lowers cost
Other entrants with same Strategy
Better Technology by Leader
Technology Licensing Strategy
Great Technology – Limited Resources – tapping unavailable markets
Address market opportunities with minimal investment – Accelerate standardization of technology
The company can not exploit the technology due to lack of resources, skill sets or can not develop a sustainable position
License to Good Competitors
License to Non-Competitors
License to Buyers
Builds a competitor
Reduced market opportunity
Segment Strategy
No economies of scale opportunities – custom – local – new area
Carve out a separable area and dominate.
Usually too small a market to draw attention. Might require very custom solutions. Might be a local business opportunity. Large Supplier has no advantage over a smaller supplier.
Create the opportunity for Economies of Scale
Standardize Mass Customization
M&A for Critical Mass within a Segment or Niche
May not be able to develop a profitable market segment
Larger competitors may use the segment as a Loss Leader
Complementary or Product Line Strategy
Broad requirements – multiple segments – complete solutions
Control the Buyer through: having a complete offering – Bundling to price compete (loss leader) – bigger footprint (installed base)
Complementary products are the opposite of substitute products -
Create Internal complementary products
Partner to create complementary products
Strong Value proposition
Additional investment requirements
Risk of consolidated margin deterioration
Possible lack of focus

5. Mature Markets Strategy Action Key Words Strategy Objective
Situation Analysis
Framework Elements
Possible Risks
Cost – Substitution Strategy
Dominate supplier – need another solution – stagnant pricing
Offensive – displace competitive offering
Defensive – fend off competitive offerings
Places a ceiling on prices – Buyer has many options so retains the bargaining power
Identify all substitution threats – identical / proximity / expanded
Direct & Indirect offerings
Compelling Value proposition
Competitor has established defensive positions to stop substitution
Raise switching costs
Complimentary supplier collaboration
Repurpose existing
Cost – Offensive Strategy -Switching
Low cost solutions – Design in – Redesign – Retraining – Risk of Failure
Eliminate switching costs to capture New customer
A customer has competitor products and will not change due to the cost of switching suppliers
Identify all switching costs, including the cost to switch back
Quantify & neutralize
Competitor may use relationship to “Design-into” customer with JV
Competitor reduces COO
Defensive customer financing
Cost – Economies of Scale
Production – Global – Logistical – Marketing – Purchasing - Partnering
Leverage Size or Scale to achieve a competitive cost advantage – Leverage Supply Chain
Larger volume translating into lower cost per unit
Consistent large volume
Improve capacity utilization
Higher operating Efficiencies
Increasing complexity may cause Dis-economies of Scale
Technology may off-set volume
M&A Strategy
Balanced competition – entrenched customer positions – time to market – buy versus make
Grow through acquisition versus organic
May also apply in emerging markets – gain critical mass – become dominant supplier
Understand all aspects of the served market
Understand the cost & method to consolidate the market
Regulatory – HSR
Bad acquisitions
Difficult to manage

6. Mature Markets Strategy Action Key Words Strategy Objective
Situation Analysis
Framework Elements
Possible Risks
Buyer Selection Strategy
No bargaining power – large discounting – commodity
Select Buyers that have or use minimal disruptive bargaining power
Where Buyers have significant bargaining power
Develop characteristics of “good” buyers
Position to have what the buyer needs & wants
Build strong relationship
> There may not be any “good” customers
Buyer Retention Strategy
Large customer base -
To retain all customers
The cost of switching is low enough to entice a change.
Raise or reinforce the cost of switching
Build strong customer relationships: Design-into customer processes
Competition eliminates or minimizes Switching costs
Competition develops compelling cost improvement to override switching costs
Vertical Integration Strategy
Control the process – quality control – cost reduction
Control the complete process & block competitors
The product or service has many integrated steps to complete
Identify all process steps
Bring under internal control
Very Cash intensive
Others may perform the steps better & faster
Horizontal Strategy
Multi-business objectives – diversified firms – business units – operating divisions
Leverage interrelationships: both internal & external
The need to coordinate the goals & strategies of all business units or relationships
Identify all tangible & intangible interrelationships
Trace interrelationships outside of firm
Asses importance
Map & communicate
May divest important misaligned businesses
Negative leverage from sharing too much information

7. Declining Markets Strategy Actions Key Words Strategy Objective
Situation Analysis
Framework Elements
Possible Risks
Leadership Strategy
Top dog in a bad market – Leverage – last person standing – the last supplier
To position the firm for above-average earnings by being the best of the last standing – Own what’s left
Market has matured…no growth…declining is size but firm wants to stay in the game
Assist competitors to exit or quit
Acquire competitors where appropriate
Commitment to stay
Stuck with non-producing assets
Market may decline to zero
Harvest Strategy
Liquidation – divestiture – milk it
To optimize cash flow from the business
The firm wants to exit the business
Reduce sales channels
Reduce operating costs
Reduce products
Eliminate bad customers
Liquidate assets
All customers may exit
May not be able to liquidate assets
Portfolio Strategy (Conglomerate)
Cyclical - Seasonal – Lumpy
To build a portfolio of businesses that are counter-cyclical to each other to smooth business cash flows
To address markets that are cyclical or very “lumpy”
Understand cyclical cycles for each business
Understand business synergies
Complex to manage diverse businesses
Possibly no operating synergies
Re-purposing
Re-packaging – Re-positioning
To leverage existing assets into new markets
Current application of products has expired
Understand Core product elements
Understand possible applications for Core product elements
Large investment required to re-purpose
Other Business process or elements missing to execute