1. Prentice Hall, Inc. © 20087-1 STRATEGIC MANAGEMENT & BUSINESS POLICY 11 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER CHAPTER 7 Strategy Formulation: Corporate Strategy

2. Prentice Hall, Inc. © 20087-2 Corporate Strategy 3 Key Issues – –Firm’s directional strategy (Growth, Stability, Retrenchment) –Firm’s portfolio strategy –Firm’s parenting strategy

3. Prentice Hall, Inc. © 20087-3 Corporate Directional Strategies

4. Prentice Hall, Inc. © 20087-4 Corporate Strategy Directional Strategy – –Orientation toward growth Expansion, contraction, status quo Concentration or diversification Internal development or acquisitions, mergers, or alliances

5. Prentice Hall, Inc. © 20087-5 Corporate Strategy Directional Strategy – –3 Grand Strategies Growth strategies Stability strategies Retrenchment strategies

6. Prentice Hall, Inc. © 20087-6 Corporate Strategy Growth Strategies -- –External mechanisms Mergers Acquisitions Strategic alliances

7. Prentice Hall, Inc. © 20087-7 Corporate Strategy Growth Strategies -- –2 Basic forms Concentration Diversification

8. Prentice Hall, Inc. © 20087-8 Corporate Strategy Basic Concentration Strategies -- –Vertical growth –Horizontal growth

9. Prentice Hall, Inc. © 20087-9 Corporate Strategy Vertical Growth -- –Vertical integration Full integration Taper integration Quasi-integration Long-term contract

10. Prentice Hall, Inc. © 20087-10 Corporate Strategy Vertical Growth -- –Backward integration –Forward integration

11. Prentice Hall, Inc. © 20087-11 Corporate Strategy Concentration -- –Horizontal Growth Horizontal integration

12. Prentice Hall, Inc. © 20087-12 Corporate Strategy Basic Diversification Strategies -- –Concentric Diversification –Conglomerate Diversification

13. Prentice Hall, Inc. © 20087-13 Corporate Strategy Concentric Diversification -- –Growth into related industry –Search for synergies

14. Prentice Hall, Inc. © 20087-14 Corporate Strategy Conglomerate diversification -- –Growth into unrelated industry –Concern with financial considerations

15. Prentice Hall, Inc. © 20087-15 Corporate Strategy International Entry Options -- –Exporting –Licensing –Franchising –Joint Ventures –Acquisitions –Green-Field Development

16. Prentice Hall, Inc. © 20087-16 Corporate Strategy International Entry Options -- –Production Sharing –Turnkey Operation –BOT Concept (Build, Operate, Transfer) –Management Contracts

17. Prentice Hall, Inc. © 20087-17 Corporate Strategy Stability Strategies -- –Pause/proceed with caution –No change –Profit strategies

18. Prentice Hall, Inc. © 20087-18 Corporate Strategy Retrenchment Strategies -- –Turnaround –Captive Company Strategy –Selling out –Bankruptcy –Liquidation

19. Prentice Hall, Inc. © 20087-19 Corporate Strategy Portfolio Analysis -- –Resource commitment on best products to ensure continued success –Resource commitment on new costly products high risk

20. Prentice Hall, Inc. © 20087-20 BCG Matrix (Portfolio Analysis)

21. Prentice Hall, Inc. © 20087-21 GE Business Screen (Portfolio Analysis) A Winners B C Question Marks D F Average Businesses E Winners Losers G H Profit Producers StrongAverageWeak Low Medium High Business Strength/Competitive Position Industry Attractiveness

22. Prentice Hall, Inc. © 20087-22 Corporate Strategy Corporate Parenting Strategy -- –Strategic factors –performance improvement –Analyze fit