1. Strategic Management #5 Strategies in Action
Growth Planning Process
Goals
Long-Term Objectives
Blue Ocean Strategy
Types of Strategies
Integration Strategies
Intensive Strategies
Diversification Strategies

2. Growth Planning Process Overview
Vision Mission Values
SWOT
Performance Evaluation
Goals Objectives
Action Plans Implementation
Strategic Growth
Plan
Method of Competition
Dashboard
Strategy Development
Balanced Scorecard

3. Goals
Marketing
Infrastructure
Profitability

4. Long-Term Objectives Objectives -- Quantifiable Hierarchical
Results expected from pursuing certain strategies
Strategies represent actions to accomplish long-term objectives
Objectives --
Quantifiable
Measurable
Realistic
Understandable
Challenging
Hierarchical
Obtainable
Congruent
Time-line

5. Long-Term Objectives Strategists Should Avoid --
Managing by Extrapolation
Managing by Crisis
Managing by Subjectives
Managing by Hope

6. Financial vs. Strategic Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Higher profit margins
Higher earnings per share
Improved cash flow

7. Financial vs. Strategic Objectives
Larger market share
Quicker on-time delivery than rivals
Quicker design-to-market times than rivals
Lower costs than rivals
Higher product quality than rivals
Wider geographic coverage than rivals

8. Financial vs. Strategic Objectives
Trade-Off
Maximize short-term financial objectives – harm long-term strategic objectives
Pursue increased market share at the expense of short-term profitability
Tradeoffs related to risk of actions; concern for business ethics; need to preserve natural environment; social responsibility issues

9. Robert Kaplan & David Norton --
The Balanced Scorecard
Marketing Dashboard
Robert Kaplan & David Norton --
Easy-to-use analytics and reporting tool
Strategy evaluation & control technique
Balance financial measures with non-financial measures
Balance shareholder objectives with customer & operational objectives

22. Horizontal Integration
Types of Strategies
Forward Integration
Vertical Integration Strategies
Backward Integration
Horizontal Integration

23. Vertical Integration Strategies
Gain Control Over --
Distributors
Suppliers
Competitors

24. Forward Integration Strategies
Gain Control Over --
Distributors
Retailers
Guidelines --
Current distributors – expensive or unreliable
Availability of quality distributors – limited
Firm competing in industry expected to grow markedly
Firm has both capital & HR to manage new business of distribution
Current distributors have high profit margins

25. Backward Integration Strategies Ownership or Control --
Firm’s suppliers
Guidelines --
Current suppliers – expensive or unreliable
# of suppliers is small; # of competitors is large
High growth in industry sector
Firm has both capital & HR to manage new business
Stable prices are important
Current suppliers have high profit margins

26. Horizontal Integration Strategies Ownership or Control --
Firm’s competitors
Guidelines --
Gain monopolistic characteristics w/o federal government challenge
Competes in growing industry
Increased economies of scale – major competitive advantages
Faltering due to lack of managerial expertise or need for particular resource

27. Types of Strategies Market Penetration Market Development
Intensive Strategies
Market Development
Product Development

28. Intensive Strategies Intensive Efforts --
Improve competitive position with existing products
Intensive Efforts --

29. Market Penetration Strategies Increased Market Share --
Present products/services
Present markets
Greater marketing efforts
Guidelines --
Current markets not saturated
Usage rate of present customers can be increased significantly
Shares of competitors declining; industry sales increasing
Increased economies of scale provide major competitive advantage

30. Market Development Strategies
New Markets --
Present products/services to new geographic areas
Guidelines --
New channels of distribution – reliable, inexpensive, good quality
Firm is successful at what it does
Untapped/unsaturated markets
Excess production capacity
Basic industry rapidly becoming global
History of Apple

31. Product Development Strategies
Increased Sales --
Improving present products/services
Developing new products/services
Guidelines --
Products in maturity stage of life cycle
Industry characterized by rapid technological development
Competitors offer better-quality comparable prices
Compete in high-growth industry
Strong R&D capabilities l
Malcolm Gladwell

32. Unrelated Diversification
Types of Strategies
Related
Diversification
Diversification Strategies
Unrelated Diversification

33. Diversification
Related – When their value chains posses competitively valuable cross-business strategic fits
Unrelated – When their value chains are so dissimilar that no competitively valuable cross-business relationships exist
Post it Notes

34. Related Diversification Preferred To Capitalize on:
Transferring competitively valuable expertise
Combining the related activities of separate businesses into a single operation to lower costs
Exploiting common use of a well-known brand name
Cross-business collaboration to create competitively valuable resource strengths and capabilities

35. Diversification Strategies
Less Popular --
More difficult to manage diverse business activities
However --
The greatest risk of being in a single industry is having all your eggs in one basket

36. Related Diversification May be Effective When:
An organization competes in a no-growth or a slow growth industry
Adding new, but related, products would significantly enhance the sales of current products
New, but related products could be offered at highly competitive prices

37. Related Diversification May be
Effective When:
New, but related, products have seasonal sales levels that counterbalance an organization’s existing peaks and valleys
An organization’s products are currently in the declining stage of the product’s life cycle
An organization has a strong management team

38. Conglomerate Diversification Strategies
Guidelines --
Declining annual sales & profits
Capital & managerial ability to compete in new industry
Financial synergy between acquired and acquiring firms
Current markets for present products - saturated

39. Unrelated Diversification
Favors capitalizing on a portfolio of businesses that are capable of delivering excellent financial performance
Entails hunting to acquire companies:
Whose assets are undervalued
That are financially distressed
With high growth potential but are short on investment capital

40. Unrelated Diversification May be Effective When:
Revenues derived from an organization’s current products or services would increase by adding new unrelated products
An organization competes in a highly competitive or a no growth industry
An organization’s current distribution channels can be used to market new products to existing customers

41. Unrelated Diversification May be Effective When:
New products have counter-cyclical sales patterns
An organization’s basic industry is experiencing declining annual sales and profits
An organization has the capital and managerial talent to compete successfully in a new industry

42. Unrelated Diversification May be Effective When:
An organization has the opportunity to purchase an unrelated business as an attractive investment opportunity
There exists financial synergy between the acquired and acquiring firm
Existing markets for the present products are saturated
Antitrust action could be charged against a company

43. Blue Ocean Strategy
What are the advantages of competing with a Blue Ocean Strategy as compared with competitors in a Red Ocean environment?