1. Strategic Management In Action Chapter 7
Group 4

2. Corporate Strategy Growth Strategies Stability Strategies
Outline
Corporate Strategy
Growth Strategies
Stability Strategies
Renewal Strategies
Evaluation and Change

3. Corporate Strategy
Corporate Strategy->Functional Strategy-> Competitive Strategy
Factors that influence strategy
Economy, Environment, Government, etc
Corporate Strategy- Choices of what businesses to be in and what to do with those businesses. Companies must first set their corporate strategy before the other two organizational strategies can be discussed. The corporate strategy lays out the template for the overall direction in which the company wants to go and then functional and competitive strategies implement the corporate strategy and the means in which they will achieve it. Many different factors can affect corporate strategies. Lets take the economy for example. Many of the businesses have adjusted their corporate strategy because of the recession we fell into in Many of these companies have tightened their belt because they are afraid of what the future has in store. Dr. Boales always talks about all of the big corporations sitting on millions of dollars instead of going out and finding ways to be innovative and create a blue ocean for themselves. The environment is another example. When the culture around the world started becoming more environmentally friendly many companies saw this trend and reacted to it and changed their corporate strategy to entail being green. Government restrictions on businesses can also play a big role in the corporate strategy because the businesses have to adhere to the government.

4. Corporate Strategy What industries are you in? Red Bull
Single-business organization
Coca-Cola
Multiple-business organization
Pepsi
Red Bull
Which industry is your company in? Is your companys focus only on one industry or multiple industries. Does your company compete primarily in one industry or have you branched out into new industries. Coca-Cola is an example given and we can see that they are a huge company with multiple products in multiple markets but they primarily compete in the beverage industry. Their corporate strategy is the Coca-Cola beverage and everything else is second. On the other hand, someone who is in the same beverage market but competes in multiple industries is Pepsi. Pepsi owns Frito-Lay, other soft drinks like Mountain Dew, Quaker Food International, and then lastly their restaurant units, which are KFC, Taco Bell, and Pizza Hut under one roof. Knowing if youre a single business organization or a multiple- business organization is very important to your corporate strategy in how it is managed, implemented, and the direction.

5. Corporate Strategy Directions
Forward
Growth Strategy
Keeping things constant
Stability Strategy
Reversing decline
Renewal Strategy
There are three strategy directions when you look at corporate strategies. You need to decide if your business is wanting to move forward and use growth strategies, if your business wants to keep things status quo by using stability strategy, or if you are trying to reverse the decline of your company with a renewal strategy. Like I said in the earlier slides about factors that influence your corporate strategy many of the businesses in todays market are saving their money because of the recession and their strategy direction is keeping things constant. They are afraid of trying to go forward because of the shape the economy is in. If you are some of the other businesses in today’s economy you might not be that lucky to make the decision whether you want to move forward or stay constant because you are in a failing company. There are many businesses out their who are having to cut costs in a strategy direction in order to reverse the decline of their company.

6. Growth Strategy
Expands products offered through current or new business
5 different ways to grow:
Concentration
Vertical Integration
Horizontal Integration
Diversification
International

7. Concentration Focuses on primary line of business.
Tries to meet goals by expanding
Growth by adding new products/locations
3 options:
Product-market exploitation
Product-development
Market-development

8. Concentration Advantages Disadvantages
Organization becomes very good at what they do
Know competitors
Know what customers want
Exploit unique resources and core competencies
Vulnerability to industry changes.
Must be flexible with organizations direction

9. Vertical Integration Growth by gaining control of inputs and outputs
Can become their own supplier
Can become their own distributor
Overall, strategies benefits outweigh costs

10. Horizontal Integration
Growth by combining operations with competitors.
Problems:
Can create a gray area legally
Can decrease competition and hurt consumers

11. Diversification Growth by moving into a different industry
Combined operations result in greater performance
Look for a strategic fit
Not commonly used
2 major types:
Related: going into a related industry
Ex. Redbull energy shots
Unrelated: going into a completely unrelated industry
Ex. If Redbull were to produce shoes

12. International Growth by taking advantage of global opportunities
Discuss more in chapter 8

13. Implementation Mergers-acquisitions Internal development
Strategic planning

14. Mergers-Acquisitions
Merger: combining 2 or more organizations around same size through stock exchange.
Acquisition: outright purchase of an organization. Usually one large, one small organization. Can be friendly or hostile.

15. Internal Development
Growth by creating and developing new business activities.
Organizations use their own resources rather than combine with other organizations.

16. Strategic Partnering
Two or more organizations establish a partnership by combining resources.
Can partner with a supplier or distributor.
3 main types:
Joint venture: separate independent organizations. Own equal shares.
Long-term contracts: locks supplier into long- term contracts
Strategic alliances: sharing resources

17. Stability Strategy Why use stability strategy? Implementation
Volatile market
Previous Rapid growth, build resources
Maturity Stage
Small Companies
Implementation
“Take a breather”
Like I said earlier, companies will use this strategy when managers are faced with EXTERNAL factors making the future a little uncertain. At times like this companies will sit tight and wait to see what happens. Companies believe that growth would be slow or even no growth and would be wasting resources. Bypassing opportunities to move in blue oceans in order to avoid any risk. Another reason why a company might use the stability strategy is to build up resources after seeing a period of rapid growth and needs some down time to build up their resources. For example, Office depot had a growth strategy where they were opening up1,500 stores and then slowed their growth using stability in order to manage things at these stores and make sure everything was operating correctly. The maturing of a company might be a reason to use stability strategy because the firms life or industry does not have much more room for growth because there is little to no room for expansion. Small companies may pursue this strategy because they may feel that their business is successful enough just as it is and that it adequately meets their needs. Environmental, government, economic, factors can all play a role in why a company uses stability strategy. There is actual little implementation when using this strategy because you are using the same strategy previously used. You do not want to avert your core competencies and resources during this period. During this period instead of using your time to figure out your new strategy you can use this time to evaluate your business’s operations and activities and prepare yourself and resources for the next period.

18. Renewal Strategy Retrenchment – short run Turnaround – more serious
Implementation
Cost Cutting
Restructuring
Divestment
Spin-Off
Liquidation
Downsizing
Bankruptcy

19. Evaluating and Changing Strategy
Corporate Goals
Efficiency, Effectiveness and Productivity
Benchmarking
Portfolio Analysis
BCG Matrix
McKinsey – GE Stoplight Matrix
Product Market Evaluation Matrix
Change If Necessary