chapterchapter 22 themes themes for class discussion

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ChapterChapter 22 ThemesThemesfor Class Discussionfor Class Discussion

The Marketing Implications The Marketing Implications of Corporate and of Corporate and

Business StrategiesBusiness Strategies

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

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What doesWhat does strategystrategy mean?mean?

•• A fundamental pattern of present and A fundamental pattern of present and planned objectives, resource deployments, planned objectives, resource deployments, and interactions of an organization with and interactions of an organization with markets, competitors, and other markets, competitors, and other markets, competitors, and other markets, competitors, and other environmental factors.environmental factors.

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Corporate Growth StrategiesCorporate Growth Strategies ((Exhibit Exhibit 22..99))

Market penetration strategiesMarket penetration strategies• Increase market share• Increase product usage

Increase frequency of useIncrease quantity usedNew applications

Product development Product development strategiesstrategies

• Product improvements• Product-line extensions• New products for same

market

Current products New products

Cu

rren

tm

arke

ts

New applications market

Market development Market development strategiesstrategies

• Expand markets for existing productsGeographic expansionTarget new segments

Diversification strategiesDiversification strategies• Vertical integration

Forward/backward integration• Diversification into related bus

(concentric diversification)• Diversification into unrelated

businesses (conglomerate diversification)

New

mar

kets

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Allocating Corporate Resources:Allocating Corporate Resources:The BCG Growth Share MatrixThe BCG Growth Share Matrix (Exhibit (Exhibit 22..1010))

HighStars Question marks

Market

5

64 12

Low

Dogs

10 0.1Relative market share

Marketgrowthrate(inconstantdollars)

10%

1

Source: Adapted from Barry Hedley, “Strategy and the Business Portfolio,” Long Range Planning 10 (February 1977).

6

9

87Cash cows

10 13

3

11 12

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Cash Flows Across Businesses inCash Flows Across Businesses inthe BCG Portfolio Modelthe BCG Portfolio Model (Exhibit (Exhibit 22..1111))

Gro

wth

rat

e (c

ash

use

)

High Stars Questionmarks

Cash

Gro

wth

rat

e (c

ash

use

)

LowCash cows Dogs

High LowRelative market share

Desired direction of business development

CashFlows

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Tools for Allocating Resources inTools for Allocating Resources inDiversified Companies: The GEDiversified Companies: The GENineNine--Cell MatrixCell Matrix

Bu

sin

ess’

s co

mp

etit

ive

po

siti

on

High

Industry attractivenessHigh Medium Low

1 1 2

Bu

sin

ess’

s co

mp

etit

ive

po

siti

on

High

Low

Medium

1 1 2

1 2 3

2 3 3

1 Invest/grow2 Selective investment/ maintain position3 Harvest/divest

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Sources of Competitive Advantage atSources of Competitive Advantage atCorporate LevelCorporate Level

•• Financial resourcesFinancial resources•• Human resourcesHuman resources•• Corporate R&DCorporate R&D•• Corporate R&DCorporate R&D•• Organisational processesOrganisational processes

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SynergySynergy

•• KnowledgeKnowledge--basedbased•• Corporate identity and corporate brandCorporate identity and corporate brand