corporate stragey & analysis(chocie)
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Chapter 6Strategy Formulation:Corporate Strategy
Dr.Vijaya Kumar Skyline College
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Three Key Issues:
Firms directional strategyFirms portfolio strategyFirms parenting strategy
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Directional Strategies
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Directional Strategy:Orientation toward growthExpand, cut back, status quo?Concentrate within current industry, diversify into other industries?Growth and expansion through internal development or acquisitions, mergers, or strategic alliances?
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Directional Strategy:Three Grand Strategies:Growth strategiesStability strategiesRetrenchment strategies
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Growth Strategies:Most widely pursued strategiesExternal mechanisms:MergersTransaction involving two or more firms in which stock is exchanged but only one firm survives.AcquisitionPurchase of a firm that is absorbed as an operating subsidiary of the acquiring firm.Strategic AlliancePartnership of two or more firms to achieve strategically significant objectives that are mutually beneficial.
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy 2 Basic Growth Strategies:
ConcentrationCurrent product line in one industry
DiversificationInto other product lines in other industries
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Basic Concentration Strategies:
Vertical growth
Horizontal growth
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Concentration:
Vertical growth
Vertical integrationFull integrationTaper integrationQuasi-integration
Backward integration
Forward integration
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Concentration:
Horizontal Growth
Horizontal integration
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy
Basic Diversification Strategies:
Concentric Diversification
Conglomerate Diversification
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Diversification:
Concentric:
Growth into related industrySearch for synergies
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Diversification:
Conglomerate:
Growth into unrelated industryConcern with financial considerations
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy InternationalEntryOptionsExportingLicensingFranchisingJoint VenturesAcquisitionsGreen-Field DevelopmentProduction SharingTurnkey OperationsBOT ConceptManagement Contracts
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Stability Strategies:
Pause/proceed with caution
No change
Profit strategies
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Retrenchment Strategies:
Turnaround
Captive Company Strategy
Selling out
Bankruptcy
Liquidation
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Portfolio Analysis
How much of our time and money should we spend on our best products to ensure that they continue to be successful?
How much of our time and money should we spend developing new costly products, most of which will never be successful?
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Portfolio Analysis
BCG (Boston Consulting Group) MatrixProduct life cycle and funding decisionsQuestion marksStarsCash cowsDogs
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *BCG Matrix
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *GE Business ScreenLong-term industry attractiveness
Business strength/competitive position
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *General Electrics Business ScreenSource: Adapted from Strategic Management in GE, Corporate Planning and Development, General Electric Corporation. Used by permission of General Electric Company.
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *International Portfolio Analysis2 Factors:Countrys attractivenessMarket size, rate of growth, regulation
Competitive strengthMarket share, product fit, contribution margin, market support
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Portfolio Matrix for Plotting Products by Country
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Portfolio Analysis
Advantages:Top management evaluates each of firms businesses individuallyUse of externally-oriented data to supplement management judgmentRaises issue of cash flow availabilityFacilitates communication
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Portfolio Analysis
Disadvantages:Difficult to define product/market segmentsStandard strategies can miss opportunitiesIllusion of scientific rigorValue-laden terms
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Corporate Parenting:
Views the corporation in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units.
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Corporate Parenting:
Strategic factorsThose elements of a company that determine its strategic success or failurePerformance improvementAnalyze fit
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Corporate Parenting:
Parenting-Fit MatrixSummarizes the various judgments regarding corporate/business unit fit for the corporation as a whole.
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Corporate Parenting:
Parenting-Fit Matrix2 DimensionsPositive contributions parent can makeNegative effects parent can have
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Parenting-Fit MatrixEdge of HeartlandHeartlandAlien TerritoryLowHighHighLowFIT between parenting opportunities and parenting characteristicsMISFIT between critical success factors and parenting characteristicsBallastValue Trap
Chapter 6Wheelen/Hunger
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Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Horizontal Strategy:Corporate strategy that cuts across business unit boundaries to build synergy across business units to improve the competitive position of one or more business units.
Chapter 6Wheelen/Hunger
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