corporate stragey & analysis(chocie)

Prentice Hall, 2002Chapter 6Wheelen/Hunger *Chapter 6Strategy Formulation:Corporate Strategy

Dr.Vijaya Kumar Skyline College

Chapter 6Wheelen/Hunger

Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Three Key Issues:

Firms directional strategyFirms portfolio strategyFirms parenting strategy


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Directional Strategies


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?


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Directional Strategy:Three Grand Strategies:Growth strategiesStability strategiesRetrenchment strategies


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.


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy 2 Basic Growth Strategies:

ConcentrationCurrent product line in one industry

DiversificationInto other product lines in other industries


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Basic Concentration Strategies:

Vertical growth

Horizontal growth


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Concentration:

Vertical growth

Vertical integrationFull integrationTaper integrationQuasi-integration

Backward integration

Forward integration


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Concentration:

Horizontal Growth

Horizontal integration


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy

Basic Diversification Strategies:

Concentric Diversification

Conglomerate Diversification


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Diversification:

Concentric:

Growth into related industrySearch for synergies


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Diversification:

Conglomerate:

Growth into unrelated industryConcern with financial considerations


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy InternationalEntryOptionsExportingLicensingFranchisingJoint VenturesAcquisitionsGreen-Field DevelopmentProduction SharingTurnkey OperationsBOT ConceptManagement Contracts


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Stability Strategies:

Pause/proceed with caution

No change

Profit strategies


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Corporate Strategy Retrenchment Strategies:

Turnaround

Captive Company Strategy

Selling out

Bankruptcy

Liquidation


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?



BCG (Boston Consulting Group) MatrixProduct life cycle and funding decisionsQuestion marksStarsCash cowsDogs


Prentice Hall, 2002Chapter 6Wheelen/Hunger *BCG Matrix


Prentice Hall, 2002Chapter 6Wheelen/Hunger *GE Business ScreenLong-term industry attractiveness

Business strength/competitive position


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.


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


Prentice Hall, 2002Chapter 6Wheelen/Hunger *Portfolio Matrix for Plotting Products by Country



Advantages:Top management evaluates each of firms businesses individuallyUse of externally-oriented data to supplement management judgmentRaises issue of cash flow availabilityFacilitates communication



Disadvantages:Difficult to define product/market segmentsStandard strategies can miss opportunitiesIllusion of scientific rigorValue-laden terms


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.



Strategic factorsThose elements of a company that determine its strategic success or failurePerformance improvementAnalyze fit



Parenting-Fit MatrixSummarizes the various judgments regarding corporate/business unit fit for the corporation as a whole.



Parenting-Fit Matrix2 DimensionsPositive contributions parent can makeNegative effects parent can have


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


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.


*******************************

corporate stragey & analysis(chocie)

Documents

wheelenhunger prentice

strategy formulation

corporate strategydr

basic growth strategies

grand strategies

acquiring firm

product lines

strategic alliances