STRATEGIES IN ACTION. Strategic Management: Concepts & Cases 14 th Edition Fred David. Ch 5-1

Transcription

1 STRATEGIES IN ACTION Strategic Management: Concepts & Cases 14 th Edition Fred David -1

2 LONG TERM OBJECTIVES* Need to be: Quantitative Challenging Measurable Hierarchical Realistic Obtainable Understandable Congruent -2

3 Types of Strategies Vertical Integration Strategies* Forward Integration Vertical Integration Strategies Backward Integration Horizontal Integration -3

4 Vertical Integration Strategies* Forward Integration* Backward Integration* Horizontal* Integration Gaining ownership or increased control over distributors or retailers Seeking ownership or increased control of a firm s suppliers Seeking ownership or increased control over competitors -4

5 Types of Strategies Intensive Strategies* Market Penetration Intensive Strategies Market Development Product Development Diverification -5

6 Intensive Strategies* Market Penetration* Market Development* Product Development* Diversification* Seeking increased market share for present products or services in present markets through greater marketing efforts Introducing present products or services into new market segments (geographic areas) Seeking increased sales by improving present products or services or developing new ones Seeking to introduce new products into to a new market segment -6

7 Types of Strategies Intensive Strategies Via Internal Growth Products New Existing Product Development Market Penetration Diversification Market Development Existing Markets New

8 Types of Strategies Diversification Strategies* Related Diversification Diversification Strategies Unrelated Diversification -8

9 Diversification STRATEGIES Related Diversification* Adding new but related products or services Unrelated Diversification* Adding new, unrelated products or services Diversification into RELATED products, service, or market segments are typically more successful and more profitable than unrelated diversification strategies* -9

10 Types of Strategies Defensive Strategies* Retrenchment Defensive Strategies Divestiture Liquidation -10

11 Defensive Strategies* Retrenchment* Regrouping through cost and asset reduction to reverse declining sales and profit Divestiture* Selling a division or part of an organization Liquidation* Selling all of a company s assets, in parts, for their tangible worth -11

12 RETRENCHMENT STRATEGY Bankruptcy types (Derived from legal statues in the United States) Chapter 7 liquidation Chapter 9 municipalities Chapter 11 reorganization Chapter 12 family farmers Chapter 13 small businesses Chapter 11 is very common in North America, Stockholder/Equity Holders lose their investment, Vendors are paid only portion or none of what is owned them, Bond Holders typically are paid first. In 2008 a number of firms that should have been liquidated under Chapter 7 filed for Chapter 11 reorganization with infusion of capital and protection by the federal government. -12

13 Means for Achieving Strategies 1. Internal Resources / Talents 2. Strategic Alliances Typically contractual structure Scale or Link Alliances Joint venture 3. Merger / acquisition 4. Outsourcing -13

14 Outsourcing * Definition: Based upon the principle that a specific value chain activity can be completed by a third party superior to the firm completing the same activity. Note that primary activities or secondary activities that differentiate the firm from their competitors or provide unique value or a source of competitive advantage should not be outsourced. 14

15 Joint Venture* Definition*: A joint venture is a form of strategic alliance in which two or more firms create a legally independent company to share some resources to develop a competitive advantage Example: 1. Virgin Galactic: joint venture between the Virgin Group and Mojave Aerospace to create an aircraft that can reach altitudes of 62 miles above the Earth 2.Pharmaceutical corporations GlaxoSmithKline and Shenzhen Neptunus Interlong Bio-Technique Company (vaccines) 3. Novartis and Zhejiang Tianyuan Bio-Pharmaceutical, (vaccines) 15

16 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. -16