Transcript Chapter 5 Strategies in Action

Chapter 5
Strategies in Action
Strategic Management:
Concepts & Cases
12th Edition
Fred David
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Publishing as Prentice Hall
Ch 5 -1
Long-Term Objectives
Objectives –
Quantifiable
Measurable
Realistic
Understandable
Challenging
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Ch 5 -2
Long-Term Objectives
Objectives –
Hierarchical
Obtainable
Congruent
Timeline
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Ch 5 -3
Varying Performance Measures
by Organizational Level
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Ch 5 -4
Financial vs. Strategic
Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Higher profit margins
Higher earnings per share
Improved cash flow
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Ch 5 -5
Not Managing by Objective
Managing by Extrapolation – “If it ain’t broke, don’t
fix it.”
Managing by Crisis – The true measure of a good
strategist is the ability to fix problems
Managing by Subjectives – “Do your own thing, the
best way you know how.”
Managing by Hope – The future is full of uncertainty
and if first you don’t succeed, then you may on the
second or third try.
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Ch 5 -6
The Balanced Scorecard
Robert Kaplan & David Norton –
Strategy evaluation & control technique
Balance financial measures with nonfinancial
measures
Balance shareholder objectives with customer
& operational objectives
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Ch 5 -7
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Ch 5 -8
Types of Strategies
Corp
Level
A Large Company
Division Level
Functional Level
Operational Level
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Ch 5 -9
Types of Strategies
Forward
Integration
Vertical
Integration
Strategies
Backward
Integration
Horizontal
Integration
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Ch 5 -10
Types of Strategies
Market
Penetration
Intensive
Strategies
Market
Development
Product
Development
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Ch 5 -11
Types of Strategies
Related
Diversification
Diversification
Strategies
Unrelated
Diversification
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Ch 5 -12
Types of Strategies
Retrenchment
Defensive
Strategies
Divestiture
Liquidation
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Ch 5 -13
Natural Environment Perspective
Songbirds and Coral Reefs in Trouble
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Songbirds – 76 songbird species have
dramatically declined in numbers
Coral Reefs – Trawl fishing destroys
coral reefs

Total area of fully protected
marine habitats in the US is only
50 square miles (93 million acres
of national wildlife refuges and
national parks)
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Ch 5 -14
2007 Examples
Forward
Integration
Southwest Airlines selling tickets
through Galileo
Backward
Integration
Hilton Hotels could acquire a large
furniture manufacturer
Horizontal
Integration
Huntington Bancshares and Sky
Financial Group merged
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Ch 5 -15
2007 Examples
Market
Penetration
McDonald’s selling millions of
“Shrek the Third” items to a
healthier image
Market
Development
Burger King opened its first
restaurant in Japan
Product
Development
Google introduced “Google
Presents” to compete with
PowerPoint
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Ch 5 -16
2007 Examples
Related
Diversification
Unrelated
Diversification
Retrenchment
MGM Mirage is opening its first noncasino luxury hotel
Ford Motor Company entered the
industrial bank business
Discovery Channel closed 103 mallbased and stand-alone stores
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Ch 5 -17
2007 Examples
Divestiture
Liquidation
Whirlpool sold its struggling Hoover
floor-care business to Techtronic
Industries
Follow Me Charters sold all of its
assets and ceased doing business
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Ch 5 -18
Michael Porter’s Generic Strategies
Cost Leadership Strategies
(Low-Cost & Best-Value)
Differentiation Strategies
Focus Strategies
(Low-Cost Focus &
Best-Value Focus)
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Ch 5 -19
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Ch 5 -20
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Ch 5 -21
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Ch 5 -22
First Mover Advantages

Benefits a firm may achieve by entering a
new market or developing a new product or
service prior to rival firms
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Ch 5 -23
Outsourcing
Business-Process Outsourcing
(BPO)

Companies taking over the functional
operations of other firms
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Ch 5 -24
Global Perspective
Joint Ventures Mandatory for All Foreign Firms in India
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India’s experiencing fastest growth in over 18 years
Second fastest (behind China) growth rate at 10.7%
Also experiencing 6.6% inflation
Gap between rich and
poor widening
Joint venture mandatory
Vast majority of joint
ventures fail
Tourism also growing
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Ch 5 -25
Strategic Management in Nonprofit and
Governmental Organizations
Educational Institutions
Medical Organizations
Governmental Agencies and Departments
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Ch 5 -26
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permission of the publisher. Printed in the United States of America.
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Ch 5 -27