Transcript Lec 13.ppt
Lecture 13 Strategies in Action Lecture Outline • Defensive Strategies Defensive Strategies Retrenchment Defensive Strategies Divestiture Liquidation Defensive Strategies Retrenchment – – Regrouping through cost and asset reduction to reverse declining sales and profit Defensive Strategies Guidelines for Retrenchment – Firm has failed to meet its objectives and goals consistently over time but has distinctive competencies Firm is one of the weaker competitors Inefficiency, low profitability, poor employee morale, and pressure from stockholders to improve performance. When an organization’s strategic managers have failed Very quick growth to large organization where a major internal reorganization is needed Defensive Strategies Divestiture – – Selling a division or part of an organization Defensive Strategies Guidelines for Divestiture – When firm has pursued retrenchment but failed to attain needed improvements When a division needs more resources than the firm can provide When a division is responsible for the firm’s overall poor performance When a division is a misfit with the organization When a large amount of cash is needed and cannot be obtained from other sources. Recent Divestitures Recent Divestitures Parent Company Part Being Divested Acquiring Company Dell Computer Cititgroup Maytag Wescoast Energy Westcoast Energy Westcoast Energy Credit Suisse emerson Electric General Motors DuPont web-hosting division Citi Capital Blodgett British Columbia Gas Union Energy Westcoast Capital CSFBdirect Chromalox Hughes Electronics drug division FON Group GE Capital Fleet Services Middleby Corporation BC Gas Epcor Utilities Epcor Utilities Bank of Montreal JPMorgan Partners Echostar Communications Bristol-Myers Squibb Defensive Strategies Liquidation– – Selling all of a company’s assets, in parts, for their tangible worth Defensive Strategies Guidelines for Liquidation – When both retrenchment and divestiture have been pursued unsuccessfully If the only alternative is bankruptcy, liquidation is an orderly alternative When stockholders can minimize their losses by selling the firm’s assets Means for Achieving Strategies Joint Venture/Partnering – Two or more companies form a temporary partnership or consortium for purpose of capitalizing on some opportunity. Means for Achieving Strategies Cooperative Arrangements – Research and development partnerships Cross-distribution agreements Cross-licensing agreements Cross-manufacturing agreements Joint-bidding consortia Means for Achieving Strategies Problems Causing Joint Ventures to Fail – Managers who must collaborate daily not involved in forming or shaping the venture Venture may benefit the companies but not the customers Venture not supported equally by both partners Venture may begin to compete with one of the partners more so than the other Means for Achieving Strategies Guidelines for Joint Ventures – Combination of privately held and publicly held can be synergistically combined Domestic forms joint venture with foreign firm, can obtain local management to reduce certain risks Distinctive competencies of two or more firms are complementary Overwhelming resources and risks where project is potentially very profitable (e.g., Alaska pipeline) Two or more smaller firms have trouble competing with larger firm A need exists to introduce a new technology quickly Recent Mergers Acquiring Firm Hewlett-Packard Ebay PepsiCo Sara Lee Phillips Petroleum Devon AMR Tellabs Acquired Firm Compaq Comuter HomesDirect Quaker Oats Earthgrains Company Conoco Anderson Exploration TWA Ocular Networks Key Terms • • • • • • • Acquisition Backward Integration Combination Strategy Concentric Diversification Conglomerate Diversification Cooperative Arrangements Cost Leadership Key Terms • • • • • • • Differentiation Diversification Strategies Divestiture Focus Forward Integration Franchising Generic Strategies Key Terms • • • • • • • Horizontal Diversification Horizontal Integration Integration Strategies Intensive Strategies Joint Venture Liquidation Long-Term Objectives Key Terms • • • • • • • • Market Development Market Penetration Merger Outsourcing Product Development Retrenchment Takeover Vertical Integration Thank You