Example of corporate strategy Increase sales through additional sales staffing. Increase sales by increasing the number of locations.

Increase profitability by laying off staff. Example of directional strategy Whether you're just starting out in your new business or planning to grow your existing one, preparing for the future can be important in guiding your company in the right direction. When budgeting and planning with your staff, choosing a directional strategy to implement companywide can encourage managers and staff to see the whole picture as the business moves forward. irectional strategy is the game plan a company decides on and implements to grow business, increase profits, and accomplish goals and objectives. !mall businesses to large corporations can create their own types of directional strategies that wor" for the focus and scope of each individual business. #or example, certain companies may find that a directional portfolio strategy wor"s best, while other businesses may choose to follow a parenting directional strategy. $ directional strategy is often created with an eye toward one or more of three elements% stability, growth and retrenchment. $s a small-business owner, before creating your directional strategy, you must define what your goal is, whether it's to stabili&e your company's earnings, grow profits, or cut bac" on staff or spending to move forward. 'nce you assess your business needs, you can better choose the type of directional strategy that suits your company. #or example, if your small business is hemorrhaging money, a retrenchment strategy may wor" best for you. uring retrenchment, you may conduct layoffs, eliminate specific products from your

line, or file for ban"ruptcy or li(uidation. customer base.

Portfolio Strategy $ strategy portfolio is a coherent set of options that address new capabilities and new potential mar"ets. )his enables tactical opportunism within the company's long-term mission. eveloping your strategy portfolio is an essential step in your company's strategic road mapping process. It ensures that all product strategies and mar"eting strategies are aligned with the company's mission and that the company remains *or becomes+ nimble. efinition of ',ertical Integration' When a company expands its business into areas that are at different points on the same production path, such as when a manufacturer owns its supplier and-or distributor. ,ertical integration can help companies reduce costs and improve efficiency by decreasing transportation expenses and reducing turnaround time, among other advantages. .owever, sometimes it is more effective for a company to rely on the expertise and economies of scale of other vendors rather than be vertically integrated.

Examples of vertical integration include%

- $ mortgage company that both

originates and services mortgages, meaning that it both lends money to

homebuyers and collects

their monthly payments.

solar

power company that produces photovoltaic products and also manufacturer s the cells, and to

wafers modules

create those products would considered vertically be

integrated.

- )he merger of /ive 0ation and )ic"etmaster created vertically integrated entertainment company that manages and represents artists, produces shows sells tic"ets. .ori&ontal integration is when a group of businesses or firms decides to merge because they will appeal to more people based off of similarity of products. $n example of hori&ontal integration would be a business that normally manufactures televisions merging with another business that sells the same product, such as 1enith merging with !ony. .ori&ontal integration is used to end competition between businesses and to maximi&e profit or create a monopoly. .ori&ontal integration is the opposite of vertical integration which is investing in natural resources used to manufacture the product instead of merging similar companies. and event a

$n example of hori&ontal integration is an automobile manufacturer's ac(uisition of a sport utility vehicle manufacturer. efinition of '.ori&ontal Integration' )he ac(uisition of additional business activities that are at the same level of the value chain in similar or different industries. )his can be achieved by internal or external expansion. 2ecause the different firms are involved in the same stage of production, hori&ontal integration allows them to share resources at that level. If the products offered by the companies are the same or similar, it is a merger of competitors. If all of the producers of a particular good or service in a given mar"et were to merge, it would result in the creation of a monopoly. $lso called lateral integration.

Investopedia explains '.ori&ontal Integration' Examples hori&ontal integration include an oil company's ac(uisition of additional refineries, oil or of

an automobile manufacturer'

ac(uisition

of a light truc" manufacturer. .ori&ontal integration offers several advantages, including favorable economies of scale, economies or scope, increased mar"et power and reduction in the costs associated with international trade operating foreign mar"ets. .ori&ontal integration is by in

in contrast to

vertical integration, where expand different activities, "nown upstream downstream activities. iversification is a strategy for company growth through starting up or ac(uiring businesses outside the company's current products and mar"ets *p.33 4otler+ )his means that a company is developing new mar"ets and new products. as or firms into

I first found about 5c6afe in 7apan and was ama&ed by its different style from traditional 5c onald store. I found more information online at 5c6afe's website.

http%--www.mccafecoffee.com-

5c onald's starting of 5c6afe is an excellent example of diversification. 2y starting 5c6afe, 5c onald's is offering new products that were not available in traditional 5c onald's stores. 5c6afe speciali&es in serving cafes, which attracts customers that usually don't come to 5c onald's to eat fastfood. 5c6afe is also not only a product development. 5c6afe has its own section of the store and clearly distinguishes itself from the traditional 5c onald store. )he store has modern, yet relaxing mood. )his is important to attract new mar"et segments, probably customers that go to cafe not to satisfy hunger, but possibly to ta"e a sip of coffee and

chat in a relaxing environment. )hus, 5c onald's 5c6afe serves as an example performing diversification by developing both new products and new mar"ets. )he older your business gets, the more difficult it might be to increase mar"et share or profits, especially if you8re see"ing exponential growth. iversifying into new business areas not only

gives you the opportunity to significantly increase your income, but it also protects you in the event your core business ta"es a temporary or long-term nosedive. $naly&e diversification strategies based on their potential revenues and affect on your core business to achieve them. Diversification iversification means branching out into new business opportunities, not just expanding your existing business. #or example, if you have a dine-in restaurant in one town, opening a second restaurant in the next town is expansion, not diversification. $dding corporate catering is an example of diversification. 'ffering coo"ing classes during the mornings, when you are not open for brea"fast, would be another example of diversification. Reasons for Diversification 2efore you begin planning a diversification strategy, write the reasons you are considering doing so. 9ou might have excess capital you can8t put into your existing business with a reasonable return on this reinvestment. 9our company might be too dependent on one product or a handful of customers, which could have devastating conse(uences if you see new competition or one or two customers leave you. 9ou might have built business relationships or a customer base that ma"e it easy to enter a new mar"et. 'nce you "now exactly why you are considering diversifying, you can better loo" at the specific advantages and disadvantages of doing so. Related vs. Unrelated Strategies $s you consider diversifying, decide if you want to stay in a related business or go into a completely different mar"et. !taying within your mar"et lets you use your contacts, brand and customer base, such as a pet sitter offering grooming services. :oing into a new mar"et, such

as a pet sitter opening a landscaping business, offers more protection against a downturn in a specific industry. 5oving into a related business can damage your brand if the new effort fails. !tarting a business in a completely new area will often re(uire more time and money, since you are starting from scratch. Brand Diversification In some cases, you can diversify by selling the same product, or a similar one, under a different name. $ women8s apparel store that adds men8s and children8s clothing to try to expand its business might damage its brand among women who are see"ing a store that speciali&es in high-end women8s apparel. 'pening a second store under another name and selling men8s and children8s apparel diversifies your business. $nother example of diversification by brand would be an upscale women8s clothing store opening a second women8s clothing store under another name and selling affordable women8s apparel. Considerations When choosing diversification strategies, loo" at your current customer base to determine if you can sell them different items or if you can add new customers by selling them a similar product at a different price or under a different name. ;eview your current suppliers, sales reps and distribution partners to determine if you can use them to sell different products, reducing your start-up costs. 6alculate the ongoing operating costs and stress on your administration of a diversification strategy and determine if you can support two different businesses or product lines. 6onsider the impact of one product line competing with the other if you will sell similar items. 5erger and ac(uisitions in the ban"ing industry in <=>?. @osted% ecember ?>st, <=>< in Headlines A Read More

Globe Telecom extends offer period for Bayan debt

$yala-led :lobe )elecom is extending its early tender offer period to buy 2ayan )elecommunications obligations from the smaller telco8s creditors, in line with moves for the two firms8 impending merger. @osted% 0ovember <<nd, <=>< in Latest Business Stories A Read More
BPI inches closer to sealing deal with PNB

In a game-changing move, 2an" of the @hilippine Islands will consolidate with @hilippine 0ational 2an", ushering in a new wave of mergers and ac(uisitions among local ban"s. @osted% 0ovember <<nd, <=>< in Editor's Pick,Headlines A Read More DMCI in bid to take over British mining company

56I .oldings is leading a consortium that plans to ta"e over B4-listed nic"el production company E04 @lc, which is developing the $coje mining project in 1ambales, in a deal that values the 2ritish company at C3D.E million. @osted% $ugust Dth, <=>< in Latest Business Stories A Read More
Corporate takeover jitters

0o final documents may have been signed, but from the loo"s of it, denials notwithstanding, broadcast giant :5$ 0etwor" Inc. is poised to come under the umbrella of the conglomerate headed by businessman 5anuel ,. @angilinan. @osted% 7uly ><th, <=>< in Columnists A Read More Asiatr st bank ceases operations

$siatrust

evelopment 2an" has given up its ban"ing license effective 7une >E alongside the

transfer of ban"ing assets and liabilities to $sia Bnited 2an" *$B2+. @osted% 7une >Dth, <=>< in Latest Business Stories A Read More
Time for P to shine! says Citi

2y Doris C. Dumlao
"hare on facebook"hare

)he @hilippines has come of age as a vibrant mar"etplace for capital-raising as well as merger and ac(uisition *5F$+ deals, even as global investment appetite has been tempered by the euro&one crisis, a top regional official of 6itigroup said. .ong 4ong-based #arhan #aru(ui, head of global ban"ing for $sia-@acific at 6iti, said in a recent G...H @osted% 7une >>th, <=>< in Headlines A Read More Central bank okays AUB takeover of Asiatr st

$sia Bnited 2an" has obtained approval from the 2ang"o !entral ng @ilipinas to ta"e over the <E-branch thrift ban" $siatrust evelopment 2an".

)he /ucio )an group and !an 5iguel 6orp. announced Wednesday they have signed a deal under which !56 would ac(uire substantial shares in both @hilippine $irlines and $ir @hilippines as well as management control of the two companies. @osted% $pril 3th, <=>< in Featured Gallery,Latest Business Stories,P otos ! "ideos A Read More
P#regold b#ying "$% for P&'()B

2y Doris C. Dumlao
"hare on facebook"hare #

;etailer @uregold @rice 6lub has agreed to buy >== percent of upscale retailer !F; 5embership !hopping for @>I.J billion via a share swap with the family of /ucio 6o, which also controls the former. /icensing Definition! A business arrangement in which one company gives another company permission to manufacture its product
for a specified payment

)here are few faster or more profitable ways to grow your business than by licensing patents, trademar"s, copyrights, designs, and other intellectual property to others. /icensing lets you instantly tap the existing production, distribution and mar"eting systems that other companies may have spent decades building. In return, you get a percentage of the revenue from products or services sold under your license. /icensing fees typically amount to a small percentage of the sales price but can add up (uic"ly.

Written contract under which the owner of a copyright, "now how, patent, servicemar", trademar", or other intellectual property, allows a licensee to use, ma"e, or sell copies of the original. !uch agreements usually limit the scope or field of the licensee, and specify whether the license is exclusive or non-exclusive, and whether the licensee will pay royalties or some other consideration in exchange. While licensing agreements are mainly used in

commerciali&ation of a technology, they are also used by franchisers to promote sales of goods and services.

franchising

efinition
$rran%ement where

one &arty *the 'ranc iser+ %rants another

party

*the 'ranc isee+

the ri% t to

use

its trademark or trade-name as well as certain (usiness systems and &rocesses, to &roduce and market a good or ser)ice according to certain s&eci'ications. )he franchisee usually &ays a one-time 'ranc ise 'ee &lus a percentage tested &roducts, ofsales re)enue as royalty, and %ains *>+ immediate name reco%nition, dKcor, *<+ tried and

*?+ standard (uildin% desi%n and

*3+ detailed tec ni*ues in

running

and &romotin% the (usiness, *J+ trainin% of em&loyees, and *I+ ongoing help in promoting and upgrading of the products. )he franchiser gains rapid expansion of business and earnin%s at minimum ca&ital
outlay.

efinition of '7oint ,enture - 7,' $ business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific tas". )his tas" can be a new project or any other business activity. In a joint venture *7,+, each of the participants is responsible for profits, losses and

costs associated with it. .owever, the venture is its own entity, separate and apart from the participants' other business interests.

Investopedia !ays Investopedia explains '7oint ,enture - 7,' $lthough 7,s represent a great way to pool capital and expertise and reduce the exposure of ris" to all involved, they do present some uni(ue challenges as well. #or instance, if party $ comes up with an idea that allows the 7, to flourish, what cut of the profits does party $ getL oes the party simply receive a cut based on the original investment pool or is there recognition of the party's contribution above and beyond the initial sta"eL #or this and other reasons, it is estimated that nearly half of all 7,s last less than four years and end in animosity. /ucio tan and )oyota motor and juice "ing alfredo yao
Greenfield *evelopment 6orporation

is rapidly expanding through aggressive development of

2usiness @ar"s, ;esidential 6ommunities, and /ifestyle 5alls. )he term greenfield was originally used in construction and development to reference land that has never been used *e.g. green or new+, where there was no need to demolish or rebuild any existing structures. )oday, the term greenfield project is used in many industries, including software development where it means to start a project without the need to consider any prior wor". $ :reenfield project is one which is not constrained by prior wor". It is constructing on unused land where there is no need to remodel or demolish an existing structure. !uch projects are often coveted by engineers.

!ome examples of :reenfield projects are new factories, power plants or airports which are built from scratch. )hose facilities which are modified- upgraded are called brownfield projects.

production sharing efinition $n a%reement to s are the &roduction or extraction costs between two %o)ernments, a government and a cor&oration, or a corporation and an indi)idual. )his can be accom&lis ed when two countries agree to allow certain ra+ materials to be shipped tari'' 'ree from the first country to the second country where the materials are manufactured into a finished &roduct. )hat product is then shipped bac", tariff free, to the ori%inal country. In oil or mineral extraction, the com&any doing the extraction is paid in oil or minerals as compensation for (usiness costs as well as a share of the &ro'it. 5ining companies and government $2!-620 and globe telecom efinition of ')urn"ey 2usiness' $ situation in which a firm's high-level management plans and executes all business strategies to ensure that individuals can buy a franchise or business and only Mturn the "eyM to begin operations. $ turn"ey business already has a proven, successful business model and merely re(uires investment capital and labor. #ranchises are typically turn"ey business, but any existing business that's already up and running successfully or a new business whose doors are ready to be opened could be considered a turn"ey business. nvestopedia explains ')urn"ey 2usiness' !ubway's sandwich shops are an example of a turn"ey business. )he menu has already been developed, the stores have already been designed, the employees' uniforms have already been chosen, mar"eting is already in place and consumers are already familiar with the brand. )o open a new !ubway franchise, an individual only needs to pay startup and operating costs for one store location, a franchise fee and ongoing royalty feesN he or she does not have to worry about the other major aspects of business development.

!tability strategies $ corporation may choose stability over growth by continuing its current activities without any significant change in direction. although sometimes viewed as a lac" of strategy, the stability family of corporate strategies can be appropriate for a successful corporation operating in a reasonably predictable environment. they are very popular with small business owners who have found a niche and are happy with their success and the managerial si&e of their firms. stability strategies can be very useful in the short run, but they can be dangerous if followed for too long. some of the more popular of these strategies are the pause or proceed-withcaution,no-change,and profit strategies.

!tability strategy implies continuing the current activities of the firm without any significant change in direction. If the environment is unstable and the firm is doing well, then it may believe that it is better to ma"e no changes. $ firm is said to be following a stability strategy if it is satisfied with the same consumer groups and maintaining the same mar"et share, satisfied with incremental improvements of functional performance and the management does not want to ta"e any ris"s that might be associated with expansion or growth. !tability strategy is most li"ely to be pursued by small businesses or firms in a mature stage of development. !tability strategies are implemented by Osteady as it goes8 approaches to decisions. 0o major functional changes are made in the product line, mar"ets or functions. .owever, stability strategy is not a Odo nothing8 approach nor does it mean that goals such as profit growth are abandoned. )he stability strategy can be designed to increase profits through such approaches as improving efficiency in current operations.
+hy do companies p#rs#e a stability strategy,

>+ the firm is doing well or perceives itself as successful

<+ it is less ris"y ?+ it is easier and more comfortable 3+ the environment is relatively unstable J+ too much expansion can lead to inefficiencies
"it#ations where a stability strategy is more advisable than the growth strategy-

a+ if the external environment is highly dynamic and unpredictable b+ strategic managers may feel that the cost of growth may be higher than the potential benefits c+ excessive expansion may result in violation of anti trust laws
Types of stability strategies.

>+ Pa#se/Process with ca#tion strategy P some organi&ations pursue stability strategy for a temporary period of time until the particular environmental situation changes, especially if they have been growing too fast in the previous period. !tability strategies enable a company to consolidate its resources after prolonged rapid growth. !ometimes, firms that wish to test the ground before moving ahead with a full-fledged grand strategy employ stability strategy first. <+ No change strategy P a no change strategy is a decision to do nothing new i.e continue current operations and policies for the foreseeable future. If there are no significant opportunities or threats operating in the environment, or if there are no major new strengths and wea"nesses within the organi&ation or if there are no new competitors or threat of substitutes, the firm may decide not to do anything new. ?+ Profit strategy P the profit strategy is an attempt to artificially maintain profits by reducing investments and short-term expenditures. ;ather than announcing the company8s poor position to shareholders and other investors at large, top management may be tempted to follow this strategy. 'bviously, the profit strategy is useful to get over a temporary difficulty, but if continued for long, it will lead to a serious deterioration in the company8s position. )he profit

strategy is thus usually the top management8s short term and often self serving response to the situation. In general, stability strategies can be very useful in the short run, but they can be dangerous if followed for too long.

@rofit strategies are usually driven by the stoc"holders. )hese are short term strategies that focus on efficiency *reducing use of resources+.

;etrenchment strategies are employed when the company if facing serious problems in its operations.

;etrenchment !trategies -cost cutting )B;0$;'B0 !);$)E:9

)urnaround is a strategy adopted by firms to arrest the decline and revive their growth. $ turnaround situation exists when a firm encounters multiple years of declining #inancial performance subse(uent to a period of prosperity *2ibeault, >DE<N .ambric" F !checter, >DE?N !chendel et al., >DQIN 1ammuto F 6ameron, >DEJ+. )urnaround situations are caused by combinations of external and internal factors *#in"in, >DEJN .eany, >DEJN !chendel et al., >DQI+ and may be the result of years of gradual slowdown or months of precipitous financial decline.

)he strategic causes of performance downturns include increased competition, raw material shortages, and decreased profit margins, while operating problems include stri"es and labour problems, excess plant capacity and depressed price levels. What is a 6aptiveL $n insurance company formed and capitali&ed under a special purpose statute whose primary purpose is financing the ris"s of its owners, participants or members. 6aptives have been around for a long time and there are over J,J== captives worldwide.

!ell out strategies re(uire selling and leaving the industry.

ivestment strategies occur when

conglomerates spin-off under performing units. 2an"ruptcy provides protection for the firm from creditors for a period of time to permit reorgani&ation. /i(uidation involves terminating the firm completely.

)his is a means for reviewing the performance of multiple !2B8s collectively. !ee the 26: :rowth-!hare 5atrix on next page. )he matrix compares levels of growth with levels of competitive position. )hose !2B8s that are high in position but low in growth are cash cows *reap the profits strategy+. )hose that are high in both categories are stars *nurture and reap strategy+. Ruestion mar"s are high in growth but low in mar"et position *proceed with caution strategy+. )hose that are low in both categories are dogs *divest, retrench, pause and see strategies+. "ro#th$share matri%

"ro#th$share matri% *a"a+ 26: 5atrix is the oldest and well-"nowned matrix method of !trategic management. It "eeps the conditions of 4I!! *"eep it simple stupid+. 26: 5atrix is useful tool of controlling. BC" Matri% has its origins in 2oston 6onsulting :roup P where it was published and used first time. It was in >DID. "ro#th$share matri% brings us a possibility to evaluate company development possibilities. It is helpful during setting up an economical strategy. )han"s to 26:, company is able to set width and height of assortment. It can be use to finding profitable products or those which will be profitable in the nearest future.

Str ct re of BC"

:raphical structure of 26: 5atrix, shows us results of mutual impact of factors controlled and uncontrolled by the company. 6ontrolled factors are on the abscissa and it means relativemar"et share *ratio of defined company's mar"et share and a mar"et share of most serious competitor+. Bncontrolled factors are placed on the ordinate and they are describing growth-speed selected mar"et of described company. 26: 5atrix predict four strategic places for products servedby the described company. I8m tal"ing about% &. Stars P they are hot products with big share in the fast-evolving mar"et. !tars are products and services providing big profits but they re(uires capital and investments. !tars have good outloo" and hope for profits. $fter some time, !tars can change their profile into 6ash cows.

)here are < "inds of !tars% *>+ young !tars which are re(uiring big capital and investing, because they are still evolving and *<+ 5ature !tars which are self-financing ability. '. Cash co#s are products, which are financial pillar of thecompany. 6ash 6ows has decisive share in slowly rising mar"et. )hey are responsible for profit surplus, so they are generating free capital for investments- for example in !tars. (. ) estion marksP they are one big riddle. )hey are deficit products with low share in fast evolving mar"et. @ossibilities of this products or services are hard to describe. Bp"eeping of Ruestion mar"s aren't connected with big profits, but Ruestion mar"s has potential for being !tarsone day. *. Dogs P they are a products, which do not brings financial surplus. :ood example of bad dog is service deprivedpotential of growth. )hey are result of lost competition on the saturated mar"et. It may be good idea to leave described mar"et sector, because of bad ;'I *return of investment+ of ogs.