CHAPTER 7 Strategy Formulation: Corporate Strategy

STRATEGIC MANAGEMENT & BUSINESS POLICY

Group 7

Corporate Strategy

3 Key Issues
Firms Firms Firms

directional strategy portfolio strategy parenting strategy

Corporate Strategy

Directional Strategy
Orientation

toward growth

Expansion,

contraction, status quo Concentration or diversification Internal development or acquisitions, mergers, or alliances

Corporate Strategy

Directional Strategy

3 Grand Strategies
Growth

strategies strategies strategies

Stability

Retrenchment

Corporate Directional Strategies

Corporate Strategy

Growth Strategies -External

mechanisms

Mergers Acquisitions Strategic

alliances

Corporate Strategy

Growth Strategies -2

Basic forms
Concentration Diversification

Corporate Strategy

Basic Concentration Strategies -Vertical

growth growth

Horizontal

Corporate Strategy

Vertical Growth -Vertical

Full

integration

integration Taper integration Quasi-integration Long-term contract

Corporate Strategy

Vertical Growth -Backward Forward

integration

integration

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Corporate Strategy

Concentration -Horizontal

Growth
integration

Horizontal

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Corporate Strategy

International Entry Options -Exporting Licensing Franchising Joint

Ventures Acquisitions Green-Field Development

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Corporate Strategy

International Entry Options -Production

Sharing Turnkey Operation BOT Concept (Build, Operate, Transfer) Management Contracts

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Corporate Strategy

Basic Diversification Strategies -Concentric

Diversification Diversification

Conglomerate

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Corporate Strategy

Concentric Diversification -Growth

into related industry Search for synergies

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Corporate Strategy

Conglomerate diversification -Growth

into unrelated industry Concern with financial considerations

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Corporate Strategy

Stability Strategies -Pause/proceed No

with caution

change strategies

Profit

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Corporate Strategy

Retrenchment Strategies -Turnaround Captive

Company Strategy Selling out Bankruptcy Liquidation

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Corporate Strategy

Portfolio Analysis -Resource

commitment on best products to ensure continued success

Resource

commitment on new costly products high risk

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BCG Matrix (Portfolio Analysis)

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GE Business Screen (Portfolio Analysis)

C Winners A High Winners B Question Marks D Winners E Medium

Average Businesses F Losers

Losers G Low Profit Producers Strong Average

Losers Weak

Business Strength/Competitive Position

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Corporate Strategy

Corporate Parenting Strategy -Strategic

factors Performance improvement Analyze fit

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End of Presentation

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