DIRECTIONS OF

CORPORATE LEVEL
STRATEGIES
1. Growth Strategy
2. Stability Strategies
3. Retrenchment
Strategies

1. GROWTH STRATEGY usu. Done by large

corporations aiming at the growth potentials in
terms of size or magnitudes (sales, assets, profits,
etc.)
a. merger involves two or more
corporations in which a stock is exchanged or
swapped
among
independent
business
organizations from which only one company
survives. Occurs between corp. which are friendly
in nature.
b. acquisition involves the purchase of a
company then completely absorbed as an operating
subsidiary or division of the acquiring corporation.
Like merger, this may occur bet. Firms of different
sizes but can be either friendly or hostile.
c. strategic alliance partnership among

2. Stability Strategies continue current activities

without any significant change in direction; sometimes
viewed as lacking of strategy as the firm simply
maintain the current array of businesses
Reasons: a. enables the corp. to focus managerial
efforts on the existing business with the goal of
enhancing their competitive posture
b. senior managers may perceive that the
cost of adding new businesses may be more than the
potential benefits.
a. Pause / proceed with caution (time out);
an opportunity to rest before continuing a growth or
retrenchment strategy
- make only incremental improvements
until a particular environment situation changes
b. no change strategy to do nothing new a
choice to continue current operations and policies for

3. Retrenchment Strategies revolves around the concept

of reduction in a variety of aspects usually in terms of size,
capital, personnel complement, etc.
a. turnaround strategy emphasizes on the
improvement of the operational efficiency and is probably
most appropriate when a corporations problems are
pervasive but not yet critical. Two ways, namely:
a1. contraction initial effort to quickly stop
the bleeding with a general across the board cutback in size
and costs
a2. consolidation implements a program to
stabilize the now-learner corporation
b. sell-out / divestment strategy used when a
company has a weak competitive position in its industry and
unable to either pull itself up (good if can still obtain a good
price for its shareholders and employees can keep their jobs
when sold to another firm)
c. bankruptcy strategy giving up management of
the firm to the courts in return for some settlement of the
corporations obligation

International and Other Entry Options

a.Exporting explore foreign markets which ship goods produced to
other countries
b.Licensing covered by a document called licensing agreement; the
licensing firm grant right to another firm in the host country to produce
or sell a product or service
c.Franchising covered by a franchising agreement wherein the
franchiser grants rights to another company to open a business,
usually a retail store, using the franchisers name and operating
system.
d.Joint Venture involves formation and registration of a new
business organization based on investment agreed upon
- combine resources and expertise needed to develop
new products or technologies
e.
Acquisition (foreign); purchasing another company
operating in that area
f.Greenfield development refers to building its own
manufacturing plant and distribution system; done in lieu of
acquiring the entire company with all its inherent liabilities and
problems which can affect the firms entry into the domestic
market
g.Production sharing allows combining resources to pursue a
business by sharing whatever proceeds as may be agreed upon;

i. Management contract it offers a scheme, through which

a corporation may use some of its personnel to assist a firm
in a host country or company for a specified fee and period
of time
j. Build-Operate-Transfer or BOT concept usu. adopted
in government infrastructure projects; a concept that is
usually a variation of the turnkey contract. Instead of turning
the facility over to the host country when completed, the
company operates the facility for a fixed period of time
during which it earns back its investment, plus a profit. Then
it turns the facility over to the government at little or no cost
to the host country
k. Outsourcing essentially refers to de-integration or
unbundling of certain business activities narrowing the
scope of the firms operations, focusing on performing
certain core value chain activities and relying on outsiders
to perform the remaining value chain activities

Strategic Alliance
- Can be done through a process of exploration and negotiation
with targeted parties or business concerns leading to signing
up an alliance document in the form of memorandum of
agreement, memorandum of understanding and/or contracts
stipulating mutual desire to attain objective and expressing
support for one another.
Objectives:
1.To collaborate on technology development or new product
development;
2.To fill gaps in technical or manufacturing expertise;
3.To acquire new competencies;
4.To improve supply chain efficiency;
5.To gain economies of scale in production and/or marketing;
and
6.To acquire or improve market access via joint marketing
agreements.
Mutual service
chain
consortia

Joint venture
Licensing agreement
Partnership

Value

Benefits and Pitfalls of Mergers and

Acquisitions
Benefits:
1.More or better competitive capabilities
2.More attractive line-up of products/services;
3.Wider geographic coverage
4.Greater financial resources to invest in R&D, add capacity or
expand
5.Cost-saving opportunities
6.Filling in of resource or technological gaps
7.Stronger technological skills; and
8.Greater ability to launch next-wave products/services.
Disadvantages:
1.Resistance from rank-and-file employees
2.Hard-to-resolve conflicts in management styles and
corporate cultures
3.Tough problems in combining and integrating the operations
of the once-different companies
4.Greater-than anticipated difficulties in achieving expected

Outsourcing: Advantages and Conditions to Consider

Advantages:
1.Improves firms ability to obtain high quality and / or cheaper
components or services;
2.Improves firms ability to innovate by interacting with best-in-theworld suppliers;
3.Enhances firms flexibility should customer needs and market
conditions suddenly shift;
4.Increases firms ability to assemble diverse kinds of expertise
speedily and efficiently; and
5.Allows firms to concentrate its resources on performing those
activities internally which it can perform better than outsiders
Other Benefits:
1.Activity can be performed better or more cheaply by outside
specialists
2.Activity is not crucial to achieve a sustainable competitive
advantage
3.Risk exposure to changing technology and/or changing buyer
preferences is reduced
4.Operations are streamlined to: cut cycle time, speed decisionmaking, reduce coordination costs

Situations Favoring Joint Venture

1.When a privately owned organization is forming a
joint venture with a publicly owned organization
2.When a domestic organization is forming a joint
venture with a foreign company; a joint venture can
provide a domestic company with the opportunity
for obtaining local management in a foreign
country, thereby reducing risks such as
expropriation and harassment by host country
officials
3.When the distinctive competencies of two or
more firms complement each other especially well
4.When some project is potentially very profitable,
but requires overwhelming resources and risks
5.When two or more smaller firms have trouble
competing with a large firm
6.When there exists a need to introduce a new

Situations Favoring Retrenchment

1.When an organization has a clearly distinctive
competence, but has failed to meet its objectives
and goals consistently over time;
2.When an organization is one of the weaker
competitors in a given industry;
3.When an organization is plagued by inefficiency,
low profitability, poor employee morale, and
pressure from stockholders improve performance;
4.When an organization has failed to capitalize on
external opportunities, minimize external threats,
take advantage on internal strengths, and overcome
internal weaknesses over time; that is, when the
organizations strategic managers have failed (and
possibly will be replaced by more competent
individuals); and
5.When an organization has grown so large so

Situations Favoring Divestiture

1.When an organization has pursued a retrenchment
strategy and it failed to accomplish needed
improvements;
2.When a division needs more resources to be
competitive than the company can provide;
3.When
a
division
is
responsible
for
an
organizations overall poor performance; and
4.When a division is a misfit with the rest of the
organization; this can result from radically different
markets, customers, managers, employees, values
or needs.

Situations Favoring Liquidation

1.When an organization has pursued both a retrenchment strategy
and a divestiture strategy, and neither has been successful;
2.

UNDERSTANDING THE BUSINESS AND ITS ENVIRONMENT

Performance
Products

Synergy and

fit
customers
Structure

THE ORGANIZATION

Competitive
Parenting
advantage
Stakeholders
Process
Environments
Markets

Business level strategy the operational plan of action of a

single and independent business that uses the companys
resources and competencies to gain a competitive advantage over
its rivals in the market or industry
Corporate
Corporate -level
Strategy
Manage
Business-level
Managers
Functional
managers

operating
managers

Business Strategies

Functional Strategies

Operating Strategies

Levels of Strategy-making in a Diversified Company

In developing a business level strategy and in

order to stay competitive or outdo the firms
competitors, substantial efforts should be made
to develop strategies taking note of the following
areas of concern:
1. specific responses to changing conditions
2. scope of geographic coverage of the
business strategy
3.
explore
collaborative
alliance
or
partnerships as necessary
4. the financial strategy to support the overall
business
strategy
5. the specific functional strategies to be
undertaken
6. concern for research and development
strategy; and

Competitive Strengths of Business

Level Strategy
a.Less ambiguity about who we are
b.Resources can be focused on building
competencies and capabilities that can make the
firm better at what it does;
c.Higher probability innovative ideas will emerge;
d.Top executives can maintain hands-on contact
with core business;
e.Important competencies more likely to emerge;
f.Ability to parlay experience and reputation into
sustainable competitive advantage; and
g.Prominent leadership position.

Functional responsibilities refer to those

tasks, function or activities that a given operating
unit (e.g. department, division, group, etc.) is
duty-bound to do by the very nature of its
functional category.
ex. Marketing department is generally
tasked to handle marketing, sales, promotion,
advertising, etc.
Functional strategy is the approach taken by a
functional area or unit to achieve its objectives
and duties by way of maximizing the use of its
resources and in light of strategic direction as well
as prevailing market competitions.
- it broadly addresses how the particular
mandate or duty of a concerned department or
unit will be done and carried out or how it will