Week 7 - PowerPoint PPT Presentation

1 / 14
About This Presentation
Title:

Week 7

Description:

Corporate directional strategies of growth, stability or retrenchment ... Retrenchment: Turnaround Strategy. Emphasizes the improvement of operational efficiency ... – PowerPoint PPT presentation

Number of Views:108
Avg rating:3.0/5.0
Slides: 15
Provided by: antho106
Category:

less

Transcript and Presenter's Notes

Title: Week 7


1
Week 7
  • Strategy Formulation Corporate Strategy

2
Three Levels of Strategy
Corporate Strategy
Business (Division Level) Strategy
Functional Strategy
3
Corporate Strategy
  • Two choices at corporate level (affect business
    level and functional levels)
  • Corporate directional strategies of growth,
    stability or retrenchment
  • Portfolio strategy analysis techniques to guide
    decisions to enter and exit businesses

4
Directional Strategies
  • Three choices . . .
  • Growth strategies
  • Stability strategies (status quo)
  • Retrenchment strategies (shrink)

5
Directional Strategy 1 Growth
  • 2 Basic Growth Strategies
  • Concentration (Current product line in one
    industry)
  • Vertical Growth -gt same market, along supply
    chain
  • Horizontal Growth -gt new markets
  • Diversification (New product lines in other
    industries)
  • Diversification -gt related industry
  • Conglomerate -gt unrelated industry

Name companies that have successfully used these
strategies to grow.
6
Directional Strategy 2 Stability
  • Pause/proceed with caution
  • No change
  • Profit strategy

When would you choose to adopt a stability
strategy for your company?
7
Directional Strategy 3 Retrenchment
  • Turnaround
  • Captive Company Strategy
  • Sell-out
  • Bankruptcy
  • Liquidation

Name companies that have recently chosen (or been
forced to) adopt these retrenchment strategies?
8
RetrenchmentTurnaround Strategy
  • Emphasizes the improvement of operational
    efficiency
  • Most appropriate when problems are severe but not
    critical
  • Two Phases
  • Contraction
  • stop the bleeding
  • Across-the-board cutbacks in size and costs
  • Consolidation
  • Stabilize the now leaner organization
  • Reduce overhead, justify costs of functional
    activities

9
Portfolio Strategies
  • Portfolio Analysis
  • How much of our time and money should we spend on
    our best products to ensure that they continue to
    be successful?
  • How much of our time and money should we spend
    developing new costly products, most of which
    will never be successful?

10
Portfolio Strategies
  • BCG (Boston Consulting Group) Matrix
  • Product life cycle and funding decisions
  • Question marks
  • Stars
  • Cash cows
  • Dogs

11
BCG Matrix
12
Portfolio Strategies
  • Portfolio Analysis
  • Advantages
  • Top management evaluates each of firms
    businesses individually
  • Externally-oriented data is used to supplement
    management judgment
  • Raises issue of cash flow availability
  • Facilitates communication
  • Disadvantages
  • Difficult to define product/market segments
  • Standard strategies can miss opportunities
  • Illusion of scientific rigor

13
In-Class Exercise 6BCG Matrix
  • Handout from www.marketingteacher.com
  • Students form into your BSG teams
  • Complete the BCG Matrices for your shoe industry
  • Add names to 1 sheet and hand in

14
Quiz 2 PreparationPractice Exercise
  • (Handout)
  • Students work in pairs or threes to complete the
    Practice Exercise
Write a Comment
User Comments (0)
About PowerShow.com