Ch 5 --.ppt

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1、Ch 5 -1,Chapter 5 Strategies in Action,Strategic Management: Concepts & Cases 12th Edition Fred David,Ch 5 -2,Long-Term Objectives,Objectives ,Quantifiable Measurable Realistic Understandable Challenging,Ch 5 -3,Long-Term Objectives,Objectives ,Hierarchical Obtainable Congruent/go well together Time

2、line,Ch 5 -4,Objectives,Objectives are commonly stated in terms such as growth in assets, growth in sales, profitability, market share, degree and nature of diversification, and so on.,Ch 5 -5,Varying Performance Measures by Organizational Level,Ch 5 -6,Financial vs. Strategic Objectives,Financial O

3、bjectives,Growth in revenues Growth in earnings Higher dividends Higher profit margins Higher earnings per share Improved cash flow,Ch 5 -7,Strategic objectives,such as:larger market share,quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, high

4、er product quality than rivals, wider geographic coverage than rivals, etc. 3. There is frequently a tradeoff/exchange between financial and strategic objectives.,Ch 5 -8,Not Managing by Objective,Strategists should avoid the following alternative ways of “not managing by objectives.” Managing by Ex

5、trapolation “If it aint broke (if you don not have problem), dont fix it.” Managing by Crisis The true measure of a good strategist is the ability to fix problems Managing by Subjectives “Do your own thing, the best way you know how.” Managing by Hope The future is full of uncertainty and if first y

6、ou dont succeed, then you may on the second or third try.,Ch 5 -9,The Balanced Scorecard,Robert Kaplan & David Norton ,The balanced scorecard is a strategy evaluation and control technique that derives its name from the perceived need of firms to “balance” financial measures, which are oftentimes us

7、ed exclusively in strategy evaluation and control with non-financial measures such as product quality and customer service.,Ch 5 -10,The Balanced Scorecard,A balanced scorecard for a firm is simply a listing of all key objectives to work towards along with an associated time dimension of when each o

8、bjective is to be accomplished, as well as a primary responsibility or contact person, department, or division for each objective.,Ch 5 -11,BSC performance evaluation depends on four consequential stages,1- Specifying institutional objectives. 2- Translating the institutional objectives to analytica

9、l performance plans. 3- Specifying the responsibility centers. 4- Developing the performance measurement indicators, which include: indicators of effectiveness, efficiency, productivity, and quality,Ch 5 -12,BSC analysis method constitutes four perspectives as follows,Financial Perspective. This is

10、related to meet the expectations of the shareholders. Customer Perspective. This is related to achieve customer satisfaction. Learning and Growth Perspective. This is related to business ability to learn and grow to be ready for future. Internal Process Perspective. The internal process should be ef

11、ficient and effective.,Ch 5 -13,Strategy,A strategy of a corporation forms a comprehensive master plan that states how the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantage,Ch 5 -14,Strategy,Mintzberg (1987) defines strateg

12、y in terms of 5Ps. These 5Ps are: 1P Perspective: is the main business concept or idea and the means by which that concept or idea is put into practice or implemented. 2P Plan: is a direction, a guide or a course of action from the present (or from the past) and into the future. However that future

13、is defined by whatever the time horizons associated with it. 3P Patterns: are the consistency of firm decision making. 4P Position or positioning: where the firm locates itself within its external and competitive environments; and by which it positions particular products or services against the dem

14、ands of the market segments it serves. 5P Ploys: are the competition strategies designed to maintain, reinforce, achieve or improve the relative competitive position of the organization within its sector and markets .,Ch 5 -15,corporate strategy,The first level of strategy (corporate strategy) is re

15、lated to determining the corporate strategy. It is fundamentally and simply concerned with deciding what type of business the organization should be in and how the overall group of activities should be formed and managed .Corporate strategy deals with issues of strategic management at the level of t

16、he firm as a whole. Such issues involve the basic character, capability and competence of the firm; the direction in which it should develop its activity; the nature of its internal architecture; governors and structure; the nature of its relationships with its sector, its competitors and the wider

17、environment. Corporate strategies usually fit within the three main categories of stability, growth and retrenchment,Ch 5 -16,business strategy,business strategy refers to the actions and approaches crafted by management to create successful performance in one particular line of business. It is also

18、 concerned with creating competitive advantage in each of the strategic business units of the organization.,Ch 5 -17,Functional or departmental strategy,Functional or departmental strategy concerns the managerial game plan for running a major functional activity or process within a business such as

19、research and development unit, marketing unit, financial unit, production unit, H R development unit and so on. A business requires as many functional strategies as it has strategically critical activities.,Ch 5 -18,Ch 5 -19,Types of Strategies,Operational Level,Functional Level,Division Level,Corp

20、Level,A Large Company,Ch 5 -20,Types of Strategies,company,A small Company,Ch 5 -21,Strategies in Action,Vertical Integration StrategiesForward integration Backward integration Horizontal integration,Ch 5 -22,Strategies in Action,DefinedGaining ownership or increased control over distributors or ret

21、ailers,ExampleGeneral Motors is acquiring 10% of its dealers.,Forward Integration,Ch 5 -23,Strategies in Action,Guidelines for Forward IntegrationPresent distributors are expensive, unreliable, or incapable of meeting firms needs Availability of quality distributors is limited When firm competes in

22、an industry that is expected to grow markedly Advantages of stable production are high Present distributor have high profit margins,Ch 5 -24,Strategies in Action,DefinedSeeking ownership or increased control of a firms suppliers,ExampleMotel 8 acquired a furniture manufacturer.,Backward Integration,

23、Ch 5 -25,Strategies in Action,Guidelines for Backward IntegrationWhen present suppliers are expensive, unreliable, or incapable of meeting needs Number of suppliers is small and number of competitors large High growth in industry sector Firm has both capital and human resources to manage new busines

24、s Advantages of stable prices are important Present supplies have high profit margins,Ch 5 -26,Strategies in Action,DefinedSeeking ownership or increased control over competitors,ExampleHilton recently acquired Promus.,Horizontal Integration,Ch 5 -27,Strategies in Action,Guidelines for Horizontal In

25、tegrationFirm can gain monopolistic characteristics without being challenged by federal government Competes in growing industry Increased economies of scale provide major competitive advantages Faltering/losing due to lack of managerial expertise or need for particular resources,Ch 5 -28,Strategies

26、in Action,Intensive StrategiesMarket penetration Market development Product development,Ch 5 -29,Strategies in Action,DefinedSeeking increased market share for present products or services in present markets through greater marketing efforts,ExampleAmeritrade, the on-line broker, tripled its annual

27、advertising expenditures to $200 million to convince people they can make their own investment decisions.,Market Penetration,Ch 5 -30,Strategies in Action,Guidelines for Market PenetrationCurrent markets not saturated Usage rate of present customers can be increased significantly Market shares of co

28、mpetitors declining while total industry sales increasing Increased economies of scale provide major competitive advantages,Ch 5 -31,Strategies in Action,DefinedIntroducing present products or services into new geographic area,ExampleKhuzendar Tiles maker introduce his product to Gulf markets.,Marke

29、t Development,Ch 5 -32,Strategies in Action,Guidelines for Market DevelopmentNew channels of distribution that are reliable, inexpensive, and good quality Firm is very successful at what it does Untapped or unsaturated markets Capital and human resources necessary to manage expanded operations Exces

30、s production capacity Basic industry rapidly becoming global,Ch 5 -33,Strategies in Action,DefinedSeeking increased sales by improving present products or services or developing new ones,ExampleApple developed the G4 chip that runs at 500 megahertz. Khuzendar Tiles maker introduce Ceramic as a new p

31、roduct.,Product Development,Ch 5 -34,Strategies in Action,Guidelines for Product DevelopmentProducts in maturity stage of life cycle Competes in industry characterized by rapid technological developments Major competitors offer better-quality products at comparable prices Compete in high-growth indu

32、stry Strong research and development capabilities,Ch 5 -35,Strategies in Action,Diversification StrategiesConcentric diversification Conglomerate diversification Horizontal diversification,Ch 5 -36,Strategies in Action,DefinedAdding new, but related, products or services,ExampleNational Westminister

33、 Bank PLC in Britain bought the leading British insurance company, Legal & General Group PLC.,Concentric Diversification,Ch 5 -37,Strategies in Action,Guidelines for Concentric DiversificationCompetes in no- or slow-growth industry Adding new & related products increases sales of current products Ne

34、w & related products offered at competitive prices Current products are in decline stage of the product life cycle Strong management team,Ch 5 -38,Strategies in Action,DefinedAdding new, unrelated products or services,ExampleConsultant Construction Engineering acquired El-Awda Bisects Co.,Conglomera

35、te Diversification,Ch 5 -39,Strategies in Action,Guidelines for Conglomerate DiversificationDeclining annual sales and profits Capital and managerial talent to compete successfully in a new industry Financial synergy between the acquired and acquiring firms Exiting markets for present products are s

36、aturated,Ch 5 -40,Strategies in Action,DefinedAdding new, unrelated products or services for present customers,ExampleThe El-Awda Co. merging with Palestinian Islamic Bank.,Horizontal Diversification,Ch 5 -41,Strategies in Action,Guidelines for Horizontal DiversificationRevenues from current product

37、s/services would increase significantly by adding the new unrelated products Highly competitive and/or no-growth industry w/low margins and returns Present distribution channels can be used to market new products to current customers New products have counter cyclical sales patterns compared to exis

38、ting products,Ch 5 -42,Strategies in Action,Defensive StrategiesJoint venture Retrenchment Divestiture Liquidation,Ch 5 -43,Strategies in Action,DefinedTwo or more sponsoring firms forming a separate organization for cooperative purposes,ExampleLucent Technologies and Philips Electronic NV formed Ph

39、ilips Consumer Communications to make and sell telephones.,Joint Venture,Ch 5 -44,Joint Venture,Joint venture is a popular strategy that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity. Other types of cooperative arrang

40、ements include R&D partnerships, cross-distribution agreements, cross-licensing agreements, cross-manufacturing agreements, and joint-bidding consortia.,Ch 5 -45,Joint Venture,Joint ventures and cooperative arrangements are being used increasingly because they allow companies to improve communicatio

41、ns and networking, to globalize operations and minimize risk.,Ch 5 -46,Joint Venture,Many, if not most, organizations pursue a combination of two or more strategies simultaneously, but a combination strategy can be exceptionally risky if carried too far. No organization can afford to pursue all the

42、strategies that might benefit the firm. Difficult decisions must be made. Priorities must be established. Organizations, like individuals, have limited resources. Both organizations and individuals must choose among alternative strategies and avoid excess indebtedness.,Ch 5 -47,Joint ventures may fa

43、il when:,Managers who must collaborate regularly are not involved in the venture. The venture may benefit partnering companies but not the customers. Both partners may not support the venture equally. The venture competes with one of the partners,Ch 5 -48,Joint ventures are especially effective when

44、:,A privately owned organization forms one with a public organization. A domestic organization works with a foeign company. The distinct competencies of the firms complement each other especially well. Some project is potentially profitable but requires much risk. Two or more smaller firms wish to c

45、ompete against a larger firm. There is a need to introduce a new technology quickly.,Ch 5 -49,Strategies in Action,Guidelines for Joint VentureCombination of privately held and publicly held can be synergistically combined Domestic forms joint venture with foreign firm, can obtain local management t

46、o 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 q

47、uickly,Ch 5 -50,Strategies in Action,DefinedRegrouping through cost and asset reduction to reverse declining sales and profit. Sometimes it is called turnaround or reorganizational strategy.,ExampleEl-Awda sold off a land and 4 apartments to raise cash needed. It introduce expense effective control

48、system.,Retrenchment (turnaround),Ch 5 -51,Strategies in Action,Guidelines for RetrenchmentFirm 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 pressur

49、e from stockholders to improve performance. When an organizations strategic managers have failed Very quick growth to large organization where a major internal reorganization is needed.,Ch 5 -52,Strategies in Action,DefinedSelling a division or part of an organization,ExampleHarcourt General, the la

50、rge US publisher, is selling its Neiman Marcus division.,Divestiture,Ch 5 -53,Strategies in Action,Guidelines for DivestitureWhen 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 firms 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.,