MANAJEMEN STRATEGI danKINERJA BISNISFO312

Chapter 11

STRATEGI UMUM KORPORASI

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Corporate Strategy

Three Key Issues:

Firm’s directional strategy Firm’s portfolio strategy Firm’s parenting strategy

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Corporate Strategy

Directional Strategy: Three Grand Strategies:

o Growth strategieso Stability strategieso Retrenchment strategies

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Corporate Strategy Growth Strategies:

Most widely pursued strategies External mechanisms:

Mergers Transaction involving two or more firms in

which stock is exchanged but only one firm survives.

Acquisition Purchase of a firm that is absorbed as an

operating subsidiary of the acquiring firm. Strategic Alliance

Partnership of two or more firms to achieve strategically significant objectives that are mutually beneficial.

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Corporate Strategy

2 Basic Growth Strategies:

Concentration– Current product line in one industry

Diversification– Into other product lines in other industries

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Corporate Strategy

Concentration:

Vertical growth

Vertical integration Full integration Taper integration Quasi-integration

Backward integration

Forward integration

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Corporate Strategy

Concentration:

Horizontal Growth

Horizontal integration

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Corporate Strategy

Diversification:

Concentric:

Growth into related industry Search for synergies

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Corporate Strategy

Diversification:

Conglomerate:

Growth into unrelated industry Concern with financial considerations

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Corporate Strategy

InternationalEntryOptions

ExportingLicensing

FranchisingJoint VenturesAcquisitions

Green-Field DevelopmentProduction SharingTurnkey Operations

BOT ConceptManagement Contracts

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Corporate Strategy

Stability Strategies:

Pause/proceed with caution

No change

Profit strategies

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Corporate Strategy

Retrenchment Strategies:

Turnaround

Captive Company Strategy

Selling out

Bankruptcy

Liquidation

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Corporate Strategy

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?

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BCG Matrix

BCG Matrix

Question Marks

Low relative market share – compete in high-growth industry

Cash needs are high

Case generation is low

Decision to strengthen (intensive strategies) or divest

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BCG Matrix

Stars

High relative market share and high growth rate

Best long-run opportunities for growth & profitability

Substantial investment to maintain or strengthen dominant position

Integration strategies, intensive strategies, joint ventures

BCG Matrix

Cash Cows

High relative market share, competes in low-growth industry

Generate cash in excess of their needs

Milked for other purposes

Maintain strong position as long as possible

Product development, concentric diversification

If weakens—retrenchment or divestiture

BCG Matrix

Dogs

Low relative market share & compete in slow or no market growth

Weak internal & external position

Liquidation, divestiture, retrenchment

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Corporate Strategy

Portfolio Analysis

Advantages: Top management evaluates each of firm’s

businesses individually Use of externally-oriented data to

supplement management judgment Raises issue of cash flow availability Facilitates communication

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Corporate Strategy

Portfolio Analysis

Disadvantages: Difficult to define product/market segments Standard strategies can miss opportunities Illusion of scientific rigor Value-laden terms

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Corporate Strategy

Corporate Parenting:

Views the corporation in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units.

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Corporate Strategy

Corporate Parenting:

Strategic factors Those elements of a company that determine its

strategic success or failure

Performance improvement Analyze fit

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Corporate Strategy

Horizontal Strategy: Corporate strategy that cuts across business

unit boundaries to build synergy across business units to improve the competitive position of one or more business units.

Grand Strategy Matrix

Tool for formulating alternative strategies

Based on two dimensions

Competitive position

Market growth

RAPID MARKET GROWTH

Quadrant II

1. Market development

2. Market penetration

3. Product development

4. Horizontal integration

5. Divestiture

6. Liquidation

Quadrant I

1. Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration

7. Concentric diversification

Quadrant III

1. Retrenchment

2. Concentric diversification

3. Horizontal diversification

4. Conglomerate diversification

5. Liquidation

Quadrant IV

1. Concentric diversification

2. Horizontal diversification

3. Conglomerate diversification

4. Joint ventures

Grand Strategy Matrix

Quadrant I

Excellent strategic position

Concentration on current markets/products

Take risks aggressively when necessary

Grand Strategy Matrix

Quadrant II

Evaluate present approach

How to improve competitiveness

Rapid market growth requires intensive

strategy

Grand Strategy Matrix

Quadrant III

Compete in slow-growth industries

Weak competitive position

Drastic changes quickly

Cost & asset reduction (retrenchment)

Grand Strategy Matrix

Quadrant IV

Strong competitive position

Slow-growth industry

Diversification to more promising growth areas