fdocuments.in_kazmi-strategy-mgt-lessons-part-4.ppt
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The document discusses different types of corporate-level strategies: concentration strategies focus resources in existing businesses; integration strategies involve horizontal or vertical expansion through acquisitions or partnerships within the same industry; and diversification strategies pursue new markets, products, industries, or technologies either related or unrelated to the core business. The strategies carry different risks, and the document will analyze when each type is most appropriate based on market conditions and a company's resources.
fdocuments.in_kazmi-strategy-mgt-lessons-part-4.ppt
- 1. STRATEGIC MANAGEMENT AND BUSINESS POLICY THIRD EDITION Chapter 5 Corporate-level strategies: Concentration, Integration and Diversification AZHAR KAZMI
- 2. (c) Dr. Azhar Kazmi 2008 2 Learning objectives Define and explain four types of generic corporate-level strategies Describe the various types of expansion strategies Discuss the conditions under which concentration, integration, and diversification strategies are used Discuss the risks of using concentration, integration, and diversification strategies Discuss diversification strategies in the Indian context
- 3. (c) Dr. Azhar Kazmi 2008 3 Corporate strategies Corporate-level strategies are basically about decisions related to: allocating resources among the different businesses of a firm transferring resources from one set of businesses to others, and managing and nurturing a portfolio of businesses.
- 4. (c) Dr. Azhar Kazmi 2008 4 Four strategic alternatives Expansion strategies Stability strategies Retrenchment strategies Combination strategies
- 5. (c) Dr. Azhar Kazmi 2008 5 Concentration strategies Concentration is a simple, first-level type of expansion strategy. It involves converging resources in one or more of a firm's businesses in terms of their respective customer needs, customer functions, or alternative technologies - either singly or jointly - in such a manner that expansion results.
- 6. (c) Dr. Azhar Kazmi 2008 6 Ansoff’s product-market matrix PRODUCT PRESENT NEW MARKET MARKET PRODUCT PRESENT PENETRATION DEVELOPMENT MARKET DIVERSIFICATION NEW DEVELOPMENT Adapted from H. I. Ansoff: “Strategies for Diversification” in Harvard Business Review, 1957, 5, pp. 113-124.
- 7. (c) Dr. Azhar Kazmi 2008 7 Ansoff’s matrix for diversification strategies ------------------------------------------------------------------------- ----- New products ------------------------------------------------------------------------------ Related technology Unrelated technology ------------------------------------------------------------------------------ New functions ------------------------------------------------------------------------------ Firm its own Vertical integration customer ------------------------------------------------------------------------------ Same type Horizontal diversification of product ------------------------------------------------------------------------------ Similar type Marketing and Marketing related of product technology-related concentric diversification diversification ------------------------------------------------------------------------------ New type Technology-related Conglomerate of product concentric diversification diversification ------------------------------------------------------------------------------ Adapted from H.I. Ansoff: Corporate Strategy (New York: McGraw-Hill, 1965), p.132.
- 8. (c) Dr. Azhar Kazmi 2008 8 Integration strategies Horizontal integration: When an organisation takes up the same type of products at the same level of production or marketing process Vertical integration: When an organisation starts making new products that serve its own needs Taper integration strategies require firms to make a part of their own requirements and to buy the rest from outsiders. Quasi integration strategies firms purchase most of their requirements from other firms in which they have an ownership stake.
- 9. (c) Dr. Azhar Kazmi 2008 9 Diversification strategies Diversification involves a substantial change in business definition - singly or jointly - in terms of customer functions, customer groups, or alternative technologies of one or more of a firm's businesses.
- 10. (c) Dr. Azhar Kazmi 2008 10 Concentric or related diversification Marketing-related concentric diversification Technology-related concentric diversification Marketing- and technology-related concentric diversification
- 11. (c) Dr. Azhar Kazmi 2008 11 Conglomerate or unrelated diversification When an organisation adopts a strategy which requires taking up those activities which are unrelated to the existing business definition of one or more of its businesses either in terms of their respective customer groups, customer functions or alternative technologies