St. mgt. chapter 5
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This document discusses various strategies that can be used in business planning. It outlines long term objectives that should be quantitative, measurable, realistic, and challenging. It also distinguishes between financial objectives focused on growth and profits, and strategic objectives evaluated using a balanced scorecard. The document then describes different types of strategies including vertical integration, intensive growth, diversification, and defensive strategies. It provides examples of strategies like market penetration, product development, related and unrelated diversification, retrenchment, divestment, and liquidation. Finally, it mentions Porter's five generic strategies of cost leadership, differentiation, and focus.
St. mgt. chapter 5
- 1. 1 Ch 5 -1 Chapter 5 Strategies in Action Ch 5 -2 Ch 5 -3 Long Term Objectives Quantitative Measurable Realistic Understandable Challenging Hierarchical Obtainable Congruent Ch 5 -4 Ch 5 -5 Financial vs. Strategic Objectives Financial Objectives Growth in revenues Growth in earnings Higher dividends Larger profit margins Greater ROI Higher earnings per share Rising stock price Improved cash flow Ch 5 -6 The Balanced Scorecard Robert Kaplan & David Norton – Strategy evaluation & control technique Balance financial measures with nonfinancial measures Balance shareholder objectives with customer & operational objectives
- 2. 2 Ch 5 -7 Levels of Strategies – Large Company Ch 5 -8 Levels of Strategies – Small Company Ch 5 -9 Types of Strategies Vertical Integration Strategies Forward Integration Backward Integration Ch 5 -10 Vertical Integration Strategies Forward Integration Gaining ownership or increased control over distributors or retailers Backward Integration Seeking ownership or increased control of a firm’s suppliers Ch 5 -11 Types of Strategies Intensive Strategies Market Penetration Market Development Product Development Ch 5 -12 Intensive Strategies Market Penetration Seeking increased market share for present products or services in present markets through greater marketing efforts Market Development Introducing present products or services into new geographic areas Product Development Seeking increased sales by improving present products or services or developing new ones
- 3. 3 Ch 5 -13 Types of Strategies DiversificationStrategies Related Diversification Unrelated Diversification Ch 5 -14 Diversification Strategies Related Diversification Adding new but related products or services Unrelated Diversification Adding new, unrelated products or services Ch 5 -15 Types of Strategies DefensiveStrategies Retrenchment Divestiture Liquidation Ch 5 -16 Defensive Strategies Retrenchment Regrouping through cost and asset reduction to reverse declining sales and profit Divestiture Selling a division or part of an organization Liquidation Selling all of a company’s assets, in parts, for their tangible worth Ch 5 -17 Porter’s Five Generic Strategies Type 1 Cost Leadership –Low cost Type 2 Cost Leadership –Best value Type 3 Differentiation Type 4 Focus –Low cost Type 5 Focus –Best value