Post on 18-Nov-2014
description
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Strategy Formulation:
Corporate Strategy
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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 Directional Strategies
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Corporate Strategy
Directional Strategy:– Orientation toward growth
• Expand, cut back, status quo?• Concentrate within current industry,
diversify into other industries?• Growth and expansion through internal
development or acquisitions, mergers, or strategic alliances?
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Corporate Strategy
Directional Strategy:– Three Grand Strategies:
• Growth strategies• Stability strategies• 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
Basic Concentration Strategies:
–Vertical growth
–Horizontal growth
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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
Basic Diversification Strategies:
– Concentric Diversification
– Conglomerate Diversification
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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
InternationalEntry
Options
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