Example of Corporate Strategy
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Example of corporate strategy
Increase sales through additional sales staffing.
Increase sales by increasing the number of locations.
Increase profitability by laying off staff.
Example of directional strategy
Whether you're just starting out in your new business or planning to grow your existing one, preparing
for the future can be important in guiding your company in the right direction. When budgeting and
planning with your staff, choosing a directional strategy to implement company-wide can encourage
managers and staff to see the whole picture as the business moves forward.
Directional strategy is the game plan a company decides on and implements to grow business, increase
profits, and accomplish goals and objectives. Small businesses to large corporations can create their own
types of directional strategies that work for the focus and scope of each individual business. For
example, certain companies may find that a directional portfolio strategy works best, while other
businesses may choose to follow a parenting directional strategy.
A directional strategy is often created with an eye toward one or more of three elements: stability,
growth and retrenchment. As a small-business owner, before creating your directional strategy, you
must define what your goal is, whether it's to stabilize your company's earnings, grow profits, or cut
back on staff or spending to move forward. Once you assess your business needs, you can better choose
the type of directional strategy that suits your company. For example, if your small business is
hemorrhaging money, a retrenchment strategy may work best for you. During retrenchment, you may
conduct layoffs, eliminate specific products from your line, or file for bankruptcy or liquidation.
A strategy portfolio is a coherent set of options that address new capabilities and new potential markets.
This enables tactical opportunism within the company's long-term mission.
Developing your strategy portfolio is an essential step in your company's strategic road mapping
process. It ensures that all product strategies and marketing strategies are aligned with the company's
mission and that the company remains (or becomes) nimble.
Definition of 'Vertical Integration'
When a company expands its business into areas that are at different points on the
same production path, such as when a manufacturer owns its supplier and/or
distributor. Vertical integration can help companies reduce costs and improve
efficiency by decreasing transportation expenses and reducing turnaround time,
among other advantages. However, sometimes it is more effective for a company to
rely on the expertise and economies of scale of other vendors rather than be vertically
- A mortgage
it both lends
- A solar power
- The merger
of Live Nation
Horizontal integration is when a group of businesses or firms decides to merge because they will appeal
to more people based off of similarity of products. An example of horizontal integration would be a
business that normally manufactures televisions merging with another business that sells the same
product, such as Zenith merging with Sony. Horizontal integration is used to end competition between
businesses and to maximize profit or create a monopoly. Horizontal integration is the opposite of
vertical integration which is investing in natural resources used to manufacture the product instead of
merging similar companies.
An example of horizontal integration is an automobile manufacturer's acquisition of a sport utility
Definition of 'Horizontal Integration'
The acquisition of additional business activities that are at the same level of the value
chain in similar or different industries. This can be achieved by internal or external
expansion. Because the different firms are involved in the same stage of production,
horizontal integration allows them to share resources at that level. If the products
offered by the companies are the same or similar, it is a merger of competitors. If all
of the producers of a particular good or service in a given market were to merge, it
would result in the creation of a monopoly. Also called lateral integration.
include an oil
acquisition of a
in the costs
integration is in
Diversification is a strategy for company growth through starting up or acquiring businesses outside the
company's current products and markets (p.44 Kotler) This means that a company is developing new
markets and new products.
I first found about McCafe in Japan and was amazed by its different style from traditional McDonald
store. I found more information online at McCafe's website. http://www.mccafecoffee.com/
McDonald's starting of McCafe is an excellent example of diversification. By starting McCafe,
McDonald's is offering new products that were not available in traditional McDonald's stores. McCafe
specializes in serving cafes, which attracts customers that usually don't come to McDonald's to eat
fastfood. McCafe is also not only a product development. McCafe has its own section of the store and
clearly distinguishes itself from the traditional McDonald store. The store has modern, yet relaxing
mood. This is important to attract new market segments, probably customers that go to cafe not to
satisfy hunger, but possibly to take a sip of coffee and chat in a relaxing environment. Thus, McDonald's
McCafe serves as an example performing diversification by developing both new products and new
The older your business gets, the more difficult it might be to increase market share or profits, especially
if you’re seeking exponential growth. Diversifying into new business areas not only gives you the
opportunity to significantly increase your income, but it also protects you in the event your core
business takes a temporary or long-term nosedive. Analyze diversification strategies based on their
potential revenues and affect on your core business to achieve them.
Diversification means branching out into new business opportunities, not just expanding your existing
business. For example, if you have a dine-in restaurant in one town, opening a second restaurant in the
next town is expansion, not diversification. Adding corporate catering is an example of diversification.
Offering cooking classes during the mornings, when you are not open for breakfast, would be another
example of diversification.
Reasons for Diversification
Before you begin planning a diversification strategy, write the reasons you are considering doing so. You
might have excess capital you can’t put into your existing business with a reasonable return on this
reinvestment. Your company might be too dependent on one product or a handful of customers, which
could have devastating consequences if you see new competition or one or two customers leave you.
You might have built business relationships or a customer base that make it easy to enter a new market.
Once you know exactly why you are considering diversifying, you can better look at the specific
advantages and disadvantages of doing so.
Related vs. Unrelated Strategies
As you consider diversifying, decide if you want to stay in a related business or go into a completely
different market. Staying within your market lets you use your contacts, brand and customer base, such
as a pet sitter offering grooming services. Going into a new market, such as a pet sitter opening a
landscaping business, offers more protection against a downturn in a specific industry. Moving into a
related business can damage your brand if the new effort fails. Starting a business in a completely new
area will often require more time and money, since you are starting from scratch.
In some cases, you can diversify by selling the same product, or a similar one, under a different name. A
women’s apparel store that adds men’s and children’s clothing to try to expand its business might
damage its brand among women who are seeking a store that specializes in high-end women’s apparel.
Opening a second store under another name and selling men’s and children’s apparel diversifies your
business. Another example of diversification by brand would be an upscale women’s clothing store
opening a second women’s clothing store under another name and selling affordable women’s apparel.
When choosing diversification strategies, look at your current customer base to determine if you can sell
them different items or if you can add new customers by selling them a similar product at a different
price or under a different name. Review your current suppliers, sales reps and distribution partners to
determine if you can use them to sell different products, reducing your start-up costs. Calculate the
ongoing operating costs and stress on your administration of a diversification strategy and determine if
you can support two different businesses or product lines. Consider the impact of one product line
competing with the other if you will sell similar items.
Merger and acquisitions
in the banking industry in 2013.
Posted: December 31st, 2012 in Headlines | Read More »
Globe Telecom extends offer period for Bayan debt
Ayala-led Globe Telecom is extending its early tender offer period to buy Bayan Telecommunications
obligations from the smaller telco’s creditors, in line with moves for the two firms’ impending merger.
Posted: November 22nd, 2012 in Latest Business Stories | Read More »
BPI inches closer to sealing deal with PNB
In a game-changing move, Bank of the Philippine Islands will consolidate with Philippine National Bank,
ushering in a new wave of mergers and acquisitions among local banks.
Posted: November 22nd, 2012 in Editor's Pick,Headlines | Read More »
DMCI in bid to take over British mining company
DMCI Holdings is leading a consortium that plans to take over UK-listed nickel production company ENK
Plc, which is developing the Acoje mining project in Zambales, in a deal that values the British company
at £49.8 million.
Posted: August 9th, 2012 in Latest Business Stories | Read More »
Corporate takeover jitters
No final documents may have been signed, but from the looks of it, denials notwithstanding, broadcast
giant GMA Network Inc. is poised to come under the umbrella of the conglomerate headed by
businessman Manuel V. Pangilinan.
Posted: July 12th, 2012 in Columnists | Read More »
Asiatrust bank ceases operations
Asiatrust Development Bank has given up its banking license effective June 18 alongside the transfer of
banking assets and liabilities to Asia United Bank (AUB).
Posted: June 19th, 2012 in Latest Business Stories | Read More »
Time for PH to shine, says Citi
By Doris C. Dumlao
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The Philippines has come of age as a vibrant marketplace for capital-raising as well as merger and
acquisition (M&A) deals, even as global investment appetite has been tempered by the eurozone crisis,
a top regional official of Citigroup said. Hong Kong-based Farhan Faruqui, head of global banking for
Asia-Pacific at Citi, said in a recent [...]
Posted: June 11th, 2012 in Headlines | Read More »
Central bank okays AUB takeover of Asiatrust
Asia United Bank has obtained approval from the Bangko Sentral ng Pilipinas to take over the 28-branch
thrift bank Asiatrust Development Bank.
The Lucio Tan group and San Miguel Corp. announced Wednesday they have signed a deal under which
SMC would acquire substantial shares in both Philippine Airlines and Air Philippines as well as
management control of the two companies.
Posted: April 4th, 2012 in Featured Gallery,Latest Business Stories,Photos & Videos | Read More »
Puregold buying S&R for P16.5B
By Doris C. Dumlao
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Retailer Puregold Price Club has agreed to buy 100 percent of upscale retailer S&R Membership
Shopping for P16.5 billion via a share swap with the family of Lucio Co, which also controls the former.
Definition: A business arrangement in which one company gives another company permission to manufacture its product
for a specified payment
There are few faster or more profitable ways to grow your business than by licensing patents,
trademarks, copyrights, designs, and other intellectual property to others. Licensing lets you instantly
tap the existing production, distribution and marketing systems that other companies may have spent
decades building. In return, you get a percentage of the revenue from products or services sold under
your license. Licensing fees typically amount to a small percentage of the sales price but can add up
Written contract under which the owner of a copyright, know how, patent, servicemark, trademark, or
other intellectual property, allows a licensee to use, make, or sell copies of the original. Such
agreements usually limit the scope or field of the licensee, and specify whether the license is exclusive
or non-exclusive, and whether the licensee will pay royalties or some other consideration in exchange.
While licensing agreements are mainly used in commercialization of a technology, they are also used by
franchisers to promote sales of goods and services.
Arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or
trade-name as well as certain business systems and processes, to produce and market a good or service according
to certain specifications. The franchisee usually pays a one-time franchise fee plus a percentage ofsales
revenue as royalty, and gains (1) immediate name recognition, (2) tried and tested products,
(3) standard building design and décor, (4) detailed techniques in running and promoting the business,
(5) training of employees, and (6) ongoing help in promoting and upgrading of the products. The franchiser
gains rapid expansion of business and earnings at minimum capital outlay.
Definition of 'Joint Venture - JV'
A business arrangement in which two or more parties agree to pool their resources for the purpose of
accomplishing a specific task. This task can be a new project or any other business activity. In a joint
venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
However, the venture is its own entity, separate and apart from the participants' other business
Investopedia explains 'Joint Venture - JV'
Although JVs represent a great way to pool capital and expertise and reduce the exposure of risk to all
involved, they do present some unique challenges as well. For instance, if party A comes up with an idea
that allows the JV to flourish, what cut of the profits does party A get? Does the party simply receive a
cut based on the original investment pool or is there recognition of the party's contribution above and
beyond the initial stake? For this and other reasons, it is estimated that nearly half of all JVs last less
than four years and end in animosity.
Lucio tan and Toyota motor and juice king alfredo yao
Greenfield Development Corporation is rapidly expanding through aggressive development of Business
Parks, Residential Communities, and Lifestyle Malls.
The term greenfield was originally used in construction and development to reference land that has
never been used (e.g. green or new), where there was no need to demolish or rebuild any existing
structures. Today, the term greenfield project is used in many industries, including software
development where it means to start a project without the need to consider any prior work.
A Greenfield project is one which is not constrained by prior work. It is constructing on unused land
where there is no need to remodel or demolish an existing structure. Such projects are often coveted by
Some examples of Greenfield projects are new factories, power plants or airports which are built from
scratch. Those facilities which are modified/ upgraded are called brownfield projects.
An agreement to share the production or extraction costs between two governments, a government and
a corporation, or a corporation and an individual. This can be accomplished when two countries agree to allow
certain raw materials to be shipped tariff free from the first country to the second country where
the materials are manufactured into a finished product. That product is then shipped back, tariff free, to
the original country. In oil or mineral extraction, the company doing the extraction is paid in oil or minerals as
compensation for business costs as well as a share of the profit.
Mining companies and government
ABS-CBN and globe telecom
Definition of 'Turnkey Business'
A situation in which a firm's high-level management plans and executes all business strategies to ensure
that individuals can buy a franchise or business and only "turn the key" to begin operations. A turnkey
business already has a proven, successful business model and merely requires investment capital and
labor. Franchises are typically turnkey business, but any existing business that's already up and running
successfully or a new business whose doors are ready to be opened could be considered a turnkey
nvestopedia explains 'Turnkey Business'
Subway's sandwich shops are an example of a turnkey business. The menu has already been developed,
the stores have already been designed, the employees' uniforms have already been chosen, marketing is
already in place and consumers are already familiar with the brand. To open a new Subway franchise, an
individual only needs to pay startup and operating costs for one store location, a franchise fee and
ongoing royalty fees; he or she does not have to worry about the other major aspects of business
A corporation may choose stability over growth by continuing its current activities without any
significant change in direction. although sometimes viewed as a lack of strategy, the stability family of
corporate strategies can be appropriate for a successful corporation operating in a reasonably
predictable environment. they are very popular with small business owners who have found a niche and
are happy with their success and the managerial size of their firms. stability strategies can be very useful
in the short run, but they can be dangerous if followed for too long. some of the more popular of these
strategies are the pause or proceed-with-caution,no-change,and profit strategies.
Stability strategy implies continuing the current activities of the firm without any significant change in
direction. If the environment is unstable and the firm is doing well, then it may believe that it is better to
make no changes. A firm is said to be following a stability strategy if it is satisfied with the same
consumer groups and maintaining the same market share, satisfied with incremental improvements of
functional performance and the management does not want to take any risks that might be associated
with expansion or growth.
Stability strategy is most likely to be pursued by small businesses or firms in a mature stage of
Stability strategies are implemented by ‘steady as it goes’ approaches to decisions. No major functional
changes are made in the product line, markets or functions.
However, stability strategy is not a ‘do nothing’ approach nor does it mean that goals such as profit
growth are abandoned. The stability strategy can be designed to increase profits through such
approaches as improving efficiency in current operations.
Why do companies pursue a stability strategy?
1) the firm is doing well or perceives itself as successful
2) it is less risky
3) it is easier and more comfortable
4) the environment is relatively unstable
5) too much expansion can lead to inefficiencies
Situations where a stability strategy is more advisable than the growth strategy:
a) if the external environment is highly dynamic and unpredictable
b) strategic managers may feel that the cost of growth may be higher than the potential benefits
c) excessive expansion may result in violation of anti trust laws
Types of stability strategies;
1) Pause/Process with caution strategy – some organizations pursue stability strategy for a temporary period
of time until the particular environmental situation changes, especially if they have been growing too
fast in the previous period. Stability strategies enable a company to consolidate its resources after
prolonged rapid growth. Sometimes, firms that wish to test the ground before moving ahead with a full-
fledged grand strategy employ stability strategy first.
2) No change strategy – a no change strategy is a decision to do nothing new i.e continue current
operations and policies for the foreseeable future. If there are no significant opportunities or threats
operating in the environment, or if there are no major new strengths and weaknesses within the
organization or if there are no new competitors or threat of substitutes, the firm may decide not to do
3) Profit strategy – the profit strategy is an attempt to artificially maintain profits by reducing investments
and short-term expenditures. Rather than announcing the company’s poor position to shareholders and
other investors at large, top management may be tempted to follow this strategy. Obviously, the profit
strategy is useful to get over a temporary difficulty, but if continued for long, it will lead to a serious
deterioration in the company’s position. The profit strategy is thus usually the top management’s short
term and often self serving response to the situation.
In general, stability strategies can be very useful in the short run, but they can be dangerous if followed
for too long.
Profit strategies are usually driven by the stockholders. These are short term strategies that focus on
efficiency (reducing use of resources).
Retrenchment strategies are employed when the company if facing serious problems in its operations.
Turnaround is a strategy adopted by firms to arrest the decline and revive their growth. A turnaround
situation exists when a firm encounters multiple years of declining Financial performance subsequent to
a period of prosperity (Bibeault, 1982; Hambrick & Schecter, 1983; Schendel et al., 1976; Zammuto &
Cameron, 1985). Turnaround situations are caused by combinations of external and internal factors
(Finkin, 1985; Heany, 1985; Schendel et al., 1976) and may be the result of years of gradual slowdown or
months of precipitous financial decline. The strategic causes of performance downturns include
increased competition, raw material shortages, and decreased profit margins, while operating problems
include strikes and labour problems, excess plant capacity and depressed price levels.
What is a Captive?
An insurance company formed and capitalized under a special purpose statute whose primary
purpose is financing the risks of its owners, participants or members. Captives have been around for
a long time and there are over 5,500 captives worldwide.
Sell out strategies require selling and leaving the industry. Divestment strategies occur when
conglomerates spin-off under performing units. Bankruptcy provides protection for the firm from
creditors for a period of time to permit reorganization. Liquidation involves terminating the firm
This is a means for reviewing the performance of multiple SBU’s collectively. See the BCG Growth-Share
Matrix on next page. The matrix compares levels of growth with levels of competitive position. Those
SBU’s that are high in position but low in growth are cash cows (reap the profits strategy). Those that
are high in both categories are stars (nurture and reap strategy). Question marks are high in growth but
low in market position (proceed with caution strategy). Those that are low in both categories are dogs
(divest, retrench, pause and see strategies).
Growth-share matrix (aka) BCG Matrix is the oldest and well-knowned matrix method of Strategic
management. It keeps the conditions of KISS (keep it simple stupid). BCG Matrix is useful tool of
BCG Matrix has its origins in Boston Consulting Group – where it was published and used first time. It
was in 1969.
Growth-share matrix brings us a possibility to evaluate company development possibilities. It is helpful
during setting up an economical strategy. Thanks to BCG, company is able to set width and height of
assortment. It can be use to finding profitable products or those which will be profitable in the nearest
Structure of BCG
Graphical structure of BCG Matrix, shows us results of mutual impact of factors controlled and
uncontrolled by the company. Controlled factors are on the abscissa and it means relativemarket share
(ratio of defined company's market share and a market share of most serious competitor).
Uncontrolled factors are placed on the ordinate and they are describing growth-speed selected market
of described company.
BCG Matrix predict four strategic places for products servedby the described company. I’m talking
1. Stars – they are hot products with big share in the fast-evolving market. Stars are products and
services providing big profits but they requires capital and investments. Stars have good outlook and
hope for profits.
After some time, Stars can change their profile into Cash cows.
There are 2 kinds of Stars: (1) young Stars which are requiring big capital and investing, because they are
still evolving and (2) Mature Stars which are self-financing ability.
2. Cash cows are products, which are financial pillar of thecompany. Cash Cows has decisive share in
slowly rising market. They are responsible for profit surplus, so they are generating free capital for
investments- for example in Stars.
3. Question marks– they are one big riddle. They are deficit products with low share in fast evolving
market. Possibilities of this products or services are hard to describe. Upkeeping of Question marks
aren't connected with big profits, but Question marks has potential for being Starsone day.
4. Dogs – they are a products, which do not brings financial surplus. Good example of bad dog is service
deprivedpotential of growth. They are result of lost competition on the saturated market.
It may be good idea to leave described market sector, because of bad ROI (return of investment) of