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

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Corporate stratedy

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Page 1: Example of Corporate Strategy

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.

customer base.

Portfolio Strategy

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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


Examples of




- A mortgage

company that

both originates

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and services


meaning that

it both lends

money to


and collects

their monthly


- A solar power

company that



products and



the cells,

wafers and

modules to

create those


would be



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- The merger

of Live Nation



created a




company that

manages and




shows and

sells event


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.

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An example of horizontal integration is an automobile manufacturer's acquisition of a sport utility

vehicle manufacturer.

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.





Examples of



include an oil


acquisition of

additional oil

refineries, or

an automobile

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acquisition of a

light truck




offers several




economies of


economies or



market power

and reduction

in the costs

associated with


trade by

operating in




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integration is in

contrast to



where firms

expand into



known as

upstream or



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

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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.

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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.

Brand Diversification

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

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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

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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

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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

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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'

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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 Says

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

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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.

production sharing


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'

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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


Stability strategies

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.

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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

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organization or if there are no new competitors or threat of substitutes, the firm may decide not to do

anything new.

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.

Retrenchment Strategies

-cost cutting


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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

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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

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


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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


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