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ChapterChapter 22 ThemesThemesfor Class Discussionfor Class Discussion
The Marketing Implications The Marketing Implications of Corporate and of Corporate and
Business StrategiesBusiness Strategies
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
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What doesWhat does strategystrategy mean?mean?
•• A fundamental pattern of present and A fundamental pattern of present and planned objectives, resource deployments, planned objectives, resource deployments, and interactions of an organization with and interactions of an organization with markets, competitors, and other markets, competitors, and other markets, competitors, and other markets, competitors, and other environmental factors.environmental factors.
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Corporate Growth StrategiesCorporate Growth Strategies ((Exhibit Exhibit 22..99))
Market penetration strategiesMarket penetration strategies• Increase market share• Increase product usage
Increase frequency of useIncrease quantity usedNew applications
Product development Product development strategiesstrategies
• Product improvements• Product-line extensions• New products for same
market
Current products New products
Cu
rren
tm
arke
ts
New applications market
Market development Market development strategiesstrategies
• Expand markets for existing productsGeographic expansionTarget new segments
Diversification strategiesDiversification strategies• Vertical integration
Forward/backward integration• Diversification into related bus
(concentric diversification)• Diversification into unrelated
businesses (conglomerate diversification)
New
mar
kets
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Allocating Corporate Resources:Allocating Corporate Resources:The BCG Growth Share MatrixThe BCG Growth Share Matrix (Exhibit (Exhibit 22..1010))
HighStars Question marks
Market
5
64 12
Low
Dogs
10 0.1Relative market share
Marketgrowthrate(inconstantdollars)
10%
1
Source: Adapted from Barry Hedley, “Strategy and the Business Portfolio,” Long Range Planning 10 (February 1977).
6
9
87Cash cows
10 13
3
11 12
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Cash Flows Across Businesses inCash Flows Across Businesses inthe BCG Portfolio Modelthe BCG Portfolio Model (Exhibit (Exhibit 22..1111))
Gro
wth
rat
e (c
ash
use
)
High Stars Questionmarks
Cash
Gro
wth
rat
e (c
ash
use
)
LowCash cows Dogs
High LowRelative market share
Desired direction of business development
CashFlows
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Tools for Allocating Resources inTools for Allocating Resources inDiversified Companies: The GEDiversified Companies: The GENineNine--Cell MatrixCell Matrix
Bu
sin
ess’
s co
mp
etit
ive
po
siti
on
High
Industry attractivenessHigh Medium Low
1 1 2
Bu
sin
ess’
s co
mp
etit
ive
po
siti
on
High
Low
Medium
1 1 2
1 2 3
2 3 3
1 Invest/grow2 Selective investment/ maintain position3 Harvest/divest
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Sources of Competitive Advantage atSources of Competitive Advantage atCorporate LevelCorporate Level
•• Financial resourcesFinancial resources•• Human resourcesHuman resources•• Corporate R&DCorporate R&D•• Corporate R&DCorporate R&D•• Organisational processesOrganisational processes
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SynergySynergy
•• KnowledgeKnowledge--basedbased•• Corporate identity and corporate brandCorporate identity and corporate brand