International Strategic Management · Ll dt ftti I.2 Levels of strategies Levels Types of strategies Levels and types of strategies. yp g Corporate level Corporate strategy Growth

International Strategic ManagementChapter: C

Prof. Dr. Christian Buer

Strategic management: Table of content

A. Fundamentals of strategic management B. Analysis and planning of business objectives and field of activitiesC. General Strategic Management Concepts D St t i A l i d Pl i I t tD. Strategic Analysis and Planning Instruments

2Prof. Dr. Michael Erner · International Strategic Management · SS 10

General Strategic Management Concepts

I O iI. OverviewII. Porter´s Strategies and Competitive Advantage III. Gilbert and StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Market Strategies

3By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12


I O iI. Overview1. Strategies in the business context2. Levels of strategies3 St t i h3. Strategic approaches

II. Porter´s Strategies and Competitive Advantage III. Gilbert and StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Market Strategies


I.1 Strategies in the business contextSt t i i th b i t t 7 S tStrategies in the business context: 7-S concept.

Structure

Sh d

Strategy Systems

Shared values

Skills Style

Staffhard facts

soft facts

5By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Quoted after Bea/Haas (2005)

E l 7 S t f th ti M t hitI.1 Strategies in the business context

Structure

Example: 7-S-concept for the corporation Matsushita.

Strategy

Matrix organization Organizational innovations

Systems Own spart names

Own distribution channels Long-term partnerships with traders

Growth strategy (price cut) Imitation strategy(price cut, quality

i )

Comprehensive planning system Fully developed finance and

controlling system due to autonomy of divisions

Comprehensive information t

Super ordinate goalsincrease) systems Company as community of

employees and management Company as a mean to satisfy societal

needs/intellectual needs

SkillsStyle

Good employee relationsSkills Strong customer- and market

proximity

Staff

Good employee relations Cooperative leadership Acceptance times

Lifelong employment High meaning of HR

Comprehensive training and education Job rotation

Recommendation system

6By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Quoted after Macharzina/Wolf (2005)

L l d t f t t i

I.2 Levels of strategiesLevels and types of strategies.

Levels of the company as a source for the strategy level:

Corporate strategiesCorporate level

Business units strategiesBusiness units strategiesBusiness unit level

Functional units strategiesFunctional level strategiesFunctional level

7By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source:Corsten (1998)

L l d t f t t i

I.2 Levels of strategiesLevels and types of strategies.

Interaction of the three major strategy levels:.Corporation

Business unit1 Business unit 2

el 1

el 3

el 2

el 1

el 3

el 2

ctio

nal l

eve

Prod

uctio

n

ctio

nal l

eve

Dis

tribu

tion

ctio

nal l

eve

Fina

nce

ctio

nal l

eve

Prod

uctio

n

ctio

nal l

eve

Dis

tribu

tion

ctio

nal l

eve

Fina

nce

Func P

Func D

Func

Func P

Func D

Func

Functional level strategy Corporate strategyBusiness unit strategy

8By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Macharzina/Wolf (2005)

L l d t f t t i

I.2 Levels of strategies

Levels Types of strategies

Levels and types of strategies.

yp g

Corporate level

Corporate strategy

Growth strategy Stabilization strategy Contraction strategyCorporate level

Business unit strategy

Product-market strategiesLocal, national and global strategies

Do-It-Yourself, cooperation and acquisition strategies

Business unit level

gy

Price leadership strategy Differentiation strategy Niche strategy

Functional level strategy

Functional levelSupply strategy

Production strategy

Distribution strategy

Finance strategy

Personnel strategy

Technology strategy

9By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bea/Haas (2005)

Alt ti di t A ff P d t M k t M t i

I.3 Strategic approachesAlternatives according to Ansoff – Product-Market-Matrix

Markets

Products M0 M1, M2, M3…. Mn

Market penetration Market developmentP0

P1, P2, P3… PnProduct development Diversification


A ff Di ifi ti lt ti

I.3 Strategic approachesAnsoff – Diversification alternatives

Same area of

Same value

Same area of operations Different area of operations

Present business Horizontal diversification

Diff

Same value chain level

Conglomerate diversification

Different value chain

levelVertical

diversification


Alt ti di t P t

I.3 Strategic approachesAlternatives according to Porter

Strategic advantage

Si l it (Q lit

Target object

Singularity (Quality, design etc.) Cost advantage

Differentiation Price leadershipIndustry wide

Concentration on core competenciesOne segment


Alt ti t t i f i t ti li ti

I.3 Strategic approaches

Market entry

Alternative strategies of internationalization.

Market entry and market penetrating strategies

Coordination strategies

Target market strategies

Allocation TimingAllocation strategies

Timing strategies


Alt ti t t i f i t ti li ti

I.3 Strategic approachesAlternative strategies of internationalization.

Strategies of the international corporation

Market entry and marketpenetration strategies

Target market strategies

Timing strategies Allocation strategies

Coordination strategies

Export Market presencestrategy

Country specific Configurationstrategies:

Demand reducing coordination

Licensing Market selection strategy

First mover strategy

Centralization Outsourcingstrategy strategy

Franchising Marketsegmentation strategy

Follower strategy Decentralization Build up of superfluous resources

C t t f t i A t i P f D d iContract manufacturing Across countries Performancestrategies

Demand coveringcoordination:

Joint Venture Waterfall strategy Standardization Structural, technocratic,personnel oriented strategiesstrategies

Strategic Alliance … Sprinkler strategy Differentiation


Source: Kutschker/Schmid (2008)


I O iI. OverviewII. Porter´s Strategies and Competitive Advantage III. Gilbert and StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Market Strategies


II. Porter‘s strategies and competitive advantagesB i t f titi t t i di t P tBasic concept of competitive strategies according to Porter

Cost advantageDifferentiation advantage

Strategy of aggressive cost leadership

Strategy of quality leadership/

Cost advantage

Total market coverage

Differentiation advantage

cost leadershipquality leadership/differentiation

Strategy of selectiveStrategy of selectiveS b k t

Concentration

Strategy of selective cost leadership

Strategy of selective quality leadership

Submarket coverage

16By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Porter, 1992

E l f titi t t i di t P tII. Porter‘s strategies and competitive advantagesExamples of competitive strategies according to Porter

Cost advantagePerformance advantage

Cost leadershipT t

Quality leadershipVW/Audi

Cost advantage


Performance advantage

Toyota Nissan Honda

VW/AudiFordOpelMercedes-Benz

CostsDifferentiation

Mitsubishi

ConcentratedConcentrated Concentrated cost leadership

KIA Hyndai

Concentrated quality leadershipPorsche Rolls-RoyceS b k t

Focusing

Hyndai Suzuki

Rolls Royce Volvo

Submarket coverage

17By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Bruhn, 2001

St k i th iddl “ bl di t P tII. Porter‘s strategies and competitive advantages„Stuck in the middle“ problem according to Porter

Companies successful in the long-term

Big companies with high market share (cover nearly the entire market)

Small, specialized companies (cover market niches)

ROI

RelativeRelative market shareStuck in the

middle

Companies with mean market share run the risk to gain not enough profitability.

18By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Porter, 1992

Q lit l d hi (Diff ti ti )II. Porter‘s strategies and competitive advantagesQuality leadership (Differentiation)

Become the leading company within the selected strategic business areaGoal

Measures Intensive market research to identify customer needs Ensure product and service quality Ensure product and service quality

Characteristic Expansion of the price policy options Classical brand image strategy High quality, constant price, ubiquity


C t l d hiII. Porter‘s strategies and competitive advantagesCost leadership

Become biggest and most efficient company within selected strategic business area (market share as dominant objective)Goal

Thrown up market entry barriers (e.g. investment barrier) Control of distribution systemMeasures y Control of costs to achieve economies of scale

Aggressive price competition Lower product preferences of consumers Small product range

Characteristic


P diti t i l t P t t t d tiII. Porter‘s strategies and competitive advantagesPrecondition to implement Porters strategy recommendation

Cost strategyDifferentiation strategy gy

Precondition: High market share (Learning curve

gy

Precondition: Exclusive reputation of the

effect) Cost advantages over the

competition (e.g. raw material)

company High-cost measures

- R&D Strong cost evaluation Efficient production plants (size) Exploit every possibility to reduce

- Product design- High quality of materials- Intensive customer care

costs:- Reduce spending level of R&D, service, sales

t ti

Intensive customer care Cost orientation Updating the brand management

representatives, communication

21By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Trommsdorff

C t ti k t i hII. Porter‘s strategies and competitive advantagesConcentration on market niche

Focus on profitable and special market nicheGoal

Focused innovation policy Invest into human capital and flexibility Strategic cooperation

Measures g p

Strategic market segmentation Individual offeringCharacteristic Individual offering Comprehensive expertise

C a acte st c

Precondition Decide whether to concentrate on market niche as cost or quality leader


I li ti f P t t t ilII. Porter‘s strategies and competitive advantagesImplications of Porter to retail

Upper market Preferencet t

Boutiques(preference-buyer) strategy

upSpecialized shop

Department store

Mid-range market

uptradingdown

DiscounterPrice-quantity

strategyLower market(price-buyer)


P t lt ti t t i i k ti iII. Porter‘s strategies and competitive advantagesPorters alternative strategies in marketing mix

Cost strategyDifferentiation strategy

Competitive advantage through cost orientation

(Minimum of quality and service)

Competitive advantage through uniqueness and fulfillment of

additional needs

Aggressive price competitionPolishing an image despite higher iprices

Brand-buyer Price-buyer

Above-average product quality Attractive packaging Image-oriented brand profiling

Average product quality Efficiently packaging No brandg p g

Personal sale / service High price

Less communication Cheap sales channels Low price


P d f P t t t lt tiII. Porter‘s strategies and competitive advantagesPros and cons of Porters strategy alternatives

Cost strategyDifferentiation strategy

Pros Late market entry at price reduction (with

cost advantages) Protection from buying power customers

Pros Customer commitment to the brand Low price sensitivity of the customers Market entry barriers due to customer Protection from buying-power customers

Protection from powerful suppliers High market entry barriers Necessary scope at the appearance of

substitutes

Market entry barriers due to customer loyalty

Dealing with suppliers Low buying power of key customers

(cause of unique position) substitutes(cause of unique position)

Cons Cost reduction potential can be “learned”

Cons High pre-investment within product and

also by competitors Neglect of adaptation on market

requirements with strong concentration on costs

brand development Substantial price advantages of cost

leader (financial savings for customers more important than brand)

Compensation of price advantage with effortless cost increase

Above average profit margins attract competitors

Imitations decrease the visible advantage


C iti t t t f P tII. Porter‘s strategies and competitive advantagesCritic on strategy concept of Porter

The strategy concept of porter basically includes a directed consumer strategy oriented on competitive advantages

The strategy concept is to limited for the wide range of competitive advantages

Companies can do on the one hand a cost oriented approach and on the other hand a quality oriented approach without being torn between two sides in this respect (outpacing strategy).

Dynamic aspects of strategy adaptation are not focused by Porter



I O iI. OverviewII. Porter´s Strategies and Competetive Advantage III. Gilbert und StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Produkt-Marktstrategien


III. Gilbert and StreibelTh t i t t h b Gilb t d St ib lThe outpacing strategy approach by Gilbert and Streibel

High product b fit

Improve the manu-facturing process

Overtakebenefit facturing process

Introduce a Product standard differentiation

First supplier

Low productioncosts

Second supplier (Follower)

28By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Gilbert/ Strebel, 1987


I O iI. OverviewII. Porter´s Strategies and Competetive Advantage III. Gilbert und StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Produkt-Marktstrategien


IV. Case study PorterC t d t l d hi 1 AldiCase study cost leadership 1: Aldi

1. companyp y

2. philosophy & implementation of cost leadership

3. key figures3. key figures

4. conclusion

5 sources5. sources


Case study cost leadership 1: AldiALDI NORD d ALDI SÜDALDI – NORD and ALDI SÜD

1913 Foundation of the family company

1960 Foundation of the both legally

independent companies ALDI -NORD and ALDI – SÜDO a d SÜ


Case study cost leadership 1: AldiALDI NORD d ALDI SÜDALDI – NORD and ALDI SÜD

Food trade

Field of business Discount principal 700 articles in product range Focus on label products

International leading brand within the area of food trade Three out of four households in Germany buy at ALDI

Market position Three out of four households in Germany buy at ALDI Number 1 of the ten top-brands in Germany

(Markenwertstudie Young & Rubicam, 2000)( g )

International

Around 6000 stores world-wide ALDI Nord runs stores in Belgium, Netherland, Luxemburg,

F S i P t l d D kInternationalpresence

France, Spain, Portugal and Denmark ALDI Süd runs stores in Austria, Great Britain, Ireland,

USA, Australia, Switzerland and Slovenia


Case study cost leadership 1: AldiTh hil h f ALDI & i l t ti f t l d hiThe philosophy of ALDI & implementation of cost leadership

Focus on the essentials!

t ibl

Focus on the essentials!

Concentrated range of goods

strong, responsible management

Rationalized l t

high quality label products in case

uncompromising

sales system label products in case of brand products

quality


Case study cost leadership 1: AldiObj tiObjectives

Lowest price

Lowest costs

High quality


Case study cost leadership 1: AldiP iti i t t t i f P tPosition in strategy matrix of Porter

Cost advantagePerformance advantage

Strategy of aggressive cost leadership

Strategy of quality leadership

Cost advantage


Performance advantage

cost leadershipquality leadership

Strategy of selectiveStrategy of selectiveS b k t

Concentration

Strategy of selective cost leadership

Strategy of selective quality leadership

Submarket coverage


Case study cost leadership 1: AldiR li ti f t l d hiRealization of cost leadership

World wide purchase

Long term contracts with suppliers

C t ff ti t t ti Cost-effective transportation

Tightened product ranges

Cost-effective location and decoration of sales area


Case study cost leadership 1: AldiM k t h f d t d GMarket share food trade Germany


Case study cost leadership 1: AldiC l iConclusion

Simplicityp y

Detailed quality checks

Decentralization

WaiveWaive


Case study cost leadership 1: AldiSSources

www.wikipedia.dep

www.aldi.de

www.suedeutsche.de

www.zeit.dewww.zeit.de


C t d t l d hi 2 R iIV. Case study PorterCase study cost leadership 2: Ryanair

1. companyp y

2. philosophy & implementation of cost leadership

3. key figures3. key figures

4. conclusion

5 sources5. sources


Case study cost leadership 2: RyanairR iRyanair

1985 founded by the Irish business man Dr. Tony Ryan

History Since 1993 Michael O'Leary leads the company with

a „No-Frills“-strategy 1997 expansion to continental Europe 2003 takeover of BUZZ

Stock company out of Ireland

Factsp y

Main base: Airport London Stansted 320 routes between 19 European countries


Case study cost leadership 2: RyanairTh R i hil h & i l t ti f t l d hiThe Ryanair philosophy & implementation of cost leadership

„No-Frills“-strategy

Low price + low additional value


Case study cost leadership 2: RyanairR li ti f t l d hiRealization of cost leadership

Airplane Minimized comfort

Aircraft fleet Almost only Boing 737-800

Di t ith B i

Airplane Fast cleaning and time savings

Aircraft fleet Discounts with Boeing

Air fields Not at main airports Fast reloading speedFast reloading speed

Service Snacks and drinks for additional money Additional profit

Personal Out of countries with lower employee on-costs Outsourcing of several services

R d i f l Reduction of personal costs


Case study cost leadership 2: RyanairR li ti f t l d hiRealization of cost leadership

Pricing Strictly to demand situation

Sales No tourist offices

M i l h l I t t

Pricing Average: 38 €/ticket

Sales Main sales channel: Internet

Communication Aggressive advertising


Case study cost leadership 2: RyanairMi h l O‘LMicheal O‘Leary


Case study cost leadership 2: RyanairK fiKey figures

Sales volume:…………..1,07 bill. EuroEmployees: 2300 Employees:………...……2300 Travel:…………………….23 mill. passengers Fleet:………………………>100 jets of type Boeing Main competitors:

Easy Jet Air Berlin

Market share in European Low-cost-market(number of passengers)

Market share:………..27,3%

xx


Case study cost leadership 2: RyanairC l iConclusion

LCC meets customers i trequirements

On time, few

Trends in prices and profit marginseasyJet and Ryanair

Average price

flight cancellations

Compete on the European

Average price

flight market

Annual growthgof approx. 25 %

15Net profit Ryanair Net profit easyJet

Cost leadership strategy successful


Case study cost leadership 2: Ryanair… Trends in prices and profit margins

easyJet and Ryanair

A iAverage price

Average price


Quelle: …

Net profit Ryanair Net profit easyJet

Case study cost leadership 2: RyanairSSources

http://www.ryanair.com/site/DE/about.php

http://de.wikipedia.org/wiki/Ryanair


C t d Diff ti ti 1 L fthIV. Case study PorterCase study Differentiation 1: Lufthansa

1. Lufthansa's strategic business unitsg

2. Philosophy & Implementation of differentiation strategy of Lufthansa

3. Key figures

4. Conclusion

5. Sources


Case study Differentiation 1: LufthansaSt t i b i itStrategic business units

Lufthansa Lufthansa Systems

LSG Sky Chefs Formerly

Thomas Cook AG

Passage

Geschäft

LufthansaTechnik

Lufthansa Cargo


Case study Differentiation 1: LufthansaPhil h & i l t ti f diff ti ti t t f L fthPhilosophy & implementation of differentiation strategy of Lufthansa

Source of competition

Costs Uniqueness

Broad Umfassende K t füh Differen-

Market

target market

Kostenführer-schaft zierung

coverage

Narrowtarget

Konzentration auf Schwerpunktetarget

marketSchwerpunkte



Quality Innovation Reliability and safety

Products

• Service on Board

• FlyNet, broadband-Internet

• Sensors at the airplane

• Classes



Tailor-made products for the customers

First Class Business Class Economy Class

• First Class Terminal

• Jet

• seating comfort • Flights for 99€


Case study Differentiation 1: LufthansaK fiKey figures

2006in Mill €

R 18 065

2005 in Mill €

16 965

Percentage

+6 5Revenue 18.065

Operating profit 577

16.965

383

+6,5

+50,7

Investments 1.829 1.783 +2,6

Employees (end of the year) 92.303 90.673 +1,8

Earnings per share 0,99 0,94 +5,3


Case study Differentiation 1: LufthansaK fiKey figures

Airlines Customers (in thousand)Rank

1 A i Ai li 91 5701 American Airlines 91.570

2 Delta Airlines 86.783

3 United Airlines 71 2363 United Airlines 71.236

4 Northwest Airlines 56.429

5 J Ai li 51 7365 Japan Airlines 51.736

6 Lufthansa 48.268

7 All Nippon Airways 46 4507 All Nippon Airways 46.450

8 Air France 45.393

9 US Airways 42 4009 US Airways 42.400

10 Continental 40.584


Case study Differentiation 1: LufthansaSSources

www.lufthansa.com mckinse dewww.mckinsey.de

http://www.org-portal.org/portal/artikelhttp://konzern.lufthansa.com/de/ htt // l fth fi i l dhttp://www.lufthansa-financials.de http://www.lufthansacityline.com/de/http://www.stern.de

//http://www.iata.de


C t d Diff ti ti 2 A lIV. Case study PorterCase study Differentiation 2: Apple

1. The company „Apple“p y pp

2. Philosophy and implementation of differentiation strategy

3. Facts3. Facts

4. Sources


Case study Differentiation 2: AppleA lApple

Apple Computer Inc computer company with headquarter in USA Apple Computer Inc. – computer company with headquarter in USA

Products: Computer, consumer electronics, operating systems and ftuser software

Around 14.800 full-time employees

Revenue: 3,7 Bill USD (4. Quarter 2005 world-wide)

P fit 430 Mill USD (4 Q t 2005 ld id ) Profit: 430 Mill USD (4. Quarter 2005 world-wide)


Case study Differentiation 2: AppleMil tMilestones

iPodiPodclassic

1G1 3G2G 4G 5G 6G

iPodmini/nano

2G1G 1G 2G 3G

iPodshuffle

1G 2G

iPod

20022001 20042003 2005 2006 2007

touch1G


Case study Differentiation 2: AppleS lSales

20

22

Mill. Units sold

1

16

18

20

1G 5G 1G

10

12

14

1G 4G

4

6

81G1

1st iPod launched in

October 2001

0

2

2007200620052004200320022001

October 2001


Case study Differentiation 2: AppleP iti iPositioning

Uniqueness on customers point of

view Cost advantage

Differen-zierung

Cost leadership

Across the industryzierung leadership industry

FocusOne segment


Case study Differentiation 2: AppleObj ti f diff ti ti t tObjectives of differentiation strategy

Offering

Mp3

Offering

Market leaderMp3 Market leader

PCPC

Target groupPrivatecustomers

Businesscustomers

g g p


Case study Differentiation 2: AppleM k t hMarket share

Extraordinary market share (1/2)Extraordinary market share (1/2)

40 %Absolute amount (2005) world-wide:

iPodMP3


Case study Differentiation 2: AppleF t f diff ti tiFeatures for differentiation

Unique User interface is patented

xx

Uniquedesign Design makes the iPod to the

iPod

Continuous adaptation

at competitors iPod continued to develop Handy with iPod design


Case study Differentiation 2: AppleF t f diff ti tiFeatures for differentiation

High qualityHigh quality

Company image

Brand imageBrand image

DesignPatience

4

EquipmentAccessories

DesignMemory

Competitors

iPod

BrandPrice


Case study Differentiation 2: AppleM f diff ti tiMeasures for differentiation

Customer loyalty Design

Ease of use


Case study Differentiation 2: AppleP d f diff ti tiPros and cons of differentiation

Pros

Customer loyalty

Cons

Imitation

Low price sensitivity

Uniqueness Price advantage of

other providers


Case study Differentiation 2: AppleO tl kOutlook

Product within the maturity phase – Relaunch?

Challenge Mobile phone market iPhones?Challenge Mobile phone market – iPhones?


Case study Differentiation 2: AppleRRevenue

apple

13.930

12.000

14.000

16.000$ first iPod

7.970

5 7506.205

8.2798.000

10.000

enue

in M

ill U

S-$

10/2001

5.360 5.750

2.000

4.000

6.000

Rev

e

02000 2001 2002 2003 2004 2005

Year


Case study Differentiation 2: AppleSSources

http://www.fscklog.com/ipod/index.htmlhttp://de.wikipedia.org p p ghttp://www.heise.dehttp://ipodlife.de/http://www.ipod-fun.de/ p phttp://de.wikipedia.org/wiki/IPod#Geschichtehttp://www.hardwarecrew.com/http://www.fscklog.com/2006/01/macs liefern nu.htmlhttp://www.fscklog.com/2006/01/macs_liefern_nu.html http://www.mactechnews.dehttp://img.mediamarkt.de/images/http://www mediaonline de/http://www.mediaonline.de/



I O iI. OverviewII. Porter´s Strategies and Competetive Advantage III. Gilbert und StreibelIV C St d P tIV. Case Study PorterV. Ansoff‘s Product-Marcet Strategies


V. Ansoff‘s product-market strategiesA ff‘ d t k t t iAnsoff‘s product-market-matrix

M k tMarket

old new

Market Marketold

Marketpenetration

Marketdevelopment

duct

newProduct

developmentDiversification

Prod

development

73By Prof. Dr. Michael Erner and Prof. Dr. Christian Buer · International Strategic Management · SS 12Source: Ansoff, 1966

A ff k t t ti MarketMarket

V. Ansoff‘s product-market strategiesAnsoff – market penetration

R i th d t f i ti t

Marketdevelopment

Marketpenetration

old

newold

Marketdevelopment

Marketpenetration

old

newold

Prod

uct

Raise the product usage of existing customers Improvement/Adaptation of product quality Additional benefit/value (Service, emotional positioning) Improvement of distribution

DiversificationProduct

developmentnew Diversification

Productdevelopment

new

P

p Intensify the communication Price differentiation

Gain new customers in existing marketsg Poach customers of competitors Recruit customers out of not yet targeted segments e.g:

– Enhance the productNew sales arguments/better information– New sales arguments/better information

– Price adjustment on level of competitors

Evaluation Low opportunities to expand (expect in other markets) Low opportunities to expand (expect in other markets) high degree of safety No enlargement of resources needed


A ff P d t d l t / di ifi ti MarketMarket

V. Ansoff‘s product-market strategiesAnsoff – Product development / diversification

P d t difi ti

Marketdevelopment

Marketpenetration

old

newold

Marketdevelopment

Marketpenetration

old

newold

Prod

uct

Product modification Additional value due to service extension Extend products with individual functions Adjustment of the product to changing needs of existing customers



Productdevelopment

new

P

j p g g g– E.g. design, packaging, compatibility

Product innovation Technical product innovationp

– Application of new technologies– Systems instead of components– Diverse innovation strategy decisions

Mental product innovation Mental product innovation– Repositioning– New positioning (relaunch)

EvaluationEvaluation Greatest possible expansion High risk: Uncertainty in evaluation of market chances, especially with

new consumer segmentsHigh investments in new product development launch and


High investments in new product development, launch and acquisitions needed

A ff k t d l t MarketMarket

V. Ansoff‘s product-market strategiesAnsoff – market development

N

Marketdevelopment

Marketpenetration

old

newold

Marketdevelopment

Marketpenetration

old

newold

Prod

uct

New purposes Solving new problems with existing product

– Enhancement of product suitability– Creation of new application fields



Productdevelopment

new

P

– Creation of new application fields – Positioning of product to solve other problems

New usersN k t New market areas

– regional– national– internationalinternational

Open new market segments (market segmentation)– Cultivation of currently neglected market segments

EvaluationEvaluation Extended expansion possibilities Aggravated risk, uncertainty in market chances within new segments Investments into enhanced capacities for market cultivation, product


Investments into enhanced capacities for market cultivation, product adaptation needed

Documents

International Strategic Management · Ll dt ftti I.2 Levels of strategies Levels Types of strategies Levels and types of strategies. yp g Corporate level Corporate strategy Growth