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MGMT 4489
STRATEGIC MANAGEMENT
Dr. Ramon Baltazar
Sobey School of Business
St. Marys University
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Dr. R. Baltazar 2011
ANTECEDENTS OF STRATEGY
INTERNAL ANALYSIS
MISSION
STRATEGY
EXTERNAL ANALYSIS
Business and
functional levels
International level
Corporate level
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TOPICS IN INTERNATIONAL
STRATEGY Rationale
Leveraging products and skills
Location, cost, and scope economies
Entry mode options
Exporting, licensing, franchising, joint ventures,
ownership
Pressures in internationalization
Cost pressures and local responsiveness
Alternative international strategies
Basic international, global, localization, transnational
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INTERNATIONALIZATION
PRESSURES
High
HighLow
Low
Cost ReductionPressures
Local
Responsiveness
Pressures
Differences in
- consumer tastes/preferences
- infrastructure/practices
- distribution channels
- host government demands
e.g. ball bearings, wheat
e.g. cosmetics, food,
household goods
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ALTERNATIVE INTERNATIONAL
STRATEGIES
Pressures
for cost
reduction
Pressures for local responsiveness
Localization
Strategy
Global
Standardization
Strategy
Transnational
Strategy
Basic
International
Strategy
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CORPORATE STRATEGY
TOPICS Rationale Diversification, Control, Scale and scope
economies
Single industry strategies Horizontal and vertical
integration
Multiple-industry strategies Related and unrelated
diversification
Tools of corporate strategy BCG matrix and Porters tests
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SINGLE-INDUSTRY CORPORATE
STRATEGIES
Vertical
integration
HorizontalIntegration
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PROS AND CONS OF SINGLE-INDUSTRY
STRATEGIES
Horizontal integration
May reduce competition, increase economies of scale
May increase business risk, risk incompatible value
chains
Vertical integration
May improve quality, enhance ability to differentiate
May increase business risk, force in-house reliance
and create potential loss of design flexibility, and
require different technical and management logics
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MULTIPLE-INDUSTRY CORPORATE
STRATEGIES
Unrelated diversification
Related diversification
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PROS AND CONS OF MULTIPLE-
INDUSTRY STRATEGIES
Related diversification
Enhances economies of scale and scope Risks incompatible value
chains
Unrelated diversification
Diversifies business risk
Risks inability to manage different businesses
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BOSTON CONSULTING GROUP
MATRIX
Stars
DogsCash Cows
?
Relative market share
IndustryGrowth
Rate
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PORTERS TESTS FOR
CORPORATE STRATEGY Attractiveness test
Is the industry/segment being contemplated structurally
attractive?
Requires industry/segment analysis
Cost of entry test Is the value of the business being
contemplated > cost?
Requires comparing cost of entry, value, and financial
capacity
Better off test Will the purchasing firm make the purchased firm
more competitive or
vice versa? Requires an examination of resource and capability
complementarities
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Case Discussion
Procter & Gamble
