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Ch 5 -1

Chapter 5Strategies in Action

Strategic Management: Concepts & Cases

13th EditionFred David

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Ch 5 -2

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Ch 5 -3

Long Term Objectives

Quantitative

Measurable

Realistic

Understandable

Challenging

Hierarchical

Obtainable

Congruent

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Ch 5 -4

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Ch 5 -5

Financial vs. Strategic ObjectivesFinancial ObjectivesGrowth in revenuesGrowth in earningsHigher dividendsLarger profit marginsGreater ROIHigher earnings per shareRising stock priceImproved cash flow

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Ch 5 -6

The Balanced Scorecard

Robert Kaplan & David Norton –

Strategy evaluation & control techniqueBalance financial measures with nonfinancial measuresBalance shareholder objectives with customer & operational objectives

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Ch 5 -7

Levels of Strategies – Large Company

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Ch 5 -8

Levels of Strategies – Small Company

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Ch 5 -9

Types of Strategies

Vertical IntegrationStrategies

Forward Integration

BackwardIntegration

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Ch 5 -10

Vertical Integration Strategies

ForwardIntegration

Gaining ownership or increased control over distributors or retailers

BackwardIntegration

Seeking ownership or increased control of a firm’s suppliers

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Ch 5 -11

Types of Strategies

IntensiveStrategies

MarketPenetration

MarketDevelopment

ProductDevelopment

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Ch 5 -12

Intensive Strategies

MarketPenetration

Seeking increased market share for present products or services in present markets through greater marketing efforts

Market Development

Introducing present products or services into new geographic areas

ProductDevelopment

Seeking increased sales by improving present products or services or developing new ones

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Ch 5 -13

Types of Strategies

DiversificationStrategies

Related Diversification

Unrelated Diversification

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Ch 5 -14

Diversification Strategies

Related Diversification

Adding new but related products or services

Unrelated Diversification Adding new, unrelated products or

services

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Ch 5 -15

Types of Strategies

DefensiveStrategies

Retrenchment

Divestiture

Liquidation

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Ch 5 -16

Defensive Strategies

RetrenchmentRegrouping through cost and asset reduction to reverse declining sales and profit

Divestiture Selling a division or part of an organization

Liquidation Selling all of a company’s assets, in parts, for their tangible worth

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Ch 5 -17

Porter’s Five Generic Strategies

Type 1 Cost Leadership – Low cost Type 2 Cost Leadership – Best value Type 3 Differentiation Type 4 Focus – Low cost Type 5 Focus – Best value