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Prentice Hall, 2004 Chapter 6Wheelen/Hunger
1
Corporate Directional Strategies
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
2
Corporate Strategy
Directional Strategy:– Three Grand Strategies:• Growth strategies• Stability strategies• Retrenchment strategies
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
3
Corporate Strategy Growth Strategies:
– Most widely pursued strategies– External mechanisms:• Mergers
– Transaction involving two or more firms in which stock is exchanged but only one firm survives.
• Acquisition– Purchase of a firm that is absorbed as an operating
subsidiary of the acquiring firm.
• Strategic Alliance– Partnership of two or more firms to achieve
strategically significant objectives that are mutually beneficial.
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
4
Corporate Strategy
2 Basic Growth Strategies:
–Concentration– Current product line in one industry
–Diversification– Into other product lines in other industries
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
5
Corporate Strategy
Basic Concentration Strategies:
–Vertical growth
–Horizontal growth
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
6
Corporate Strategy
Concentration:
Vertical growth
– Vertical integration• Full integration• Taper integration• Quasi-integration
– Backward integration
– Forward integration
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
7
Corporate Strategy
Concentration:
Horizontal Growth
–Horizontal integration
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
8
Corporate Strategy
Basic Diversification Strategies:
–Concentric Diversification
–Conglomerate Diversification
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
9
Corporate Strategy
Diversification:
Concentric:
–Growth into related industry–Search for synergies
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
10
Corporate Strategy
Diversification:
Conglomerate:
–Growth into unrelated industry–Concern with financial considerations
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
11
Corporate Strategy
InternationalEntry
Options
ExportingLicensing
FranchisingJoint Ventures
AcquisitionsGreen-Field Development
Production SharingTurnkey Operations
BOT ConceptManagement Contracts
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
12
Corporate Strategy
Stability Strategies:
–Pause/proceed with caution
–No change
–Profit strategies
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
13
Corporate Strategy
Retrenchment Strategies:
– Turnaround
–Captive Company Strategy
–Selling out
–Bankruptcy
– Liquidation
Prentice Hall, 2004 Chapter 6Wheelen/Hunger
14
International Portfolio Analysis
2 Factors:
• Country’s attractiveness• Market size, rate of growth, regulation
• Competitive strength• Market share, product fit, contribution
margin, market support