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Corporate Strategies Ch. 6 of Strategic Management in Action

Corporate Strategies Ch. 6 of Strategic Management in Action. Team 6 Michael Grizzle, Ryan Moeller, Stuart Gaston, Tate Rouche , Justin Schamp, Rachel Strat. Definitions.

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Corporate Strategies Ch. 6 of Strategic Management in Action

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  1. Corporate StrategiesCh. 6 of Strategic Management in Action Team 6 Michael Grizzle, Ryan Moeller, Stuart Gaston, Tate Rouche, Justin Schamp, Rachel Strat

  2. Definitions • Corporate Strategy = a strategy concerned with the choices of what business(es) to be in and what to do with those businesses • Single-Business Organization = a business primarily in 1 industry • Ex: Coca-Cola • Multiple-Business Organization = a business that is in more than 1 industry • Ex: PepsiCo, Shell

  3. Corporate Strategic Directions • 3 types • Moving an organization forward (growth strategy) • Hope to expand the organization’s activities or operations • Keeping an organization as is (stability strategy) • Keep the organization from expanding, but also not declining • Reversing an organization’s directions (renewal strategy) • Describing problem the organization has, and then installing a renewal strategy

  4. Growth Strategy • A strategy that expands the products offered or markets served by an organization or expands it’s activities or operations either through current business(es) or through new business(es) • 5 growth strategies • Concentration = concentrates on its primary line of business and looks for ways to meet its growth goals by expanding • Vertical Integration = an organizations grows by gaining control of its inputs, outputs, or both • Horizontal Integration = an organization grows by combining operations with 1 of its competitors • Diversification = an organization grows by moving into a different industry • International = expanding into global markets

  5. Implementing Growth Strategies • 3 ways • Mergers/Acquisitions • Merger = a legal transaction in which 2 or more organizations combine operations through an exchange of stock and create a 3rd entity • Acquisition = an outright purchase of an organization by another • Internal Development • Grows by creating and developing new business activities itself • Strategic Partnering • 2 or more organizations establish a partnership by combining resources, distinctive capabilities, and core competencies

  6. When is Stability an Appropriate Strategic Choice? • When an industry is in a period of rapid upheaval • When an industry is facing slow or no growth opportunities • When an organization has been growing rapidly • When a large firm is in the maturity stage of it’s life cycle

  7. Implementing the Stability Strategy • Primarily involves not growing • Not allowing the organization to decline

  8. Renewal Strategies • Renewal strategies = strategies the reverse the decline of the organization and put it back on a positive track • Reasons for performance declines • Inadequate financial controls • Uncontrollable costs or too high costs • New competitors • Unpredicted shifts in customer demand • Overexpansion/too rapid of growth • Slow or no response to significant external or internal changes

  9. Renewal Strategies • 2 main types • Retrenchment • A short-run renewal strategy designed to address organizational weaknesses that are leading to performance declines • Turnaround • A renewal strategy that’s designed for situations in which the organization’s performance problems are more serious • Ex: Sears, Delta Airlines, Chrysler, GM

  10. Implementing Renewal Strategies • Involves 2 actions: cutting costs and restructuring • Cost cutting • restructuring

  11. Evaluating Corporate Strategies • Corporate goals • Increased earnings • Maximized stockholder wealth • Increased market share • Strong global presence • Increased revenues • High product quality • Strong customer satisfaction

  12. Efficiency, Effectiveness, & Productivity Measures • Efficiency = an organization’s ability to minimize resource use in achieving organizational goals • Effectiveness = an organization’s ability to reach its goals • Productivity = a specific measure of how many inputs it takes to produce outputs

  13. Portfolio Analysis • Portfolio = an organization’s various business units • Uses 2 matrices to summarize internal and external factors • BCG matrix • McKinsey-GE stoplight matrix

  14. Changing Corporate Strategies • Organization might need to change their strategies if the results are weak or not having the intended results • Ex: Microsoft • Acquired various internet and web startup companies • Redesigned software • Reshuffled administrative duties

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