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Strategic MGMT 3 PDF
Strategic MGMT 3 PDF
Process:
Strategy formulation 2.
By: Prof. Dr. András Nábrádi
PhD, MBA
University of Debrecen
Faculty of Ag. Economics and Rural Development
Dept.: Business Management and Marketing
HUNGARY
Outline
• Establish long
term objectives
Strategy formulation
•Types of
strategies
•Integration
•Intensive Strategy Implementation
•Defensive
•Generic
•Achieving
strategies
Strategy Evaluation
Outline
• Establish long
term objectives Develop
•Types of
Vision and
strategies Mission
•Integration
Statements
•Intensive
Establish
•Defensive
long term Strategy formulation
•Generic objectives
•Achieving (Strategic planning)
strategies
Generate,
evaluate,
and select
strategies
© Dr. Nábrádi András
DE-AVK
Strategy formulation
•Developing vision and mission
Outline
•Indetifying external opportunities and threats
• Establish long
term objectives
•Determining internal strenghts and weaknesses
•Types of
strategies •Establishing long term objectives
•Integration
•Intensive •Generating alternative strategies
•Defensive •Choosing particular strategies to pursue
•Generic •Deciding what new business to enter
•Achieving •How to allocate resources
strategies •Expand or diversify operations
•Entering or not international market
•Merge or form joint venture
•How to avoid a hostile takeover
© Dr. Nábrádi András
DE-AVK
Strategy formulation
Outline
• Establish long
PERFORMANCE OBJECTIVES
term objectives
•Types of Organization’s target for achievement; both short
strategies and long range objectives are needed.
•Integration
•Intensive
FINANCIAL OBJECTIVES
•Defensive
•Generic Financial performance targets a company wants to
•Achieving achieve.
strategies
STRATEGIC OBJECTIVES
Targets relating to strenghtening a company’s
© Dr. Nábrádi András
overall market position and competetive viability.
DE-AVK
Strategy formulation
Outline
• Establish long
LONG-RANGE OBJECTIVES
term objectives
•Types of Achiement levels to be reached within the next three
strategies to five years.
•Integration
•Intensive
•Defensive
•Generic SHORT-RANGE OBJECTIVES
•Achieving
strategies
Near-term performance target; they establish the
pace for achieving the long-range objectives.
Outline
I. Integration
• Establish long
term objectives Strategy Description Example
•Types of
Forward Gaining ownership An agricultural
strategies
integration or increased company
•Integration control over purchased a
distributors or regional bakery-
•Intensive
retailers chain
•Defensive Backward Seeking ownership Hotels Inc.
•Generic integration or increased purchased a
control of a firm’s furniture producer
•Achieving suppliers
strategies
Horizontal Seeking ownership One department
integration or increased store acquired
control over another department
competitors store
Outline
Forward integration effective when:
• Establish long
• present distributors are especially expensive or unreliable
term objectives
• availability of quality distributors is limited
•Types of
strategies
• competes in an industry growing and expected to continue
to grow
•Integration
• an organization has both capital and HR needed to manage of
•Intensive
distributing its own products
•Defensive • present distributors or retailers have high profit margin
•Generic
•Achieving
strategies
distributors
© Dr. Nábrádi András
DE-AVK
Types of strategies
Outline
Backward integration effective when:
• Establish long
term objectives
• present suppliers are especially expensive or unreliable
•Types of • number of suppliers is small and the number of
strategies
competitors is large
•Integration
• competes in an industry growing and expected to continue
•Intensive
to grow
•Defensive
• an organization has both capital and HR to manage new
•Generic
business of supplying its own raw materials
•Achieving
strategies • the advantages of a stable raw material price particularly
important
• present suppliers have high profit margin
Outline
Horizontal integration effective when:
• Establish long
term objectives
• increase economic of scale provide major competitive
•Types of advantages
strategies
• competes in an industry growing and expected to continue
•Integration
to grow
•Intensive
• an organization has both capital and HR needed to
•Defensive
manage an expanded organization
•Generic
•Achieving
strategies
competitors
Outline
II. Intensive
• Establish long
term objectives Strategy Description Example
•Types of Increased market share for present
Market Coca cola is spending
strategies products in present market millions to advertise its
penetration through greater marketing efforts
drinks
•Integration
•Intensive Market Introducing present MOL purchased a 10
development products or services into % stake in Slovakoil
•Defensive new geographic area
Outline
Market penetration effective when:
• Establish long
term objectives
• Current markets are not saturated with a particular product
•Types of or service
strategies
• usage rate of present customers could be increased
•Integration
significantly
•Intensive
• market share of major competitors have been declining
•Defensive
while total industry sales have been increasing
•Generic
•increased economies of scale provide major competitive
•Achieving
strategies advantages
present products in present market
‘Sony co. is spending over $141 million in a new advertising and
promotion drive to market its high-definition television named
© Dr. Nábrádi András BRAVIA sets in the USA’. 2006
DE-AVK
Types of strategies
Outline
Birth Growing Maturity Declining
• Establish long
term objectives 10
•Types of 8
strategies Money / Time
•Integration 6
•Intensive 4
Cash-flow
•Defensive
2
•Generic
•Achieving 0
strategies
-2
0 1 2 3 4 5 6
Time
Outline
II. Intensive
• Establish long
term objectives Strategy Description Example
•Types of Increased market share for present
Market Coca cola is spending
strategies products in present market millions to advertise its
penetration through greater marketing efforts
drinks
•Integration
•Intensive Market Introducing present MOL purchased a 10
development products or services into % stake in Slovakoil
•Defensive new geographic area
Outline
Current New
• Establish long Name
term objectives markets markets
•Types of
strategies Market Market
•Integration Current penetration development
•Intensive products
•Defensive
Market
•Generic development
•Achieving Market Unrelated
strategies penetration
New products diversification
Related
diversification
Outline
III. Defensive
• Establish long
term objectives Strategy Description Example
•Types of
Retrenchment Regrouping through costs Sanyo Electric is cutting
strategies and assets reduction to its global workforce by
Reorganizational serve declining sales and 15% in 2006 for reducing
•Integration strategy profit. its dept.
•Intensive Divestiture Selling a division or part of Goodyear Co. sold its
an organization North American farm-tire
•Defensive business to Titan Inc.
•Generic Liquidation Selling all of a company’s Britain’s last major car
assets, in parts, for their manufacturer, MG Rover
•Achieving tangible worth Group Ltd., liquidated in
strategies 2005 and laid off its 5000
employees.
Best value
Outline
Generic strategies
• Establish long
term objectives To gain competitive advantage from 3 different bases:
•Types of
• Cost leadership: producing standardized products at very low per-
strategies unit cost for consumers who are price-sensitive. Two alternatives:
•Integration
• low cost strategy: concentrate on a low cost
• best value: concentrate on best-price-value compared to rival’s
•Intensive
• Differentiation
•Defensive •Considered unique or industrywide products and services
•Generic • Focus: fulfill the needs of small groups of consumers Two
•Achieving alternatives
strategies •low cost focus:
•best value focus