Strategies in Action

Usman Chaudhry
 Strategies

“Because we’re making bigger bets on investments in

technology, we can’t afford to spend a whole lot of money
in one direction and then find out five years later it was the
wrong direction.”
Kent Nelson
Former chair of UPS

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 Long-Term Objectives

Results expected from pursuing certain strategies.

 Quantifiable
 Measurable
 Realistic TIME LINE
 Understandable
 Challenging

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 A Small Company

Corporate
Level

Business level

Functional/ Operational Level

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 A Large Company

Corp
Level

Division Level

Functional Level

Operational Level

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 Long-Term Objectives

Objectives serve as Standards

 Corporate Level
 Divisional Level
 Functional Level

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 Long-Term Objectives

Varying Performance Measures

by Organizational Level

Organizational Level
75% on long-term objectives
Corporate
25% on annual objectives
50% on long-term objectives
Division
50% on annual objectives
25% on long-term objectives
Function
75% on annual objectives
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 Financial vs. Strategic Objectives

Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Higher profit margins
Higher Earnings per share
Improved cash flow
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 Financial vs. Strategic Objectives

Strategic Objectives
Larger market share
Quicker on-time delivery than rivals
Quicker design-to-market times than rivals
Lower costs than rivals
Higher product quality than rivals
Wider geographic coverage than rivals
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 Financial vs. Strategic Objectives

Trade-Off for Crucial Decisions

To maximize short-term financial objectives – it

could harm long-term strategic objectives
Pursue increased market share at the expense
of short-term profitability

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 The Balanced Scorecard

Robert Kaplan & David Norton

Strategy evaluation & control technique

Balance financial measures with non-financial
measures
Balance shareholder objectives with customer
& operational objectives

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 The Balanced Scorecard

The Balanced Scorecard

Enterprise performance management systems that measure many
aspects of a firm’s achievements.

The scorecard approach links strategy to measurement by asking

firms to consider their vision, critical success factors for
accomplishing it, and subsequent performance metrics in four
areas: Customer, Internal Business Process, Innovation and
learning, and Financial.

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 Types of Strategies

Forward
Integration

Integrative
Strategies Backward
Integration

When and Horizontal

why Integration

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 Integration Strategies

Gaining ownership or increased

Forward control over distributors or retailers
Integration (Franchises) Attock, Chenab Group, K & N,
WhatsApp

Seeking ownership or increased

Backward
control of a firm’s suppliers (Ice
Integration
cream company buys a dairy)

Seeking ownership or increased

Horizontal
control over competitors (Tata Steel
Integration
India & Corus UK)
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 Types of Strategies

Market
Penetration

Intensive Market
Strategies Development

Product
Development

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 Intensive Strategies

Seeking increased market share for

Market present products or services in
Penetration present markets through greater
marketing efforts (Coke, Ufone)
Introducing present products or
Market Development services into new geographic areas
(McDonald’s)
Seeking increased sales by improving
Product
present products or services or
Development
developing new ones (Samsung)
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 Types of Strategies

Related
Diversification
Diversification
Strategies

Unrelated
Diversification

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 Types of Strategies

Related / Concentric Adding new but related products or

Diversification services (Bicycle and Scotty, Ketchup
and Mayonnaise)
Unrelated /
Conglomerate Adding new, unrelated products or
Diversification services (Virgin Group, Engro Food)

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 Types of Strategies

Retrenchment

Defensive
Strategies Divestiture

Liquidation

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 Types of Strategies

Regrouping through cost and asset

Retrenchment reduction to reverse declining sales
and profit (Starbucks, Citigroup, Mobilink)

Divestiture Selling a division or part of an

organization – often to raise capital

Selling all of a company’s assets, in

Liquidation
parts, for their tangible worth
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 Retrenchment

Sixty lose jobs as BlackBerry

retrenchment continues

“We are moving a small number of U.S.-focused sales roles that were
based in Canada to the U.S. to be more closely aligned with our
customers. As a result, approximately 60 employees have been
impacted, primarily in sales.”
Lisette Kwong, senior manager of corporate communications for
BlackBerry.

She said the layoffs are part of the second phase of BlackBerry’s
transformation plan
September 11, 2013

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 Michael Porter’s Generic Strategies

Cost Leadership Strategies

Differentiation Strategies

Focus Strategies

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 Generic Strategies

Cost Leadership

In conjunction with differentiation

Economies or diseconomies of scale
Capacity utilization achieved
Linkages with suppliers & distributors

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 Generic Strategies

Low Cost Producer Advantage

Many price-sensitive buyers

Few ways of achieving differentiation
Buyers not sensitive to brand differences
Large number of buyers w/bargaining power

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 Cost Leadership

Examples

 Pound Land (UK)

 Megabus (USA, Canada, Europe)
 Chinese products for developing/poor countries
 Ryanair

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 Generic Strategies

Differentiation
Greater product flexibility
Greater compatibility
Improved service
Greater convenience
More features

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 Differentiation

Examples

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 Generic Strategies

Focus/ Segmented Strategies

Target / niche market of sufficient size

Good growth potential
Not crucial to success of major competitors

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 Focus…

Examples

 BMW – M3 (Sports Sedan)

 IKEA
 Toyota Family Cars (7 seaters)

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 Means for Achieving Strategies

• Joint Venture/Partnering
• Cooperative Arrangements
• (R&D partnership, cross distribution agreements)

• Mergers & Acquisitions

• First Mover Advantage
• Outsourcing
• Business-process outsourcing (BPO)
• Companies taking over the functional operations of other
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