Ch 5 -1

Chapter 5: Strategies in Action

1. Huynh Thi Doan Thuy
2. Huynh Thi My Dieu
3. Nguyen Thi Thuan
4. Nguyen Thy Ngoc Dung



Ch 5 -2
Long Term Objectives
Quantitative
Measurable
Realistic
Understandable
Challenging
Hierarchical
Obtainable
Congruent
Timeline
represent the results expected
from pursuing certain strategies
Ch 5 -3
Ch 5 -4
Ch 5 -5
Financial vs. Strategic Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Larger profit margins
Greater ROI
Higher earnings per share
Rising stock price
Improved cash flow
Larger market share
Quicker on-time delivery than
rivals
Shorter design-to-market times
than rivals
Lower costs than rivals
Higher product quality than rivals
Wider geographic coverage than
rivals
Achieving technological
leadership
Consistently getting new or
improved products to market
ahead of rivals
Strategic Objectives
Ch 5 -6
Not Managing by Objectives
Managing by Extrapolation If it aint broke,
dont fix it.
Managing by Crisis The true measure of a good
strategist is the ability to fix problems.
Managing by Subjectives Do your own thing,
the best way you know how
Managing by Hope The future is full of
uncertainty and if at first you dont succeed, then you
may on the second or third try.
Ch 5 -7
The Balanced Scorecard
Robert Kaplan & David Norton
Strategy evaluation & control technique
Balance financial measures with
nonfinancial measures
Balance shareholder objectives with
customer & operational objectives
Ch 5 -8
Levels of Strategies
Large Company
Small Company
Ch 5 -9
Types of Strategies

Vertical
Integration
Strategies

Forward
Integration
Backward
Integration
Horizontal
Integration
Gaining ownership or
increased control over
distributors or retailers
Seeking ownership or
increased control of a
firms suppliers
Seeking ownership or
increased control over
competitors
Ch 5 -10
Types of Strategies

Intensive
Strategies

Market
Penetration
Market
Development
Product
Development
Seeking increased
market share for present
products or services in
present markets through
greater marketing efforts
Introducing present
products or services
into new geographic
areas
Seeking increased sales
by improving present
products or services or
developing new ones
Ch 5 -11
Types of Strategies

Diversification
Strategies

Related
Diversification
Unrelated
Diversification
Adding new but
related products or
services
Adding new, unrelated
products or services
Ch 5 -12
Types of Strategies

Defensive
Strategies

Retrenchment
Divestiture
Liquidation
Regrouping through cost
and asset reduction to
reverse declining sales and
profit
Selling a division or
part of an organization
Selling all of a companys
assets, in parts, for their
tangible worth
Ch 5 -13
Examples for types of Strategies

Vertical
Integration
Strategies

Forward
Integration
Backward
Integration
Horizontal
Integration
Exp: Wal- Mart recently
announced that over the
next five years the company
Will double the amount
Of food bought from local
Farmers in US
Exp: Unilever just acquired
The U.S Hair Care firm Alberto
Culver, moving into direct
competition with Procter & Gamble
And LOreal SA in shampoo
And other personal products.
Exp: Apple Inc began selling
its Ipad, Iphone through
Verizon Wirelesss 2000 stores
and AT &T s 2,200tores

Ch 5 -14
Examples for Intensive Strategies
Market
Penetration
Seeking increased market share
for present products or services
in present markets through
greater marketing efforts
Ex: United Parcel Service (UPS) recently launched its
large marketing campaign ever, replacing its memorable
slogan What can Brown do for you? with the slogan
We [heart] Logistics . Ads promoting this new slogan
are running worldwide on both TV and digital media
outlets.
Market
Development
Introducing present products or
services into new geographic
areas

Ex: Both Subway and Dunkin Brands recently opened
their first restaurants in Viet Nam. Subway also just
opened its first in Bahrain. Subway expects its number of
international restaurants to surpass its number of U.S
restaurants by 2020. Many customers say it is hard to
beat Subways $5 foot long sandwiches in terms of value
and nutrition. Starbucks expects to open its first
restaurants in India within 12 months.
Product
Development
Seeking increased sales by
improving present products or
services or developing new
ones
Ex: Hilton Worldwide recently opened its first new hotel
brand in 20 years a Home 2 Suites in Fayetteville, North
California. . Home 2 suites moves Hilton into the mid tier
extended stay market, although the company already
owns Homewood Suites, aimed at the upscale extended
stay segment. Hilton opened about 10 new Home 2 Suites
in the U.S in 2011.
Ch 5 -15
Examples for Diversification Strategies
Related
Diversification
Adding new but related products or
services

Ex: Amazon.com began allowing users to pay $79
per year for Amazon Prime , which allows users
to stream over 5,000 movies and TV shows
Unrelated
Diversification
Adding new, unrelated products or
services


Ex: Tyson Foods recently launched a new
diversification strategy, successfully opening a
manufacturing plant that makes diesel and jet fuel
from chicken fat, beef tallow, and leftover food
grease from the firms meat-processing plants.
Tysons new louisiana factory can produce 75
million gallons of fat based fuel annually. Working
with syntroleum Corp, Tyson is using heat to
change the molecular structure of fats and oils so
their new product perform like conventional fuels
rather than similar biodiesel products.
Ch 5 -16
Examples for Defensive Strategies
Retrenchment
Regrouping through cost and asset
reduction to reverse declining sales and
profit

Exp: Abbott Laboratories in 2011 cut about
3,000jobs or 3% of workforce, a part of major
strategy to streamline operations and improve
efficiencies.
- Borders closed 200 of its 488 superstores and laid
off 6,000 of its 19,500 employees
Divestiture
Selling a division or part of an
organization


Exp: Arriott sold its timeshare business, creating
the worlds largest autonomous time-share
business, consisting of 71 properties with
33,000rooms.
Liquidation
Selling all of a companys assets, in
parts, for their tangible worth

Exp: Blockbuster Inc. barely escaped liquidation in
March 2011
- Based on Mayodan, North Carolina, General
Tobaco liquidated in 2011, as the market of low
priced cigarettes failed to make payments owed to
states under a massive industry settlement.
Ch 5 -17
Porters Five Generic Strategies
Ch 5 -18
Type 1 or 2 Cost Leadership Strategy
Conditions
Vigorous price competition
Plentiful supply of identical products
Little product differentiation
Products used in same ways
Low cost to switch
Large buyers with power
Industry newcomers use low prices to attract
buyers
Ch 5 -19
Type 3 Differentiation Strategy
Conditions
Many ways to differentiate and buyers
perceive the differences as having
value
Diverse buyer needs and uses
Few rival firms following similar
differentiation approach
Fast paced technological change and
evolving product features
Ch 5 -20
Type 4 or 5 Focus Strategy
Conditions
Large, profitable, and growing target market
niche
Industry leaders do not consider the niche
crucial to their success
Industry leaders consider it costly or difficult
to meet the needs of this niche
Industry has many niches and segments
Few rivals are specializing on this target
segment
Ch 5 -21
Means for Achieving Strategies
Cooperation among competitors
Joint venture/ partnering
Merger/ acquisition
First mover advantages: Benefits a firm may
achieve by entering a new market or developing
a new product or service prior to rival firms
Outsourcing: Business-Process Outsourcing
(BPO): Companies taking over the functional
operations of other firms
Ch 5 -22