MPM8107: Strategic

Management for Public

Sector Organizations
Dr. Ben Ngoye
Session 7

Strategic Decision time

Levels of strategy and
associated decisions

Corporate level SBU Functional level

Portfolio management How to compete: general or operational strategies
Grand strategy: growth, specific market, cost or the engineering & alignment
retrench, consolidate differentiation questions
method for pursuing the product/service dev., market
strategy dev., diversification
Session 7a

An overview of corporate level concerns: Portfolio Management

Portfolio analysis: The BCG
Growth-Share Matrix
Your Market share
HIGH LOW
HIGH Stars – solidify Question marks –
comparative invest to build market
advantages, ward off share or eliminate
potential/current
competitors
Market Growth rate
LOW Cash cows – build or Dogs – targets for
maintain current divestment
market share. Use
revenue to build stars
or question marks
Portfolio analysis: The Gruber
& Mohr Matrix
Program Social Value
LOW HIGH
POSITIVE RETURNS Sustaining Programs Beneficial (Best of all
(Necessary Evil) – Worlds) – expand. Use
maintain. Use revenues to subsidize
revenues to support worthwhile programs
worthwhile programs
Financial Returns
NEGATIVE RETURNS Detrimental (No Worthwhile programs
redeeming qualities) - (Satisfying, Good for
prune Society) – nurture with
aggressive fundraising
and subsidies
Portfolio Analysis: MacMillan
(1983) Framework
Program Attractiveness
HIGH LOW
Alternative coverage Alternative Coverage
HIGH LOW HIGH LOW
Competitive STRONG I: Aggressive II: Aggressive V: Build up VI: The soul
position of competition growth best
your competitor
products/
services WEAK III: Aggressive IV: Build VII: orderly VIII: Joint
divestment strength or divestment Venture
sell out
Session 7b

An overview of corporate level concerns: Grand strategies

Growth, retrenchment and
stability strategies in summary
Growth strategies: Concentration
versus diversification
 Concentration
 Focus effort and resources in one/few markets in short run. Gradual expansion into other
markets in the long run
 Focus on primary line of business – meet growth objectives by increasing level of operation in
primary business
 Includes: Market development, Product development, Integration
 Integration could be vertical (forward, backward) or horizontal

 Diversification
 Go to many markets then build each slowly. Requires investing marketing effort and resources
into many markets in the short run
 Branching out into new business opportunity
 Concentric (related) or conglomerate (unrelated products/services)

 Combination/Hybrid*
Retrenchment strategies
 Turnaround strategies
 Two phases: contraction and consolidation
 Succeed where: disciplined and sustained efforts at cost reduction, focus on product
differentiation, technically competent leaders

 Divestment
 Types: transfer of responsibility, collaboration, consolidation, elimination
 Privatization
 Outsourcing

 Liquidation
Retrenchment: who is most
vulnerable…
 Small and young organizations

 Single-purpose organizations

 Organizations without a strategy

Retrenchment: when should it
be considered?
 When organization incapable of contributing sufficient value relative to the
resources it is consuming
 To revitalize the organization
 To redirect resources, protect the core
 To shed ineffective programs
 When mission is fulfilled
 As precursor to a new organization (from the ashes of the old)
Stability strategies
 A Viable option…
 In response to uncertain market
status quo captive conditions
 To consolidate gains
 To adjust to retrenchment
 To protect a leadership position in a
pause incremental stable market
 To stabilize revenue streams
 To meet community demands for
continuity of service and direction

defensive
Session 7c

An overview of corporate level concerns: Methods for pursuing the strategies

internal versus external
growth
 Internal growth
 Own capacity enhanced through new infrastructure etc.

 External growth
 Mergers: absorbed organization dissolved and assets transferred, absorbed has no legal
status
 Acquisitions: purchase of all or part, there is transfer of ownership
 Consolidations: pooling of assets, creation of a new organization and extinguishing of the
original(s)
 Joint ventures: cooperative activity, temporary, identities intact
Session 7d

Making a choice
Making a choice
 Review the market and industry trends, your service capabilities, your
service/product offering and their cost structure, R&D
 Assessing viability to thin down the options: The SAFE criteria
 Applying an evaluative matrix to make a final choice (and to prioritize)
Assessing viability
Making a choice
 Review the market and industry trends, your service capabilities, your
service/product offering and their cost structure, R&D
 Assessing viability to thin down the options: The SAFE criteria
 Applying an evaluative matrix to make a final choice (and to prioritize)
Bringing it all together: Many
evaluative matrices…
Bringing it all together: final
notes
 Possibility of conflicting solutions
 Need for consistency between the different elements – competitive strategy (cost or
differentiation) needs to align with strategy direction (product development,
diversification) and strategic method (internal, acquisition, alliances)
 Implementation may bring up issues – consider experimentation, low cost probes?
Next steps…answering the
engineering question

Entrepreneurial
Alignment question
question
Engineering question
MPPM strategy
Dr. Ben Ngoye