Professional Documents
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David - Sm14 Inppt05
David - Sm14 Inppt05
David - Sm14 Inppt05
Action
Chapter Five
The Nature of Long-Term
Objectives
Objectives should be:
quantitative, measurable, realistic,
understandable, challenging, hierarchical,
obtainable, and congruent among
organizational units
5-2
The Nature of Long-Term
Objectives
Objectives
provide direction
aid in evaluation
establish priorities
reduce uncertainty
minimize conflicts
aid in both the allocation of resources and
the design of jobs
5-3
Varying Performance Measures
by Organizational Level
5-4
The Desired Characteristics
of Objectives
5-5
Not Managing by Objectives
5-6
The Balanced Scorecard
Balanced Scorecard
derives its name from the perceived need of
firms to “balance” financial measures that
are oftentimes used exclusively in strategy
evaluation and control with nonfinancial
measures such as product quality and
customer service
5-7
A Comprehensive Strategic-
Management Model
5-8
Types of Strategies
5-9
Alternative Strategies Defined
and Exemplified
5-10
Alternative Strategies Defined
and Exemplified
5-11
Levels of Strategies With Persons
Most Responsible
5-12
Integration Strategies
Forward integration
involves gaining ownership or increased
control over distributors or retailers
Backward integration
strategy of seeking ownership or increased
control of a firm’s suppliers
Horizontal integration
a strategy of seeking ownership of or
increased control over a firm’s competitors
5-13
Forward Integration Guidelines
5-15
Horizontal Integration Guidelines
5-18
Market Development Guidelines
5-19
Product Development Guidelines
Related Unrelated
diversification diversification
value chains value chains are
possess so dissimilar that
competitively no competitively
valuable cross- valuable cross-
business strategic business
fits relationships exist
5-21
Synergies of Related
Diversification
Transferring competitively valuable
expertise, technological know-how, or other
capabilities from one business to another
Combining the related activities of separate
businesses into a single operation to
achieve lower costs
Exploiting common use of a well-known
brand name
5-22
Related Diversification Guidelines
5-24
Unrelated Diversification
Guidelines (cont.)
When an organization has the opportunity to
purchase an unrelated business that is an
attractive investment opportunity
When existing markets for an organization’s
present products are saturated
When antitrust action could be charged
against an organization that historically has
concentrated on a single industry
5-25
Defensive Strategies
Retrenchment
occurs when an organization regroups
through cost and asset reduction to reverse
declining sales and profits
also called a turnaround or reorganizational
strategy
designed to fortify an organization’s basic
distinctive competence
5-26
Retrenchment Guidelines
5-27
Defensive Strategies
Divestiture
Selling a division or part of an organization
often used to raise capital for further strategic
acquisitions or investments
5-28
Divestiture Guidelines
5-29
Defensive Strategies
Liquidation
selling all of a company’s assets, in parts, for
their tangible worth
can be an emotionally difficult strategy
5-30
Liquidation Guidelines
5-31
Porter’s Five Generic Strategies
5-32
Michael Porter’s Five
Generic Strategies
Cost leadership
emphasizes producing standardized products
at a very low per-unit cost for consumers who
are price-sensitive
5-33
Michael Porter’s Five
Generic Strategies
Type 1 Type 2
low-cost strategy best-value
that offers strategy that offers
products or products or
services to a wide services to a wide
range of range of
customers at the customers at the
lowest price best price-value
available on the available on the
market market
5-34
Michael Porter’s Five
Generic Strategies
Differentiation
strategy aimed at producing products and
services considered unique industry-wide
and directed at consumers who are relatively
price-insensitive
5-35
Michael Porter’s Five
Generic Strategies
Type 4 Type 5
low-cost focus best-value focus
strategy that offers strategy that offers
products or products or
services to a niche services to a small
group of range of
customers at the customers at the
lowest price best price-value
available on the available on the
market market
5-36
Cost Leadership Strategies
5-37
Cost Leadership Strategies
Two ways:
1.Perform value chain activities more
efficiently than rivals and control the factors
that drive the costs of value chain activities
2.Revamp the firm’s overall value chain to
eliminate or bypass some cost-producing
activities
5-38
Cost Leadership Guidelines
5-39
Differentiation Strategies
5-40
Differentiation
5-41
Focus Strategies
5-42
Focus Strategy Guidelines
5-43
Means for Achieving Strategies
5-44
Key Reasons Why Many Mergers
and Acquisitions Fail
5-45
Potential Benefits of Merging With
or Acquiring Another Firm
5-46
Benefits of a Firm Being
the First Mover
5-47