Chapter Chapter TwoTwo

Corporate Strategy Decisions Corporate Strategy Decisions

and Their Marketing and Their Marketing ImplicationsImplications

Chapter Two: Corporate Strategy Decisions and Their Marketing

Implications

Learning Objectives:

• Understand the corporate strategy components and issues:

- Scope and mission - Objectives

- Growth and competitive advantage - Growth strategies

• Improve analytical skills, especially in forming objectives

Corporate Scope and Mission

• Corporate Mission

examples

RIC SOM

• Corporate Scope: In what business should the firm be?

In what business is Rhode Island College?

The railroads collapsed because they thought they were in the railroad business, when really they were in the transportation business.

Broad Specific

FunctionalBased on customer needs

Transportation business

Long-distance transportation for large-volume producers of low-value, low-density products

PhysicalBased on existing products or technology

Railroad business Long-haul, coal carrying railroad

Corporate Strategy Video

Corporate Growth and Gaining a Competitive Advantage

Ansoff Strategies

Growth Strategies and Allocating Corporate ResourcesB

usi

nes

s’s

com

pet

itiv

e p

osi

tio

n

High

Low

Medium

Industry attractivenessHigh Medium Low

1 1 2

1 2 3

2 3 3

BCG Portfolio Model

GE Nine-Cell Matrix

1 Invest/grow2 Selective investment/

maintain position3 Harvest/divest

Alternative Corporate Strategic Frameworks

Rock, Scissors,

Paper

FSS Corporate

Video

Factors Affecting the Creation of Shareholder Value

Creatingshareholder

value

Shareholder return• Dividends• Capital gains

Corporateobjective

Sales growth• Operating profit margin

• Income tax rate

Discount rate Debt

Operating

Cash flowfrom

operations

Investment Financing

• Working capital investment

• Fixed capital investment

• Cost of capital

• Value growth duration

Valuationcomponents

Valuedrivers

Managementdecisions

Source: Reprinted with permission of The Free Press, A Division of Macmillan, Inc., from Crating Shareholder Value by Alfred Rappaport. Copyright © 1986 by Alfred Rappaport.

Exhibit 2.9.

Is Santana Worth It?