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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -1
Chapter 5Strategies in Action
Strategic Management: Concepts & Cases
13th EditionFred David
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -3
Long Term Objectives
Quantitative
Measurable
Realistic
Understandable
Challenging
Hierarchical
Obtainable
Congruent
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -5
Financial vs. Strategic ObjectivesFinancial ObjectivesGrowth in revenuesGrowth in earningsHigher dividendsLarger profit marginsGreater ROIHigher earnings per shareRising stock priceImproved cash flow
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -6
The Balanced Scorecard
Robert Kaplan & David Norton –
Strategy evaluation & control techniqueBalance financial measures with nonfinancial measuresBalance shareholder objectives with customer & operational objectives
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Ch 5 -7
Levels of Strategies – Large Company
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Ch 5 -8
Levels of Strategies – Small Company
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Ch 5 -9
Types of Strategies
Vertical IntegrationStrategies
Forward Integration
BackwardIntegration
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Ch 5 -10
Vertical Integration Strategies
ForwardIntegration
Gaining ownership or increased control over distributors or retailers
BackwardIntegration
Seeking ownership or increased control of a firm’s suppliers
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -11
Types of Strategies
IntensiveStrategies
MarketPenetration
MarketDevelopment
ProductDevelopment
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -12
Intensive Strategies
MarketPenetration
Seeking increased market share for present products or services in present markets through greater marketing efforts
Market Development
Introducing present products or services into new geographic areas
ProductDevelopment
Seeking increased sales by improving present products or services or developing new ones
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -13
Types of Strategies
DiversificationStrategies
Related Diversification
Unrelated Diversification
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -14
Diversification Strategies
Related Diversification
Adding new but related products or services
Unrelated Diversification Adding new, unrelated products or
services
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -15
Types of Strategies
DefensiveStrategies
Retrenchment
Divestiture
Liquidation
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 5 -16
Defensive Strategies
RetrenchmentRegrouping through cost and asset reduction to reverse declining sales and profit
Divestiture Selling a division or part of an organization
Liquidation Selling all of a company’s assets, in parts, for their tangible worth