Professional Documents
Culture Documents
Strategy Formulation
Part 3
Long-Term Objectives
Must link to the situational analysis
Represent the results expected from
pursuing certain strategies
Should be quantitative, measurable,
realistic, understandable,
challenging, achievable and
congruent among organizational
units.
Provide direction and also allocation
of resources
Long-Term Objectives
Needed at corporate, divisional and
functional levels of an organization.
Clearly stated and communicated
objectives are vital to succeed.
Also provide a basis for consistent
decision making by managers whose
values and attitudes differ.
Financial V Strategic
Objectives
Financial revenue growth, larger profit ,
better ROI and etc
Strategic Larger market share, quicker ontim delivery, higher product quality and etc
Financial shorter term
Strategic Longer term
Danger trade off
Best way to sustain competitive advantages
over the long run, pursue strategic objective
Types of strategies
Corporate level strategies is an
action taken to gain a competitive
advantage through the selection and
management of a mix of business
competing in several industries or
product markets.
Two key questions What businesses
the firm should be in and how the
corporate office should manage its
group of businesses.
Types of strategies
Business- level strategy an
integrated and coordinated set of
commitments and actions the firm
uses to gain a competitive advantage
by exploiting core competencies in
specific product market.
Indicates the choices the firm has
made about how it intends to
compete in individual product
markets.
Business-Level Strategy
Porters Generic Competitive
Strategies :
A low-cost provider strategy
A broad differentiation strategy
A focused low-cost strategy
A focused differentiation strategy
A best-cost provider strategy
Broad Differentiation
Strategies
To offer unique product attributes
that a wide range of buyers find
appealing and worth paying for
How?
Managing the Value Chain to Create
the Differentiating attributes
Revamping the Value Chain System
to increase Dirrerentiation
Best-Cost provider
strategies
A Hybrid of low-cost provider and
differentiation strategies that aim at
providing more desirable attributes
( quality, features, performance,
services) while beating rivals on
price.
Strengthening a companys
competitive Position
Strategic offensive is use when a
company spots opportunities to gain
profitable market share at its rivals
expense or to try to whittle away at a
strong rivals competitive advantage.
The best offensives use a companys
most powerful resources and
capabilities to attach rivals in the
areas where they are weakest.
Approaches to Diversifying
Acquisition of existing business
Through Internal Development
Joint-Venture
Corporate Parenting
Judicious Cross-Business Allocation of
Financial Resources ( acting as
internal capital market to other
businesses)
Acquiring and Restructuring
undervalued companies.
Drawbacks of unrelated
Diversification
Demanding Managerial Requirements
Limited Competitive Advantage
Potential
( relying solely on
leveraging general resources and the
expertise of corporate executives)
References
Thompson/Peteraf/Gamble/Strickland,
Crafting & Executing strategy, 12th Edition,
Mc Graw-Hill
F.R. David, Strategic Management
concepts and cases, 11th Edition, Pearson
International edition.
D. Hanson, P. Dowling, M. Hitt, R.D. Ireland
and R.E. Hoskisson, Strategic
Management, competitiveness &
Globalization, Asia Pacific Third Edition