Session 9 Flashcards
Strategic business unit
supplies goods or services for a distinct domain of activity
Corporate strategy
the choice of direction of the firm as a whole
Directional strategy
the firm’s overall orientation toward growth
Portfolio analysis
industries in which the firm competes through its products and
business unites
Parenting strategy
which management coordinates activities
Corporate strategy directions
-market penetration (existing products and existing markets)
-new products and services (new products and existing markets)
-market development (existing products and new market)
-conglomerate diversification (new products and new markets)
Diversification
involves increasing the range of products or markets served by an organisation.
Related diversification
diversifying into products or services with relationships to the existing businesses
Conglomerate diversification (unrelated)
diversifying into products or services new to the existing market
Market penetration
increasing share of current markets with current product range
-strategic capabilities, scope is unchanged, increased power and economies of scale
corporate directional strategies
- growth
_ concentration (vertical and horizontal growth)
_Diversification (concentric and conglomerate) - stability
- retrenchment
Directional strategy
-growth strategies
-stability strategies
-retrenchment strategies
-merger
-acquisition
Concentration strategies
-vertical growth
-vertical integration
-backward integration
-forward integration
-full integration
-taper integration
-quasi-integration
-long-term contracts
-horizontal growth
-horizontal integration
Diversification strategies
-concentric (related)
growth into a related industry when a firm has a strong competitive
position
-conglomerate (unrelated)
diversifying into an industry unrelated to its current one
stability strategies
-pause/proceed with caution
opportunity to rest before continuing growth
-no-change
do nothing new
-profit strategy
decision to do nothing new
Retrenchment strategies
used when the firm has a weak competitive position
-contraction
-consolidation
-sell-out
-divestment
-bankruptcy
-liquidation
portfolio analysis
management views its product lines and business units as a series of investments
BCG Growth-share matrix
-question mark
new products with potential for success but need money to development
-stars
market leaders that can generate enough cash to maintain
-cash cows
bring more money that is needed low market growth rate
-dogs
low market share and don’t have potential to bring cash
corporate parenting
views a corporation in terms of resources and capabilities
-focusing on the core competencies of
the parent corporation
Horizontal strategy
cuts across business unit boundaries to build synergy across business
units and to improve competitive position
Multipoint competition
-large multi-business corporation compete against other large multi-business firms
