Chapter 08, Strategic Management

Types of corporate strategies growth 1 2 3 4

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Unformatted text preview: orate Strategies (cont'd) Stability A strategy that seeks to maintain the status quo to deal with the uncertainty of a dynamic environment, when the industry is experiencing slow or no growth conditions, or if the owners of the firm elect not to grow for personal reasons. 1. 2. 3. No significant change is proposed. Organization's performance is satisfactory. Environment appears to be stable. Types of Corporate Strategies (cont'd) Renewal Developing strategies to counter organization weaknesses that are leading to performance declines. 1. Retrenchment. Focusing of eliminating non critical weaknesses and restoring strengths to overcome current performance problems. 2. Turnaround. Addressing critical longterm performance problems through the use of strong cost elimination measures and largescale organizational restructuring solutions. TYPES OF ORGANIZATIONAL STRATEGIES (cont'd) BusinessLevel Strategy Determines how an organization should compete in each of its businesses. Strategic business units Independent businesses that formulate their own strategies. TYPES OF ORGANIZATIONAL STRATEGIES (cont'd) Competitive advantage. Sets an organization apart by providing a distinct edge: 1. 2. 3. Comes from the organization's core competencies. Not every organization can transform core competencies into a competitive advantage. Once created, must be able to sustain it. TYPES OF ORGANIZATIONAL STRATEGIES (cont'd) BusinessLevel Strategy (cont'd) Competitive Strategies Industry analysis based on five competitive forces. 1. Threat of new entrants. 2. Threat of substitutes. 3. Bargaining power of buyers. 4. Bargaining power of suppliers. 5. Existing rivalry. FORCES IN THE INDUSTRY ANALYSIS New Entrants Threat of New Entrants Bargaining Power or Suppliers Suppliers Industry Competitors Buyers Current Rivalry Threat of Substitutes Bargaining Power or Buyers Substitutes TYPES OF ORGANIZATIONAL STRATEGIES (cont'd) BusinessLevel Strategy (cont'd) Porter's three generic strategies are: 1. 2. 3. Cost leadership. Goal is to become the lowest cost producer in the industry. widely valued by customers. Differentiation. Offer unique products that are Focus. Aims at a cost advantage or differentiation advantage in a narrow segment...
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This note was uploaded on 01/19/2012 for the course ECON 501 taught by Professor Ibrar during the Spring '11 term at University of the Punjab.

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