Topic2.StrategyRevisited

Market high low small large relative market share

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: /not?? •  Proposition 2: Companies can reduce more risk through unrelated diversification •  Unrelated diversification: Creating or acquiring companies in completely unrelated businesses •  Proposition 3: Investing the profits & cash flows from mature, slow- growth businesses into newer faster-growing businesses can reduce long term risk •  BCG matrix 47 28/04/12 95 UPF - International Strategic Management 2012 Corporate-level strategies (a) BCG Matrix: an assessment tool MARKET GROWTH :Question Marks: :Stars: Companies (businesses) with a large share of a fast-growing market Companies with a small share of a fast-growing market High Low Small Large RELATIVE MARKET SHARE :Dogs: companies with a small share of a slow-growing market :Cash Cows: Companies with a large share of a slow-growing market 96 UPF - International Strategic Management 2012 Corporate-level strategies (a) BCG Matrix: an assessment tool Market Growth Company A 4 Company D Stars High Question Marks Company C Company B Company G Low Dogs Company H 5 Small 3 2 1 Company E Cash Cows Company F Large Relative Market Share 48 28/04/12 UPF - International Strategic Management 2012 97 Corporate-level strategies (a) 2. Portfolio Strategies: Problem??? Risk High Low Single Business Related Unrelated Diversification Diversification UPF - International Strategic Management 2012 98 Corporate-level strategies (a) 2. Portfolio Strategies: Other Problems??? •  Risk and diversification (previous slide!) •  Cash cows fail to aggressively pursue opportunities and defense themselves from threats •  Being labeled a “cash cow” can hurt employee morale. •  Companies often overpay to acquire stars •  Acquiring firms often treat stars as “conquered foes” •  … •  Further integration problems.. 49 28/04/12 UPF - International Strategic Management 2012 99 Corporate-level strategies A. Portfolio strategy B. Grand strategies   Vertical Integration   Portfolio strategies: single business, related diversification, unrelated diversification   BCG Matrix   Stability   Retrenchment/   Stars   Question marks   Cash cows   Growth recovery   Dogs UPF - International Strategic Management 2012 100 Corporate-level strategies (b) Grand Strategies •  Grand strategy is a broad strategic plan used to help an organization achieve its strategic goals •  Growth strategy focuses on increasing profits, revenues, market share, or number of places to do business •  Stability strategy focuses on improving the way the company sells the same products or services to the same customers •  Retrenchment & recovery strategy focuses on turning around very poor company performance by shrinking the size or scope of the business / shutting down lines of businesses. Analogous to pruning roses… 50 28/04/12 UPF - International Strategic Management 2012 101 Corporate-level strategies (b) Grand Strategies - Illustration •  Nestle and its brands** •  Nestle has a new strategy to cut unproductive brands and simpli...
View Full Document

This note was uploaded on 10/18/2012 for the course BUSI 102 taught by Professor X during the Spring '12 term at Universitat Pompeu Fabra.

Ask a homework question - tutors are online