8 44 achieving a turnaround the strategic options

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8-44 Achieving a Turnaround: The Strategic Options Sell off assets to generate cash and/or reduce debt Revise existing strategy Launch efforts to boost revenues Cut costs Combination of efforts
What Is a Harvest Strategy?
8-45 Objectives Short-term - Generate largest feasible cash flow Long-term - Exit market
8-46 Types of Harvest Options Reduce operating expenses to rock-bottom Hold reinvestment to minimum Place little priority on new capital investments Emphasize stringent internal cost controls Trim advertising and promotion expenses Do not replace employees who leave Shave equipment maintenance
When Should a Harvest Strategy Be Considered?
8-48 Wisest strategic option in certain situations Lack of resources Dim profit prospects May serve stockholder interests better than bankruptcy Unpleasant strategic option Hardship of job eliminations Effects of closing on local community Liquidation Strategy
8-49 10 Commandments for Crafting Successful Business Strategies 1. Always put top priority on crafting and executing strategic moves that enhance a firm’s competitive position for the long-term and that serve to establish it as an industry leader. 2. Be prompt in adapting and responding to changing market conditions, unmet customer needs and buyer wishes for something better, emerging technological alternatives, and new initiatives of rivals. Responding late or with too little often puts a firm in the precarious position of playing catch-up.
8-50 10 Commandments for Crafting Successful Business Strategies 3. Invest in creating a sustainable competitive advantage, for it is a most dependable contributor to above- average profitability. 4. Avoid strategies capable of succeeding only in the best of circumstances. 5. Don’t underestimate the reactions and the commitment of rival firms. 6. Consider that attacking competitive weakness is usually more profitable than attacking competitive strength. 7. Be judicious in cutting prices without an established cost advantage.
8-51 10 Commandments for Crafting Successful Business Strategies 8. Employ bold strategic moves in pursuing differentiation strategies so as to open up very meaningful gaps in quality or service or advertising or other product attributes. 9. Endeavor not to get “stuck back in the pack” with no coherent long-term strategy or distinctive competitive position, and little prospect of climbing into the ranks of the industry leaders.

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