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Chapter 7 Strategy Formulation Corporate Strategy

The document discusses corporate strategy and outlines three key components: directional strategy, portfolio strategy, and parenting strategy. It defines directional strategy as a company's orientation toward growth, contraction, or status quo. The three grand directional strategies are growth, stability, and retrenchment. Portfolio strategy involves analyzing a company's portfolio of business units using tools like the BCG matrix to determine how to allocate resources. Parenting strategy considers how to manage a company's various business units to improve performance and strategic fit.

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Jm Fernando Wenceslao
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965 views23 pages

Chapter 7 Strategy Formulation Corporate Strategy

The document discusses corporate strategy and outlines three key components: directional strategy, portfolio strategy, and parenting strategy. It defines directional strategy as a company's orientation toward growth, contraction, or status quo. The three grand directional strategies are growth, stability, and retrenchment. Portfolio strategy involves analyzing a company's portfolio of business units using tools like the BCG matrix to determine how to allocate resources. Parenting strategy considers how to manage a company's various business units to improve performance and strategic fit.

Uploaded by

Jm Fernando Wenceslao
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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CHAPTER 7 Strategy Formulation: Corporate Strategy

STRATEGIC MANAGEMENT & BUSINESS POLICY


Group 7

Corporate Strategy

3 Key Issues
Firms Firms Firms

directional strategy portfolio strategy parenting strategy

Corporate Strategy

Directional Strategy
Orientation

toward growth

Expansion,

contraction, status quo Concentration or diversification Internal development or acquisitions, mergers, or alliances

Corporate Strategy

Directional Strategy

3 Grand Strategies
Growth

strategies strategies strategies

Stability

Retrenchment

Corporate Directional Strategies

Corporate Strategy

Growth Strategies -External

mechanisms

Mergers Acquisitions Strategic

alliances

Corporate Strategy

Growth Strategies -2

Basic forms
Concentration Diversification

Corporate Strategy

Basic Concentration Strategies -Vertical

growth growth

Horizontal

Corporate Strategy

Vertical Growth -Vertical


Full

integration

integration Taper integration Quasi-integration Long-term contract

Corporate Strategy

Vertical Growth -Backward Forward

integration

integration

10

Corporate Strategy

Concentration -Horizontal

Growth
integration

Horizontal

11

Corporate Strategy

International Entry Options -Exporting Licensing Franchising Joint

Ventures Acquisitions Green-Field Development

12

Corporate Strategy

International Entry Options -Production

Sharing Turnkey Operation BOT Concept (Build, Operate, Transfer) Management Contracts

13

Corporate Strategy

Basic Diversification Strategies -Concentric

Diversification Diversification

Conglomerate

14

Corporate Strategy

Concentric Diversification -Growth

into related industry Search for synergies

15

Corporate Strategy

Conglomerate diversification -Growth

into unrelated industry Concern with financial considerations

16

Corporate Strategy

Stability Strategies -Pause/proceed No

with caution

change strategies

Profit

17

Corporate Strategy

Retrenchment Strategies -Turnaround Captive

Company Strategy Selling out Bankruptcy Liquidation

18

Corporate Strategy

Portfolio Analysis -Resource

commitment on best products to ensure continued success


Resource

commitment on new costly products high risk

19

BCG Matrix (Portfolio Analysis)

20

GE Business Screen (Portfolio Analysis)

C Winners A High Winners B Question Marks D Winners E Medium

Average Businesses F Losers

Losers G Low Profit Producers Strong Average

Losers Weak

Business Strength/Competitive Position


21

Corporate Strategy

Corporate Parenting Strategy -Strategic

factors Performance improvement Analyze fit

22

End of Presentation

23

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