MGT 411: STRATEGIC MANAGEMENT Strategy Formulation Lecture - 6

Long-Term Objectives
Financial Objectives

Strategic Objectives

Faster revenue growth Higher dividends Wider profit margins Higher returns on invested capital Bigger cash flows A rising stock price A more diversified revenue base

A bigger market share A higher, more secure industry rank Higher product quality Lower costs relative to key competitors Broader more attractive product line A stronger reputation with customers Superior customer service Recognition as a leader in technology and /or product innovation Total customer satisfaction

Types of Strategies

Porters Five Generic Strategies

Cost leadership

Overall (Industry-wide) Low Cost strategy Focused Low Cost strategy

Differentiation strategy

Overall (Industry-wide) Differentiation/ Best Value strategy Focused Differentiation /Best Value strategy

Best-Cost provider (Struck in the middle)

Types of Strategies

Integration strategies

Forward integration Backward integration Horizontal integration Vertical integration Intensive strategies
market penetration Market development Product development

Types of Strategies

Diversification strategies

Related diversification Unrelated diversification Retrenchment Divestiture Liquidation

Defensive strategies

Types of Strategies

Operational Strategies Low-cost provider High-quality provider Best customer service provider Be the first to introduce new products Become highly automated Minimize layoffs

Means of Achieving Strategies

Cooperation among competitiors joint venture / partnering merger Acquisition first mover advantage outsourcing

Strategic Analysis Tools

SWOT Analysis Value Chain analysis Pestle Analysis Benchmark Balance Scorecard analysis