Solution Manual For Strategic Management in Action 6th Edition by Coulter

Solution Manual for Strategic Management in Action 6th Edition by Coulter
Solution Manual for Strategic Management in Action

6th Edition by Coulter
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Chapter 6 Corporate Strategies
CHAPTER 6 CORPORATE STRATEGIES

LEARNING OUTCOMES
Use this Learning Outline as you read and study the chapter:
6.1 Define corporate strategy.

6.2 Discuss organizational growth strategies.
6.3 Describe the organizational stability strategy.
6.4 Describe organizational renewal strategies.
6.5 Discuss how corporate strategy is evaluated and changed.
TEXT OUTLINE
Strategic Management in Action Case #1: Growing Up
Under Armour was a startup in the 1990s by a college student who wanted a better t-shirt to wear under
his football uniform. Today the company has $1.4 billion in revenue. Their strategy of getting the shirt
to market was to contact various individuals known by the founder of the company. Eventually, the
shirt as well as other products was carried by big box retailers.
Teaching Notes: _______________________________________________________________________

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I. LEARNING OUTCOME 6.1

DEFINE CORPORATE STRATEGY
A. What Is Corporate Strategy?
Corporate strategy—that strategy concerned with the choices of what business(es) the
organization is in or wants to be in, and what it wants to do with those businesses.
Single and Multiple-Business Organizations

Distinction between single- and multiple-business organizations is important because it
influences the organization’s overall strategic direction, what corporate strategy is used and how
that strategy is implemented and managed.
1. Single-business organization—primarily in one industry.
Coca-Cola is a single-business organization because it competes primarily in the beverage
industry, even though it has multiple products, multiple markets and multiple outlets.
2. Multiple-business organization—one that operates in more than one industry.
PepsiCo is a multiple-business organization because its business units include its snack food
business (Frito Lay), its beverage business (Pepsi, Diet Pepsi and its other beverages), its
prepared foods business (Quaker Foods North America) and its international business
(PepsiCo International). Although these industries are similar in many ways, they are
different industries. PepsiCo has chosen to follow a corporate strategy in which it operates
in more than one industry—a multiple-business organization.
B. Relating Corporate Strategy to Other Organizational Strategies
1. Corporate strategy establishes the overall direction that the organization hopes to go in, the
other organizational strategies—functional and competitive—provide the means for making
sure the organization gets there (Figure 6.1).
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Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
2. The means for moving the organization are the resources, distinctive capabilities, core
competencies, and competitive advantage(s) found in the organization’s functional and
competitive strategies.
3. Each type of strategy (corporate, competitive and functional) is important to whether the
organization does what it’s in business to do and whether it achieves its strategic goals.
a) Corporate strategy can’t be implemented effectively or efficiently without the
resources, capabilities and competencies being developed and used in the competitive
and functional strategies.
b) Competitive and functional strategies that are implemented must support the overall
strategic direction and corporate strategy.
C. What Are the Corporate Strategic Directions?
1. Moving an organization forward growth strategy(ies)
2. Keeping an organization as is stability strategy
3. Reversing an organization’s decline renewal strategy
Teaching Notes: _______________________________________________________________________

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Learning Review: Learning Outcome 6.1

• What is corporate strategy?
• Corporate strategy is those strategies concerned with the broad and long-term questions of what
business(es) the organization is in or wants to be in, and what it wants to do with those businesses.
• Contrast single-business multiple-business organizations.
• A single-business organization is one that operates primarily in one industry. A multiple-
business organization is one that operates in more than one industry.
• How is corporate strategy related to the other organizational strategies?
• Corporate strategy establishes the overall direction that the organization hopes to go. The other
organizational strategies—functional and competitive—provide the means for making sure the
organization gets there.
• Describe each of the three corporate strategic directions.
• Moving the organization forward
• Keeping the organization as is
• Reversing the organization’s decline
II. LEARNING OUTCOME 6.2

DISCUSS ORGANIZATIONAL GROWTH STRATEGIES
Growth strategy is one that expands the products offered or markets served by an organization or
expands its activities or operations either through current or new business(es).
A. The typical growth objectives for business organizations include:
1. Increasing revenues
2. Increasing profits
3. Increasing other financial/performance measures
B. Growth objectives for not-for-profit organizations include:
1. Increasing the number of clients served or patrons attracted
2. Broadening the geographic area of coverage
3. Increasing the number of programs offered
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C. Types of Growth Strategies (Figure 6.2)
1. Concentration
Concentration strategy is a growth strategy in which an organization concentrates on its
primary line of business and looks for ways to meet its growth goals by expanding its core
business. (When a single-business organization pursues growth, it’s using the concentration
strategy.)
a) When attempting to increase sales and profits, an organization might use these three
concentration options (Figure 6.3):
(1) Product-market exploitation describes attempts by the organization to increase
sales of its current product(s) in its current market(s) by depending on its
functional (particularly, marketing and advertising) and its competitive
strategies.
(2) Product development option is where organizations create new products to sell
to its current market (customers). New products may include improved or
modified versions of existing products.
(3) Market development option describes when an organization sells its current
products in new markets that may be additional geographic areas or other
market segments not currently served by the organization.
(4) Product-market diversification option: (the fourth option in Figure 6.3) is
where the organization seeks to expand both into new products and new
markets. (At this point, the single-business organization becomes a multiple-
business organization since its now operating in a different industry; it is NOT
a concentration strategy by definition.)
Strategic Management –The Global Perspective: Kuka Robotics

These are natural line extensions for firms pursuing concentration strategies where they expand the
industries they sell their current products to. The risk of having one product and concentrating on one
industry leaves a company vulnerable to a slump in an industry.
b) Advantage of the concentration strategy is that the organization becomes very good
at what it does.
c) Main drawback of the concentration strategy is that the organization is vulnerable
to industry and other external changes. Risk can be minimized by noticing
significant trends and adjusting the organization’s direction, should that become
necessary.
Strategic Managers in Action : Judson C. Green, Navteq Corporation

Expanding into other industries (i.e., navigation on handheld devices) will help Navteq Corporation
survive the anticipated decrease of navigation-equipped vehicles to 70 percent of its sales. Do your
students think CEO Green made a good decision to vertically integrate? Can your students suggest other
ways Navteq Corporation could either backwardly or vertically integrate?
d) Use of concentration strategy isn’t limited to small-sized organizations. In fact,

large organizations often start off using the concentration strategy and continue to
use it to pursue growth.
2. Vertical Integration (Forward and Backward)
Vertical integration strategy is a strategy in which an organization grows by gaining
control of its inputs (backward), its outputs (forward), or both.
a) In backward vertical integration, the organization gains control of its inputs or
resources by becoming its own supplier.
b) In forward vertical integration, the organization gains control of its outputs (products or
services) by becoming its own distributor.
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c) The vertical integration strategy is considered a growth strategy because an
organization’s activities and operations are expanded.
d) Studies of organizations’ vertical integration strategies have shown mixed results in
terms of whether the strategy helped or hurt performance. Some of the problems
associated with vertical integration include reduced organizational flexibility as locked
into product(s) and technology, difficulties in integrating various operations, and
financial costs of acquiring or starting up.
e) Studies have also confirmed some of the advantages associated with vertical integration
include reduced purchasing and selling costs, improved coordination among functions
and capabilities, and protection of proprietary technology to name a few.
f) The benefits of vertical integration have been shown to slightly outweigh the costs
associated with it.
3. Horizontal Integration
Horizontal integration strategy is expanding the organization’s operations through
combining with other organizations in the same industry doing the same things it is doing.
Horizontal integration is an appropriate corporate growth strategy as long as:
a) It enables the company to meet its growth goals.
b) It can be strategically managed to attain a sustainable competitive advantage.
c) It satisfies legal and regulatory guidelines.
Strategic Management —The Global Perspective: SABMiller and Fosters

If a company takes a “global” approach to horizontal integration, the company can enhance its
likelihood of success. The combined businesses have the potential to complement one another well as
the company moves forward with the integration.
4. Diversification
Diversification strategy is a corporate growth strategy in which an organization grows by
moving into a different industry. Any move into a different industry automatically makes an
organization a multiple-business organization because it’s no longer operating in just one
industry.
There are two major types of diversification:

a) Related (concentric) diversification is diversifying into a different industry but one
that’s related to the organization’s current operations. Often called the search for
strategic “synergy,” which is the idea that the performance of the combined operations
will be much greater than the performance of each unit separately (the old idea that
suggests 2 + 2 can equal 5). Synergy happens because of the interactions and
interrelatedness of the combined operations and the sharing of resources, capabilities
and distinctive competencies.
(1) Examples: Apple Computer had successful diversification into music, cell phones,
movies, retail stores and personal computers.
(2) Example: Anheuser-Busch’s unsuccessful diversification into Eagle Snacks snack
food industry.
b) Unrelated (conglomerate) diversification is diversifying into a completely different

industry from the organization’s current operations. This growth strategy involves the
organization moving into industries in which there is absolutely no strategic fit to be
exploited.
(1) Used when the organization’s core industry and related industries don’t offer
enough growth potential.
(2) Used when specialized resources, capabilitie, and core competencies can’t be
easily applied to other industries outside its core business.
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(3) Example: Fortune Brands: Jim Beam bourbon, Moen faucets, Aristokraft and
Schrock cabinets, DeKuyper cordials, Titleist golf balls, Master Lock padlocks.
Toyota: automobiles, prefabricated houses, advertising, roof gardens and
consulting.
c) Research has shown that, for the most part, related diversification is superior to
unrelated diversification. If an organization can develop and exploit the potential
synergies in the resources, capabilities, and core competencies of its diversified
operations, then its likely to create a sustainable competitive advantage.
d) International
(1) An organization can “go international” as it pursues growth using any of the other
corporate growth strategies.
(a) If an organization chooses to vertically integrate, then this particular growth
strategy could be implemented globally as well as domestically.
(b) If a related diversification strategy is being implemented, it could involve
combining the operations of organizations in different countries as well as those
in just the home market.
For Your Information—Thinking Small: Sam Palmisano, IBM

Thinking small can allow companies to be more nimble and responsive to markets more conducive to
creativity, collaboration and innovation. Do your students think CEO Sam Palmisano selected a
successful strategy? Can your students suggest other ways IBM could grow?
Active Learning Hint

Divide class into teams or pairs. Have each team brainstorm advantages and disadvantages of one of the
possible growth strategies as shown in Figure 6.2.
You may want to assign specific subtopics to a team (e.g., one team could do related diversification,
another, unrelated diversification, etc.).
Teaching Notes: _______________________________________________________________________

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D. Implementing Growth Strategies

The mechanisms for implementing the three broad options of corporate growth strategies are:
1. Mergers-Acquisitions
A merger or acquisition could be used by an organization when implementing any of the
growth strategies. An organization can implement growth strategies by “purchasing” what it
needs to expand its operations.
a) Merger is a legal transaction in which two or more organizations combine operations
through an exchange of stock, and create a third entity. Mergers usually take place
between organizations that are similar in size and are usually “friendly.”
b) Acquisition is an outright purchase of an organization by another. The purchased
organization is absorbed by the purchasing organization. Acquisitions usually are
between organizations of unequal sizes and can be friendly or hostile.
c) Hostile Takeover is a hostile acquisition where the organization being acquired doesn’t
want to be acquired. In fact, the target of a takeover often will take steps to prevent the
acquisition.
Research has shown that the popularity of mergers and acquisitions as a strategic growth
mechanism seems to go in cycles.
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Strategic Management in Action—General Electric

General Electric chose acquisition as its path to growth in part because the airport security market was
changing rapidly and the government was going to be the major purchaser of hardware developed to
screen passengers. This meant that for GE to enter the market it did not have years to do the research
needed to develop products in-house. Where GE could add value was in the ability to quickly supply the
market by expanding production and a certain comfort-level that they would be around as a supplier in
years to come.
2. Internal Development
Internal development is where the organization grows by creating and developing new
business activities itself.
Research has shown that the choice between internal development and mergers-acquisitions
depends on:
a) The new industry’s barriers to entry
b) The relatedness of the new business to the existing one
c) The speed and development costs associated with each approach
d) The risks associated with each approach
e) The stage of the industry life cycle
(These factors are summarized in Table 6.1)
3. Strategic Partnering
Strategic partnering is when two or more organizations establish a legitimate relationship
(partnership) by combining their resources, distinctive capabilities, and core competencies
for some business purpose.
a) These cooperative arrangements can be used to implement any of the growth strategies:
(1) Vertical integration—strategically partner with one of its suppliers or distributors
(2) Horizontal integration—develop a strategic relationship with one of its competitors
(3) Related diversification—develop a strategic relationship in a related industry
b) Rather than buying or internally developing to expand its operations, decision makers
might choose to develop one of the three main types of strategic partnerships:
(1) Joint venture
(a) Two or more separate organizations form a separate independent organization
for strategic purposes.
(b) The strategic partners typically own equal shares of the new joint venture in
this cooperative arrangement.
(c) Often used when the partners do not want to or cannot legally join together
permanently.
(d) In international growth strategies it can minimize the financial and political-
legal constraints that accompany mergers-acquisitions and internal
development.
(e) Examples: General Motors and Toyota’s joint venture as New United Motor
Manufacturing Company; L’Oreal SA and Nestle SA’s joint venture as
Laboratoires Inneov.
(2) Long-term contract

(a) Legal contract between organizations covering a specific business purpose.
(b) Typically it’s between an organization and its suppliers.
(c) Often viewed as a new variation of vertical integration without the organization
buying the supplier or internally developing its own supply source.
(d) Organization benefits by having an assured source of supplies that meets its
cost and quality expectations.
(e) Supplier benefits by having an assured outlet for its products.
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(f) Partners in a long-term contract often find that it’s in their best interests to share
resources, capabilities and core competencies so both can capture potential
benefits.
(g) Examples: Pixar and Disney
For Your Information—Why Alliances Make Sense

• Have student groups compare alliances with acquisitions. This discussion may help them further
understand when one method may be preferred over the other. Consider that many alliances are
developed to address short-term problems and that once the problems are overcome and both
organizations have learned, there may be no need to continue the relationship. This situation may
lead to many alliances but in a constantly changing pattern.
(3) Strategic Alliance

(a) Two or more organizations share resources, capabilities, or competencies to
pursue some business purpose.
(b) Sounds similar to a joint venture, but there’s no separate entity formed.
(c) Intent of strategic partnerships is to gain the benefits of growth while
minimizing the drawbacks of buying or internally developing.
(d) Strategic alliances are often pursued to:
(1) Encourage product innovation
(2) Bring stability to cyclical businesses
(3) Expand product line offerings
(4) Cement relationships with suppliers, distributors, or competitors
(e) Each partner in the strategic alliance can reap the benefits of expanded
operations by contributing to the alliance its unique resources, capabilities, or
competencies.
(f) Examples: PepsiCo and Lipton; Honda Motor and General Electric
Teaching Notes: _______________________________________________________________________
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• Define growth strategy.
• Growth strategy is one that involves the attainment of specific growth objectives by increasing
the level of an organization’s operations.
• Describe the various corporate growth strategies and how the corporate growth strategies can be
implemented.
• The various corporate growth strategies are concentration, vertical integration (backward and
forward), horizontal integration, diversification and international.
• Concentration strategy is a growth strategy where the organization concentrates on its primary
line of business and looks for ways to meet its growth objectives through increasing its level of
operations in this primary business.
• When attempting to increase sales and profits an organization might use these three
concentration options: product-market exploitation, product development, and market
development.
• The advantage of the concentration strategy is that the organization becomes very good at what
it does. The main drawback of the concentration strategy is that the organization is vulnerable
to industry and other external environmental shifts.
• A single-business organization pursuing growth uses the concentration strategy.
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• Vertical integration strategy is an organization’s attempt to gain control of its inputs (backward)
its outputs (forward), or both.
• The vertical integration strategy is considered a growth strategy because the organization’s
operations are expanded.
• Horizontal integration strategy is expanding the organization’s operations through
combining with other organizations in the same industry doing the same things it is—that is, it
involves combining operations with competitors.
• Horizontal integration is an appropriate corporate growth strategy as long as:
(1) It enables the company to meet its growth objectives
(2) It can be strategically managed to attain a sustainable competitive advantage
(3) It satisfies legal and regulatory guidelines
• Diversification strategy is a corporate growth strategy in which an organization expands its
operations by moving into a different industry.
• The two major types of diversification are:
- Related (concentric) diversification is diversifying into a different industry, but one that’s
related in some way to the organization’s current operations.
- Unrelated (conglomerate) diversification is diversifying into a completely different industry
from the organization’s current operations.
• International strategy - is when an organization chooses to vertically integrate, then this
particular growth strategy could be implemented globally as well as domestically. If a related
diversification strategy is being implemented, it could involve combining the operations of
organizations in different countries as well as those in just the home market.
• A merger is a legal transaction in which two or more organizations combine operations through
an exchange of stock, but only one organization or entity will actually remain.
• An acquisition is an outright purchase of an organization by another. The purchased
organization is completely absorbed by the purchasing organization.
• A takeover is a hostile acquisition where the organization being acquired doesn’t want to be
acquired. In fact, the target of a takeover often will take steps to prevent the acquisition.
• Internal development is when the organization chooses to expand its operations by starting a
new business from the ground up.
• Research has shown that the choice between internal development and mergers or acquisitions
depends on:
(1) The new industry's barriers to entry.
(2) The relatedness of the new business to the existing one.
(3) The speed and development costs associated with each approach.
(4) The risks associated with each approach.
(5) The stage of the industry life cycle.
• Strategic partnering is a situation when two or more organizations establish a legitimate
relationship (partnership) by combining their resources, distinctive capabilities, and core
competencies for some business purpose.
• A joint venture is when two or more separate organizations form a separate independent
organization for strategic purposes.
• A long-term contract is a long-term legal contract between organizations covering a specific
business purpose.
• A strategic alliance is when two or more organizations share resources, capabilities, or
competencies to pursue some business purpose.
III. LEARNING OUTCOME 6.3

DESCRIBE THE ORGANIZATIONAL STABILITY STRATEGY
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Stability strategy is one in which an organization maintains its current size and current level of
business operations.
A. When Is Stability an Appropriate Strategic Choice?
1. If the industry is in a period of rapid upheaval with several key industry and general
external forces drastically changing, making the future highly uncertain.
2. If the industry is facing slow or no growth opportunities.
3. If it has just completed a frenzied period of growth and needs to have some “down time” for
its resources and capabilities to build up strength again.
4. If a large firm in a large industry is in the maturity stage of the industry life cycle. In this
situation, if profits and other performance results are satisfactory and if strategic decision
makers are relatively risk averse, they may choose to “stay as they are” rather than pursuing
growth.
5. If small business owners feel that their business is successful enough just as it is and that it
adequately meets their personal goals.
6. The stability strategy typically should be a short-run strategy.
B. Implementing the Stability Strategy
1. During stability the organization does not expand the level of its operations. It won’t put
new products on the market, develop new programs, or add production capacity.
2. Organizational resources, capabilities, and core competencies can change during periods of
stability—they just don’t expand.
3. Organizations often use the period of stability to assess operations and activities, and
strengthen and reinforce those that need bolstering or revitalizing.
4. Stability gives the organization an opportunity to “take a breather” and to prepare itself for
the pursuit of growth and the strategic challenges associated with that particular corporate
strategy.
5. Once an organization strengthens its resources, capabilities and core competencies, it’s
ready to grow once again.
6. Stability probably should be a short-run strategy.

• What is a stability strategy?
• Stability strategy is one in which the organization maintains its current size and current level of
business operations.
• Why might an organization choose a stability strategy?
• Industry is in a period of rapid upheaval with several key industry and general external forces
drastically changing, making the future highly uncertain.
• Industry is facing slow or no growth opportunities.
• Organization has just completed a frenzied period of growth and needs to have some “down time”
for its resources and capabilities to build up strength again.
• Large firms in a large industry that’s in the maturity stage of the industry life cycle
• Many small business owners may follow a stability strategy indefinitely.
• Describe how a stability strategy is implemented.
• Primarily implementation involves not expanding the level of the organization’s operations.
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IV. LEARNING OUTCOME 6.4 DESCRIBE ORGANIZATIONAL RENEWAL STRATEGIES
Renewal strategies are used to reverse organizational decline and put the organization back on a
more appropriate path to successfully achieving its strategic goals.
A. What Leads to Performance Declines?
The main reason behind corporate decline is poor management. Organizational performance is
likely to suffer when inept or incompetent strategic managers don’t strategically manage all
aspects of the organization.
1. Causes of corporate decline (Figure 6.5):
a) Uncontrollable or too high costs to be competitive
b) New competitors
c) Unpredicted shifts in consumer demand
d) Slow or no response to significant external or internal changes
e) Overexpansion or too rapid growth
f) Inadequate financial controls
2. Indicators of potential performance decline (from Table 6.2):
a) Excess number of personnel
b) Unnecessary and cumbersome administrative procedures
c) Fear of conflict or taking risk
d) Tolerating work incompetence at any level or in any area
e) Lack of clear vision, mission, or goals
f) Ineffective or poor communication within and between various units
B. Renewal Strategies
1. Retrenchment
Retrenchment strategy is a common short-run strategy designed to address organizational
weaknesses that are leading to performance declines.
a) Usual situation in retrenchment is that the organization hasn’t been able to meet it
strategic goals.
b) The strategic managers must stabilize operations, replenish or revitalize organizational
resources and capabilities and prepare to compete once again.
2. Turnaround
Turnaround strategy is an organizational renewal strategy that’s designed for situations
where the organization’s performance problems are more serious.
a) Organization has to be “turned around” or its very survival may be in jeopardy.
b) Examples: Apple, Chrysler, Cray, Delta Airlines, General Motors, Intuit, Kmart,
Motorola, Mitsubishi, Sears
Teaching Notes: _______________________________________________________________________

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C. Implementing Renewal Strategies

1. Cost Cutting
a) The organization’s strategic managers cut costs to revitalize the organization’s
performance (retrenchment) or save the organization (turnaround).
b) Cost cutting can be:
(1) Across-the-board cuts (implemented in all areas of the organization)
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(2) Selective cuts (implemented in selected areas)
c) Strategic decision makers evaluate to see if there are redundancies, inefficiencies, or
wastes in work tasks and activities that could be eliminated or used more efficiently.
d) If additional cuts are needed to keep performance from declining further, strategic
managers may have to look at reducing and eliminating entire departments, units, or
divisions.
2. Restructuring
Restructuring operations involves refocusing on the organization’s primary business(es)
through:
a) Divestment is the process of selling off one or more business units to someone else
where it will continue as an ongoing business.
b) Spin-off typically involves setting up the business unit as a separate, independent
business by distributing its shares of stock.
c) Liquidation is shutting down a business completely; strategic action of last resort.
Strategic Management – The Global Perspective: Siemens AG and Peter Loscher

Siemens’ new CEO, Peter Loscher, has cleaned house significantly at the world’s largest electronics and
industrial engineering company. He sold off business units of the firm, replaced almost the entire
executive team, and fired about half the middle managers.
d) Downsizing is an organizational restructuring in which individuals are laid off from

their jobs.
e) Bankruptcy is the failure of a business and involves dissolving (Chapter 7) or
reorganizing (Chapter 11) the business under the protection of bankruptcy legislation.
f) Research has shown organizational refocusing to be the most beneficial form of
restructuring an organization can do. `Can improve stockholder wealth if done for
strategic purposes.
Active Learning Hint

Ask student teams to research businesses that are in decline. Have the student groups search for news
stories about companies in bankruptcy, reorganization, downsizing, liquidation, failure and other terms
used in the chapter. Have each team describe how an organization dealt with decline. What actions did
the company take? How does the team think that would help the organization’s survival?
Teaching Notes: _______________________________________________________________________

_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________

• Describe the causes of corporate decline.
• Possible Causes of Corporate Decline (from Figure 6.5):
- Overexpansion or too rapid growth
- Inadequate financial controls
- Uncontrollable costs or too high costs
- New competitors
- Unpredicted shifts in consumer demand
- Slow or no response to significant external or internal changes
• Describe the two organizational renewal strategies.
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• The retrenchment strategy is a common short-run strategy designed to address organizational
weaknesses that are leading to performance declines.
• The turnaround strategy is an organizational renewal strategy that’s designed for situations
where the organization’s performance problems are more serious.
• What two strategic actions are used in implementing the renewal strategies?
• The two actions are cutting costs and restructuring.
• Describe organizational restructuring actions.
• A strategic action that an organization takes to implement a retrenchment or turnaround strategy is
restructuring its operations by refocusing on its primary business(es) as it sells off, spins off,
liquidates, reengineers, or downsizes.
• Why are most organizational renewal strategies used in combination?
• It’s often necessary for the organization to use some combination of these renewal strategies as it
struggles to regain or develop a sustainable competitive advantage. Most organizations faced with
the need to retrench or to do some serious restructuring (needed for a turnaround) will look at a
coordinated long-run program of strategic actions.
V. LEARNING OUTCOME 6.5 DISCUSS HOW CORPORATE STRATEGY IS EVALUATED

AND CHANGED.
EVALUATING AND CHANGING CORPORATE STRATEGY

A. Evaluating Corporate Strategies
Without evaluation, strategic managers wouldn’t have a clue about whether the implemented
strategies—at any level of the organization—were working. Reflects the interactions and
interdependence among the various strategies.
1. Corporate Goals (from Figure 6.6): These objectives become the standards against which
actual performance is measured.
a) Maximizing stockholder wealth
b) Increasing market share
c) Strong global presence
d) Increasing productivity
e) Positive reputation-image
f) Strong customer satisfaction
g) High product quality
h) Increasing revenues
i) Increasing earnings
The Grey Zone —Wal-Mart

Public display is good for evaluating whether the organization is doing an acceptable thing, not
necessarily an effective thing. Organizations can decide what they choose to sell and consumers can
decide where to buy. If customers are offended, the company’s will lose their customers. Refusing to
sell controversial products is a good strategy if the products will offend or hurt people. A company can
also make them available but restricted from easy view so that customers who are offended know the
company is trying to minimize the damage done by these products and the company provides the
products for those customers who truly want the products.
2. Efficiency, Effectiveness and Productivity Measures

a) Efficiency is an organization’s ability to minimize resource use in achieving
organizational objectives.
b) Effectiveness is an organization’s ability to reach its goals.
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c) Productivity is a specific measure of how many inputs it took to produce output;
typically used in the production-operations area. Measured by taking the overall output
of goods and services produced, divided by the inputs needed to generate that output.
3. Benchmarking
Benchmarking is the search for the best practices inside or outside an organization.
Benchmarking is from other leading organizations (competitors or noncompetitors) that are
believed to have contributed to their superior performance.
4. Portfolio Analysis
Analysis is done with two-dimensional matrices that summarize internal and external
factors. The three main ones are:
a) BCG Matrix (also known as the growth-share matrix) is a simple, four-cell matrix
created by the Boston Consulting Group as a way to determine whether a business unit
was a cash producer or user.
(1) X-axis is a measure of the business unit’s relative market share, that is, relative to
the market leader. Market share is a proxy for the business unit’s internal strengths
and weaknesses.
(2) Relative market share is defined as the ratio of a business unit’s market share
compared to the market share held by the largest rival in the industry.
(3) Y-axis is a measure of the industry growth rate (industry growth rate is a proxy for
the external opportunities and threats facing the business unit).
(4) Circles represent an organization’s various business units. The size of the circle
corresponds to the size of the business unit, using some measure such as business
unit proportion of total corporate revenues.
(5) Classification of business units:
(a) Dog
(1) Low relative market share and low industry growth rate.
(2) Offers few growth prospects and may require significant investments just to
maintain its position.
(3) Strategy recommendation is to exit industry by divesting or liquidating.
(4) Harvesting: If the business unit is profitable gradually letting the business
unit decline in a controlled and calculated fashion, using excess cash flows
to support other, more desirable business units.
(b) Question Mark
(1) Low relative market share and high industry growth rate.
(2) Low in competitive strengths, but in an industry where there’s a lot of
potential.
(3) Recommendation for a business unit evaluated as a question mark is that
those with the weakest or most uncertain long-term potential should be
divested.
(c) Star
(1) High relative market share and high industry growth rate.
(2) The leading business units in an organization’s portfolio.
(3) May take significant cash resources to maintain market leadership position
or little cash if in an industry where competitive rivalry isn’t high.
(4) Strategic recommendation is to maintain its strong positions while taking
advantage of the significant growth opportunities in the industry.
(d) Cash Cow
(1) High relative market share but low industry growth rate.
(2) Cash flows generated from cash cows should be used to support question
marks with potential and to support stars.
(6) The simplicity of the BCG matrix is both its biggest advantage and its biggest
drawback.
13
b) McKinsey-GE Stoplight Matrix is a nine-cell matrix that provides a more
comprehensive analysis of a business unit’s internal and external factors and was
developed by McKinsey and Company for General Electric (Figure 6.7).
(1) X-axis is defined as business strength-competitive position.
(2) Analysis includes the internal resources and capabilities that are believed by
strategic managers to be important for success in this business.
(3) The evaluation scale in this analysis ranges from 1 (very weak) to 5 (very strong).
(4) Y-axis is defined as industry attractiveness, which provides a much broader analysis
than the BCG’s industry growth rate. Industry attractiveness might include such
factors as average industry profitability, number of competitors, ethical standards,
technological stability of the market, market growth rate, etc.
(5) The measurement scale ranges from 1 (very unattractive) to 5 (very attractive) to
evaluate the industry a business unit is in.
(6) Circles represent an organization’s various business units. The size of the circle
corresponds to the relative size of the industry. The shaded wedge corresponds to
the market share held by the organization’s business unit.
(7) Evaluation of the cells in the matrix:
(a) (Red = Stop) The three cells in the lower right-hand corner are losers (weak
competitive position-low industry attractiveness; weak competitive position-
medium industry attractiveness; and average competitive position-low industry
attractiveness).
(b) (Green = Go) The three cells in the upper left-hand corner are winners (strong
competitive position-high industry attractiveness; strong competitive position-
medium industry attractiveness; and average competitive position-high industry
attractiveness).
(c) (Yellow = Caution) The three cells along the diagonal in the matrix are:
(1) question marks (weak competitive position-high industry attractiveness)
(2) average businesses (average competitive position-medium industry
attractiveness)
(3) profit producers (strong competitive position-low industry attractiveness).
(8) The McKinsey matrix overcame the problem of simplistic analysis that plagued the
BCG matrix tool.
(9) Drawbacks
(a) Its main drawback is the subjectivity of the analysis.
(b) Performance analysis is static (also shared by the BCG matrix).
c) Product-Market Evolution Matrix is a 15-cell matrix and was developed by C.W.
Hofer.
(1) Y-axis is product life cycle.
(2) X-axis (internal analysis of the business unit) is the competitive position.
(3) Circles represent an organization’s various business units.
(a) The circle size corresponds to the relative size of the industry.
(b) The shaded wedge corresponds to the market share of that business unit.
(c) Business units are placed on the matrix according to their individual evaluation
on competitive position and stage in the product life cycle.
(4) Once all business units are plotted on the matrix, strategic managers have an
indicator of the range of business units in various stages of the product life cycle.
(5) Drawbacks
(a) Hofer’s product-market evolution matrix suffers from the same subjectivity
biases that the McKinsey matrix does.
(b) In addition, there are many products that don’t fit nicely and neatly into the
industry life cycle, so this particular evaluation tool also has drawbacks that
limit its usefulness.
14
d) As an evaluation tool, the portfolio matrices
(1) Provide a way to assess the performance of the organization’s business units
(2) Should be used with caution or at least in conjunction with other strategy evaluation
measures
B. Changing Corporate Strategies
1. Changes are needed if the evaluation shows that the corporate strategies aren’t having these
intended results:
a) Growth objectives aren’t being attained.
b) Organizational stability is causing the organization to fall behind.
c) Organizational renewal efforts aren’t working.
2. Possible strategies to change:
a) Functional
b) Competitive
c) Corporate direction
(1) Example: Microsoft
Teaching Notes: _______________________________________________________________________

_____________________________________________________________________________________
_____________________________________________________________________________________

• Why is it important to evaluate corporate strategies?
• Evaluation is an important part of the entire strategic management process. Without evaluation,
strategic managers wouldn’t have a clue as to whether or not the implemented strategies—at any
level of the organization—were working.
• What are the four ways to evaluate corporate strategies?
• The four main evaluation techniques are: (1) corporate objectives; (2) efficiency, effectiveness,
and productivity measures; (3) benchmarking; and (4) portfolio analysis.
• Describe each of the portfolio analysis matrices including how it’s used, the cells in the matrix and
its advantages and drawbacks.
• BCG (growth-share) matrix is a four-cell matrix created as a way to determine whether a
business unit was a cash producer or a cash user. The simplicity of the BCG matrix is both its
biggest advantage and its biggest drawback.
• McKinsey-GE stoplight matrix is a nine-cell matrix that provides a more comprehensive
analysis of a business unit’s internal and external factors. The McKinsey matrix overcame the
problem of simplistic analysis that plagued the BCG matrix tool. However, its main drawback is
the subjectivity of the analysis.
• Product-Market evolution matrix is a 15-cell matrix that is based on the product life cycle. The
product-market evolution matrix suffers from the same subjectivity biases that the McKinsey
matrix does. In addition, there are many products that don’t fit nicely and neatly into the industry
life cycle, so this particular evaluation tool also has drawbacks that limit its usefulness.
• Why might an organization’s corporate strategy need to be changed?
• If the evaluation shows that the corporate strategies aren’t having the intended results—growth
objectives aren’t being attained, organizational stability is instead causing the organization to fall
behind, or if organizational renewal efforts aren’t working—then some changes are needed.
• How might an organization’s corporate strategy be changed?
• Strategic managers might look at changing the functional and competitive strategies that have
been implemented. Or they might decide that more drastic action is needed and the corporate
direction should be changed. If so, changes might also be necessary in the way the corporate
strategy is being implemented.
15
QUESTIONS?
THE BOTTOM LINE
Learning Outcome 6.1: Explain corporate strategy.

• Corporate strategy is a strategy that’s concerned with the choices of what business(es)
to be in and what to do with those businesses. One thing we need to know is whether
the organization is a single-business organization (in primarily one industry) or a
multiple-business organization (in more than one industry).
• The corporate strategy establishes the overall direction the organization hopes to go
while the other organizational strategies (functional and competitive) provide the means
for getting there. Each type of strategy is important to whether the organization does
what it’s in business to do and whether it achieves its goals.
• The three corporate strategic directions include moving an organization forward
(growth strategy), keeping an organization where it is (stability strategy), and reversing
an organization’s decline (renewal strategy).
Learning Outcome 6.2: Discuss organizational growth strategies.
• A growth strategy is one that expands the products offered or markets served by an
organization or expands its activities or operations either through current business(es) or
through new business(es). There are five different ways for an organization to grow.
• Concentration is a growth strategy in which an organization concentrates on its primary
line of business and looks for ways to meet its growth goals by expanding its core
business. Three concentration options include: (1) product–market exploitation, which
is selling more current products to current markets; (2) product development, which is
selling new products to current markets; and (3) market development, which is selling
current products to new markets. The advantage of concentration is that this is the
organization’s primary business and it knows it well. The main drawback is the
vulnerability to industry and other external changes.
• The vertical integration strategy is one in which an organization grows by gaining
control of its inputs (backward), its outputs (forward), or both. The benefits of vertical
integration seem to slightly outweigh the costs.
• Horizontal integration is a strategy in which an organization grows by combining
operations with competitors. It can be a good growth strategy as long as it enables the
company to meet its growth goals, it can be strategically managed, and it satisfies legal
and regulatory guidelines.
• The diversification strategy is a strategy in which an organization grows by moving into
a different industry. Related (concentric) diversification is diversifying into a different
industry that’s related in some way to the organization’s current business. Unrelated
(conglomerate) diversification is diversifying into a completely different industry not
related to the organization’s current business.
• The final type of growth strategy is international in which an organization grows by
taking advantage of potential opportunities in global markets or protecting its core
operations from global competitors.
• The growth strategies can be implemented in three ways: (1) merger (legal transaction
in which two or more organizations combine operations through an exchange of stock
and create a third entity) or acquisition (outright purchase of an organization by
another; if the organization being acquired doesn’t want to be acquired, it’s referred to
as a hostile takeover); (2) internal development (organization grows by creating and
16
developing new business activities itself); and (3) strategic partnering (where two or
more organizations establish a legitimate relationship – partnership – by combining
their resources, distinctive capabilities, and core competencies for some business
purpose). Types of strategic partnerships include: joint venture (two or more
organizations form a separate independent organization for business purposes), long-
term contract (a legal contract between organizations covering a specific business
purpose), or strategic alliance (two or more organizations share resources, capabilities,
or competencies to pursue some business purpose but no separate entity is formed).
Learning Outcome 6.3: Describe the organizational stability strategy.
• A stability strategy is one in which an organization maintains its current size and
activities. In most instances, it should be a short-run strategy.
• Times when the stability strategy is appropriate include: industry is in period of rapid
change, industry is facing slow or no growth opportunities, organization has just
experienced rapid growth, organization is large and in an industry that’s in the maturity
stage of industry life cycle, or organization is a small business whose owners are
satisfied with staying as is.
• Stability strategy is implemented by not growing, but also by not allowing organization
to decline.
Learning Outcome 6.4: Describe organizational renewal strategies.
• Renewal strategies are used when an organization’s situation is declining and strategic
managers want to reverse the decline and put the organization back on a more
appropriate path to achieving its goals.
• The main cause of performance declines can be traced to poor management although
things like inadequate financial controls, uncontrollable or too high costs, new
competitors, unpredicted shifts in consumer demand, slow or no response to significant
external or internal changes, and overexpansion or too rapid growth also contribute.
• There are two main renewal strategies: (1) retrenchment (a short-run strategy designed
to address organizational weaknesses that are leading to performance declines) and (2)
turnaround (a strategy that’s designed for situations in which organization’s
performance problems are more serious).
• These renewal strategies are implemented by cutting costs and restructuring. The
amount and extent of these are determined by whether it’s a retrenchment or
turnaround.
• Restructuring actions include: (1) divestment (selling a business to another organization
where it will continue as an ongoing business), (2) spin–off (setting up a business unit as
a separate business by distributing its shares of stock), (3) liquidation (shutting down a
business completely), (4) downsizing (individuals are laid off from their jobs), and (5)
bankruptcy (failure of a business in which it’s dissolved or reorganized under the
protection of bankruptcy legislation.
Learning Outcome 6.5: Discuss how corporate strategy is evaluated and changed.
• There are four main techniques for evaluating corporate strategy: (1) corporate goals
(were organization’s goals achieved?); (2) measuring efficiency (organization’s ability
to minimize resource use in achieving goals), effectiveness (organization’s ability to
reach its goals), and productivity (specific measure of how many inputs it took to
produce outputs); (3) benchmarking (search for best practices inside or outside an
organization); and (4) portfolio analysis, which is used to assess an organization’s
portfolio of businesses.
• Three main portfolio analysis techniques include the BCG matrix, the McKinsey-GE
stoplight matrix, and the product-market evolution matrix.
17
• If the evaluation of corporate strategy shows it’s not working, strategic managers might
first change the functional and competitive strategies or they might take more drastic
action and change the corporate direction.
Suggestions for using YOU as Strategic Decision Maker: Building Your Skills exercises
1. Typically in January or February of each year, news articles will appear in Fortune magazine that
identify and discuss the previous year’s corporate mergers and acquisitions. You may wish to
review the availability of this or other resources on the subject before assigning this question to your
students. [Learning Outcome 6.2: Discuss organizational growth strategies; Course
Level Objectives: Discuss best practices for strategy implementation; AACSB:
Reflective thinking skills]
2. This is an excellent opportunity to introduce students to some of the available online research
sources available for investor, industry and corporate research. The U.S. government is also a
source (www.sec.gov, www.ftc.gov, and www.dol.gov, etc.).
- You may wish to give your students an additional exercise by having them locate other sources of
business research information on the Internet. [Learning Outcome 6.2: Discuss
organizational growth strategies; Course Level Objectives: Discuss best practices
for strategy implementation; AACSB: Use of information technology, Reflective
thinking skills]
3. Rapid compounding growth is often experienced in the early stages of growth for many companies.
This is an excellent opportunity to review the “corporate life cycle.” [Learning Outcome 6.2:
Discuss organizational growth strategies; Course Level Objectives: Discuss best
practices for strategy implementation; AACSB: Reflective thinking skills]
4. This exercise would best be assigned to a group. Additionally, you may have your students present
both sides of this issue in an in-class debate. [Learning Outcome 6.1: Define corporate
strategy; Course Level Objectives: Discuss best practices for strategy
implementation; AACSB: Reflective thinking skills]
5. This is a good topic for class discussion before introducing “takeover” activities. [Learning
Outcome 6.1: Define corporate strategy; Course Level Objectives: Discuss best
6. This could be tackled by groups of students as in-class exercise. [Learning Outcome 6.2:
Discuss organizational growth strategies; Course Level Objectives: Discuss best
7. Finkelstein’s book itself may be an interesting project. It may be interesting to compare this to
“groupthink.” You may want to brainstorm with the class to create a list of “bad decisions” and
allow the students or groups to select from the list. Examples: The introduction of New Coke,
Quaker’s acquisition of Snapple, Enron’s decision to use questionable accounting practices, Martha
Stewart’s decision to try to alter records, Dan Rather’s/CBS’ decision to release the falsified
National Guard memos. [Learning Outcome 6.5: Discuss how corporate strategy is
evaluated and changed; Course Level Objectives: Discuss best practices for strategy
18
Strategic Management in Action Cases
Case #1 Growing Up
1. Under Armour is a single-business organization that is utilizing two growth strategies. First,
there is a concentration strategy (in that the company remains true to the shirts that originally
built the brand). Second, Under Armour is utilizing a related diversification strategy (through
the addition of new product lines like shoes, women’s apparel, and so on). [Learning
Outcome 6.1: Define corporate strategy; Course Level Objectives: Discuss best
2. The primary challenge for Under Armour is keeping up with not only the technology of the
apparel that is sold, but fashion as well. Monitoring trends is key for the company’s success. In
addition, the firm must be careful not to spread itself too thin across a variety of product
categories as this could affect overall corporate performance. [Learning Outcome 6.1:
Define corporate strategy; Course Level Objectives: Discuss best practices for
strategy implementation; AACSB: Reflective thinking skills]
3. Students may interpret the firm’s mission statement in a wide variety of ways. [Learning
Outcome 6.1: Define corporate strategy; Course Level Objectives: Discuss the
functions of vision statements, mission statements, and long-term corporate
objectives; AACSB: Reflective thinking skills]
4. The company may choose to use as an evaluation measure the corporate goals. Evaluating
success in achieving targets and results would be an indicator of effectiveness. In addition,
Under Armour can certainly examine efficiency, effectiveness, and productivity. These
measures will help ascertain success as well. [Learning Outcome 6.5: Discuss how
corporate strategy is evaluated and changed; Course Level Objectives: Discuss
best practices for strategy implementation; AACSB: Reflective thinking skills]
5. See Under Armour’s website for the latest information. [Learning Outcome 6.5: Discuss
how corporate strategy is evaluated and changed; Course Level Objectives:
Discuss best practices for strategy implementation; AACSB: Use of information
technology, Reflective thinking skills]
Case #2 Time for Bread

1. Corporate plays a role in determining qualifications for franchisees, developing site criteria for
restaurant locations, setting uniform recipes and menus and national advertising campaigns.
Competitive strategies would include keeping food and image upscale and varied to keep customers
interested. Functional strategies might include hiring practices in local markets, advertising and
sponsorship publicity in local markets. [Learning Outcome 6.1: Define corporate strategy;
Course Level Objectives: Discuss best practices for strategy implementation;
AACSB: Reflective thinking skills]
2. Shaich’s team should track some specific indicators such as how fast new stores are coming on line,
how the sales per store is changing as more stores are created and how much brand recognition there
is among consumers and if that recognition translates into customers visits. [Learning Outcome
6.5: Discuss how corporate strategy is evaluated and changed; Course Level
Objectives: Discuss best practices for strategy implementation; AACSB: Reflective
thinking skills]
19
3. Being on various lists is positive for a company in that it fosters a strong sense of accomplishment
for those working for the firm. It also signifies that from a strategic management standpoint,
inclusion on these lists is important. When it comes to rapid growth, a company must be cognizant
of the quality of its offerings. Panera wants to avoid becoming complacent with their service,
offerings, and even the ambiance of the stores. In addition, too rapid of growth might result in
quality controls losing importance (such as happened with Krispy Kreme in the late 1990s and early
2000s). [Learning Outcome 6.5: Discuss how corporate strategy is evaluated and
changed; Course Level Objectives: Discuss best practices for strategy
4. Franchisees may become less interested, may be less qualified to own a restaurant. Site selection
may suffer as fewer good sites are available. Low volume of sales in new restaurants. Health
violations and customer complaints if operations are not running smoothly. Difficulty in hiring
managers and key employees if brand image is shifting or if restaurant is not seen as an attractive
opportunity.
A key advantage is to be able to move fast using other people’s capital. Often get owners who
understand how to reach local markets and have relationships with suppliers. On the other hand,
franchisees can be politically active and may oppose management initiatives, a bad owner can hurt
the entire brand by poor management of a single franchise (discrimination in service or hiring for
example). [Learning Outcome 6.5: Discuss how corporate strategy is evaluated and
changed; Course Level Objectives: Discuss best practices for strategy
5. Starbucks and other coffee chains over local diners or cafes, Haagen-Dazs and Cold Stone premium
ice creams over Dairy Queen and other chains. Godiva chocolates over Hershey’s. Flat screen/wide
screen home theaters over televisions. [Learning Outcome 6.5: Discuss how corporate
strategy is evaluated and changed; Course Level Objectives: Discuss best practices
for strategy implementation; AACSB: Reflective thinking skills]
Case #3 Speed Bump

1. Finding new markets without alienating his loyal base of customers. Brian France should try to re-
package the sport to appeal to new fans but keep the basic product intact. [Learning Outcome
6.5: Discuss how corporate strategy is evaluated and changed; Course Level
Objectives: Discuss best practices for strategy implementation; AACSB: Reflective
thinking skills]
2. At the corporate level, NASCAR needs to decide on its message or image, the number of venues
(does it want multiple regional circuits, a single national circuit, independent events) and national
sponsorships. At the competitive level, strategies surrounding the schedule of when races will occur
taking into account other sporting events and traditions in various tracks. At the functional level,
they need to consider local promotions to compete with local events each year. Also, ticket pricing
decisions and the need for local television/newspaper promotion will be at the functional level.
[Learning Outcome 6.5: Discuss how corporate strategy is evaluated and changed;
3. Keep in mind their needs and focus on delivering what each group values without offending other
groups. Advertisers want viewers and fans, the drivers want safety and great races with big prizes
and prestige, customers want to see good competition, to meet their heroes, to see the cars and to be
able to buy merchandise. [Learning Outcome 6.5: Discuss how corporate strategy is
20
4. One example, a product-market evolution matrix will help them see how the different products
relate to their counterparts and to determine which may be in need of renewal or change.
[Learning Outcome 6.5: Discuss how corporate strategy is evaluated and changed;
Case #4 Changing the Menu

1. Kraft competitive strategies included in the case continually developing new products, diversifying
the business, acquisition by Philip Morris Corporation, merger with General Foods, discontinuing
almost 300 food items, Kraft went public and sold several business divisions, sold brands that didn’t
fit into its portfolio, reducing the fat and sugar content and portion sizes of its products, and finally
Kraft being spun-off as a complete spin-off. [Learning Outcome 6.1: Define corporate
strategy; Course Level Objectives: Discuss best practices for strategy
2. CEO Rosenfeld’s strategic challenges include crafting a corporate direction for the company that
explicates its competitive advantage in light of the changes taking place in the food industry such
that Kraft leverages its assets to accelerate its growth.
CEO Rosenfeld has to deal with strategic challenges including decreased product quality, eroding
the strength of some brands and causing the company to lose market share. Additionally, workers
were afraid to speak up when they saw problems. [Learning Outcome 6.5: Discuss how
corporate strategy is evaluated and changed; Course Level Objectives: Discuss best
3. An organization’s corporate strategy is used to guide the organization in a certain direction long-
term. An organization’s functional strategy provides the means for making sure that direction is
followed and ensuring that significant progress is made toward achieving its corporate strategy.
Therefore, if an organization frequently changes its corporate strategies, it’s likely that its day-to-
day operations will suffer. [Learning Outcome 6.5: Discuss how corporate strategy is
4. Kraft might use the following corporate strategy evaluation measures: (1) corporate goals, (2)
efficiency, effectiveness and productivity measures, (3) benchmarking and (4) portfolio analysis.
Corporate goals indicate the desired end results or targets that strategic managers have established.
The corporate goals become the standards against which actual performance is measured.
Efficiency is an organization’s ability to minimize resource use in achieving organizational goals.
Effectiveness is an organization’s ability to reach its goals. Productivity is a specific measure of how
many inputs it took to produce outputs and is typically used in the production-operations area. Since
total organizational performance is a result of the interaction of a vast array of work activities at
many different levels and in different areas of the organization, these three measures are appropriate
assessments of how well the organization works and how well it’s doing at going in the desired
corporate direction (growth, stability, or renewal).
Benchmarking is the search for best practices inside and outside an organization. Using the
benchmarks, strategic managers can evaluate whether the organization is being strategically
managed as a world-class organization and where improvements are needed.
21
Solution Manual for Strategic Management in Action 6th Edition by Coulter
Portfolio analysis includes two-dimensional matrices that summarize internal and external factors
consisting of: (1) BCG matrix, (2) McKinsey-GE stoplight matrix, and (3) product-market
evolution matrix. If the portfolio evaluation indices indicate that performance results aren’t as
strategic managers had hoped, then strategic changes are in order. [Learning Outcome 6.5:
Discuss how corporate strategy is evaluated and changed; Course Level Objectives:
Discuss best practices for strategy implementation; AACSB: Reflective thinking
skills]
5. Have student groups visit Kraft Foods Web site [www.kraft.com] to update revenues, profits and
strategic initiatives information. [Learning Outcome 6.5: Discuss how corporate strategy
is evaluated and changed; Course Level Objectives: Discuss best practices for
strategy implementation; AACSB: Use of information technology, Reflective thinking
skills]
22
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CHAPTER 6 CORPORATE STRATEGIES

6.1 Define corporate strategy.

Teaching Notes: _______________________________________________________________________

I. LEARNING OUTCOME 6.1

Single and Multiple-Business Organizations

Teaching Notes: _______________________________________________________________________

Learning Review: Learning Outcome 6.1

II. LEARNING OUTCOME 6.2

Strategic Management –The Global Perspective: Kuka Robotics

Strategic Managers in Action : Judson C. Green, Navteq Corporation

d) Use of concentration strategy isn’t limited to small-sized organizations. In fact,

Strategic Management —The Global Perspective: SABMiller and Fosters

There are two major types of diversification:

b) Unrelated (conglomerate) diversification is diversifying into a completely different

For Your Information—Thinking Small: Sam Palmisano, IBM

Active Learning Hint

Teaching Notes: _______________________________________________________________________

D. Implementing Growth Strategies

Strategic Management in Action—General Electric

(2) Long-term contract

For Your Information—Why Alliances Make Sense

(3) Strategic Alliance

Learning Review: Learning Outcome 6.2

III. LEARNING OUTCOME 6.3

Learning Review: Learning Outcome 6.3

IV. LEARNING OUTCOME 6.4 DESCRIBE ORGANIZATIONAL RENEWAL STRATEGIES

Teaching Notes: _______________________________________________________________________

C. Implementing Renewal Strategies

Strategic Management – The Global Perspective: Siemens AG and Peter Loscher

d) Downsizing is an organizational restructuring in which individuals are laid off from

Active Learning Hint

Teaching Notes: _______________________________________________________________________

Learning Review: Learning Outcome 6.4

V. LEARNING OUTCOME 6.5 DISCUSS HOW CORPORATE STRATEGY IS EVALUATED

EVALUATING AND CHANGING CORPORATE STRATEGY

The Grey Zone —Wal-Mart

2. Efficiency, Effectiveness and Productivity Measures

Teaching Notes: _______________________________________________________________________

Learning Review: Learning Outcome 6.5

Learning Outcome 6.1: Explain corporate strategy.

Strategic Management in Action Cases

Case #2 Time for Bread

Case #3 Speed Bump

Case #4 Changing the Menu

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