Porter diamond model

Factor condition: The special factor

or inputs of production such as
natural resources, raw materials,
labour etc
Demand condition: The nature and
size of the buyers needs in the
domestic market
Related and supporting
industries: The existence of related
and supporting industries to the ones

Porter diamond model

Firm strategy, structure and
rivalry: The condition in the nation
determining how firms are created
organized and managed and the
nature of domestic competition.

Government
Firm strategy
structure and
rivalry

Factor
conditions

Demand
conditions

Related and
supporting
industries

Serendipity

BCG (Boston Consulting

Group)
The BCG (Boston Consulting Group) (Growth
Share Matrix):
Question marks are new product with the
potential for success, but they need a lot of
cash for development.
Stars are market leaders typically at the peak
of their product life cycle and are usually able
to generate enough cash to maintain their
high share of the market. When their market
growth rate slows, stars become cash cows.

BCG (Boston Consulting

Group)
Cash cows typically bring in far
more money than is needed to
maintain their market share . In this
decline stage of their life cycle these
products are milked for cash that will
be invested in new question marks.
Dogs have low market share and do
not have the potential to bring in
much cash.

General Electric Business Screen:

It include 9 cells based on long term industry
attractiveness
and
business
strength/
competitive
position.
At
GE
Industry
attractiveness includes market growth rate,
industry profitability, size and pricing
practices, among other possible opportunities
and threats. Business strength or competitive
position includes market share as well as
technological position, profitability and size,
among
other
possible
strength
and
weaknesses.

General Electric Business

Screen
The individual product lines or
business units are identified by a
letter and plotted as circle on the GE
Business Screen. The area of each
circle is in proportion to the size of
the industry in terms of sales. The
pie slices within the circle depict the
market share of each product line or
business units.

General Electric Business

Screen
Step 1: Select criteria to rate the industry for each
product line or business unit. Assess overall industry
attractiveness for each product line or business unit
on a scale.
Step 2: Select the key factor needed for success in
each product line or business unit. Assess business
strength/ competitive position for each product line or
business unit on a scale
Step 3: Plot each product lines or business units
current position on a matrix.
Step 4: Plot the firm future assuming that present
corporate and business strategies remain unchanged.

Competitive strategies
Porters Generic Competitive
strategies:
Cost leadership
Differentiation
Cost focus
Focused Differentiation

Competitive Advantage

Broad Target
Narrow Target

Competitive Scope

Lower cost
Cost Leadership

Differentiation

Corporate parenting:
Corporation in term of resources and
capabilities that can be used to build
business unit value as well as generate
synergies across business units.
According to Campbell:
Multibusiness companies create value by
influencing or parenting the business they
own. The best parent company create more
value than any of their rival would if they
owned the same businesses.

Corporate parenting:
Corporate parenting generates corporate
strategy by focusing the core competencies of
the parent corporation and on the value created
from the relationship between the parent and its
business.
First Examine each business unit in terms of its
strategic factors
Second examine each business unit in terms of
area in which performance can be improved.
Third analyze how the parent corporation fits
with the business unit.

Strategic Choice:
It is the evaluation of alternative strategies
and selection of the best alternative. There is
mounting evidence that when an organization
is facing a dynamic environment, the best
strategic decisions are not arrived at through
consensus when everyone agrees on one
alternative. They actually involve a certain
amount of heated disagreement and even
conflicts. This is certainly the case for firms
operating in a global industry.

Corporate Development
Stage I:Simple Structure
The entrepreneur tends to make all the
important decisions personally and is involved
in every detail and phase of the organization.
In stage I company has little formal structure
which allows the entrepreneur to directly
supervise the activities of every employee.
Planning is usually short range or reactive. The
greater strength in stage I is its flexibility and
dynamism. The greater weakness is its
extreme reliance on the entrepreneur.(crisis of
leadership)

Corporate Development
Stage II :Functional structure
Entrepreneur is replaced by a team of
managers who have functional
specialization. In stage II corporate
strategy favours protectionism through
dominance of the industry ,often through
vertical and horizontal growth. The great
strength is concentration and
specialisation in one industry. Its great
weakness is that all of its eggs are in one
basket. A crisis of autonomy can be
develop further when people manages

Corporate Development
Stage III : Divisional structure:
The corporation managing diverse product
lines
in
numerous
industries,
it
decentralizes
the
decision
making
authority. These organisations grow by
diversifying their product lines and
expanding to cover wider geographical
areas. They move to a divisional structure
with
a
central
headquarters
and
decentralized operating divisions. The
greatest
strength
is
its
unlimited
resources. Its weakness is its large and

Corporate Development
Stage IV: Beyond SBUs
Increasing environment uncertainty
Greater use of sophisticated technological
production methods and information system
The increase size and scope of world wide
business corporations
A greater emphasis on multi industry
corporative strategy
More educated cadre of managers and
employees, a new advanced forms of
organization.
(Pressure cooker crisis) Employees in these organization
grow emotionally and physically exhausted from the