Chapter 5

Strategies in Action

Strategic Management:
Concepts & Cases
12th Edition
Fred David

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Long-Term Objectives

Objectives –

Quantifiable
Measurable
Realistic
Understandable
Challenging

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Long-Term Objectives

Objectives –

Hierarchical
Obtainable
Congruent
Timeline

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Varying Performance Measures
by Organizational Level

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Financial vs. Strategic
Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Higher profit margins
Higher earnings per share
Improved cash flow

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Not Managing by Objective

Managing by Extrapolation – “If it ain’t broke, don’t

fix it.”
Managing by Crisis – The true measure of a good
strategist is the ability to fix problems
Managing by Subjectives – “Do your own thing, the
best way you know how.”
Managing by Hope – The future is full of uncertainty
and if first you don’t succeed, then you may on the
second or third try.

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The Balanced Scorecard

Robert Kaplan & David Norton –

Strategy evaluation & control technique

Balance financial measures with nonfinancial
measures
Balance shareholder objectives with customer
& operational objectives

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Types of Strategies
Corp
A Large Company Level

Division Level

Functional Level

Operational Level

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Types of Strategies

Forward
Integration

Vertical Backward
Integration Integration
Strategies

Horizontal
Integration

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Types of Strategies

Market
Penetration

Intensive Market
Strategies Development

Product
Development

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Types of Strategies

Related
Diversification

Diversification
Strategies

Unrelated
Diversification

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Types of Strategies

Retrenchment

Defensive Divestiture
Strategies

Liquidation

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Natural Environment Perspective
Songbirds and Coral Reefs in Trouble

 Songbirds – 76 songbird species have

dramatically declined in numbers
 Coral Reefs – Trawl fishing destroys
coral reefs
 Total area of fully protected
marine habitats in the US is only
50 square miles (93 million acres
of national wildlife refuges and
national parks)

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2007 Examples

Forward Southwest Airlines selling tickets

Integration through Galileo

Backward Hilton Hotels could acquire a large

Integration furniture manufacturer

Horizontal Huntington Bancshares and Sky

Integration Financial Group merged

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2007 Examples

McDonald’s selling millions of

Market
“Shrek the Third” items to a
Penetration healthier image

Market Burger King opened its first

Development restaurant in Japan

Google introduced “Google

Product
Presents” to compete with
Development PowerPoint

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2007 Examples

Related MGM Mirage is opening its first non-

Diversification casino luxury hotel

Unrelated
Ford Motor Company entered the
Diversification industrial bank business

Discovery Channel closed 103 mall-

Retrenchment based and stand-alone stores

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2007 Examples

Whirlpool sold its struggling Hoover

Divestiture
floor-care business to Techtronic
Industries

Follow Me Charters sold all of its

Liquidation assets and ceased doing business

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Michael Porter’s Generic Strategies

Cost Leadership Strategies

(Low-Cost & Best-Value)

Differentiation Strategies

Focus Strategies
(Low-Cost Focus &
Best-Value Focus)

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 First Mover Advantages

 Benefits a firm may achieve by entering a

new market or developing a new product or
service prior to rival firms

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 Outsourcing
Business-Process Outsourcing
(BPO)

 Companies taking over the functional

operations of other firms

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Global Perspective
Joint Ventures Mandatory for All Foreign Firms in India

 India’s experiencing fastest growth in over 18 years

 Second fastest (behind China) growth rate at 10.7%
 Also experiencing 6.6% inflation
 Gap between rich and
poor widening
 Joint venture mandatory
 Vast majority of joint
ventures fail
 Tourism also growing

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Strategic Management in Nonprofit and
Governmental Organizations

Educational Institutions
Medical Organizations
Governmental Agencies and Departments

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