Business Strategies

Week 9
 Categories of Business Organizations•

• SINGLE PROPRIETORSHIP
• PARTNERSHIP
• CORPORATION
• COOPERATIVE
 Levels of Business Strategies
• Corporate level
• Business Level
• Functional level
 4 E’s to Addressing Corporate Strategy

1.Extend
2.Expand
3.Exit
4.Enhance
 Key Issues in Corporate Level Strategy

• a)Directional Strategy
• b)Portfolio Strategy
• c)Parenting Strategy
 Strategic Choices at Corporate Level

• a.Business Closure
• b.Business Disposal
• c.Business Acquisition
• d.Business Reorganization
• e.Business Start up
• f. The impact of doing nothing different
 Vertical integration
- is the degree to which a firm owns its
upstream suppliers and its downstream
buyers.
Three (3) varieties:
• backward (upstream) vertical integration
• forward (downstream) vertical integration
• balanced (both upstream and downstream)
vertical integration
 Horizontal integration
- is a strategy where a company acquires,
mergers or takes over another company in the
same industry value chain
 Types of Horizontal Integration
• Merger is the joining of two similar sizes,
independent companies to make one joint
entity.
• Acquisition is the purchase of another
company.
• Hostile takeover is the acquisition of the
company, which does not want to be acquired.
SM Investments Corp (SMIC). in March said it was acquiring a 34.5-percent stake in
2GO, for its first foray into the fast-growing logistics business. The conglomerate,
founded by the country’s richest man,

Henry Sy, wants to adapt to the changing retail landscape. “Some people will like
to order from the comfort of their living room, some go to the mall to socialize and
interact with other shoppers. We are going to cater to different ways,” SMIC vice
chairman Tersita Sy-Coson said.
• Universal Robina Corp, founded by tycoon John Gokongwei, said Tuesday it
was selling the rights to manufacture and distribute Hunt’s products to Century
Pacific Food’s Corp, the maker of Century Tuna and Argentina Corned Beef.
• The transaction, URC, said, would enable it to focus on its core snack food and
beverage business. Universal Robina’s brands include Jack n Jill and C2 iced tea.
• State-run Land Bank of the Philippines announced in November
that it would acquire Philippine Postal Savings Bank and spin it
off into a lender for overseas Filipino workers.
• Finance Secretary Carlos Dominguez said PostBank was in the
best position to serve overseas workers, given its ties to the
postal service.
• PLDT Inc. and Globe Telecom, said in May last year that it would
buy rival San Miguel Corp’s telecommunications assets for P70
billion, effectively stopping the entry of a third player in the
industry hounded by complaints of bad service.
• Access to San Miguel’s 700 Mhz frequency will increase internet
speeds, PLDT and Globe said.
The Ayala Group said in February that it was acquiring
nearly half of online retailer Zalora, as it expands into
e-commerce.
The fusion of physical and virtual spaces will create an “
omni-channel retail experience,” according to Zalora,
which plans to bring its “pop-up” stores to Ayala Malls.
 Horizontal Diversification
• Generally perceived as a strategy that evolves
around the idea of seeking ownership or
increased control over the direct and indirect
competitors of the business.
 Direct and Indirect competitors
Direct competitors can be classified as:
• Offering the same products and/or services as you are offering to
your clients and/or customers.
• Having the same targeted field of clients, customers and/or
demographics.
• Using the same tactics in advertising or bringing
news/information of products/services to your targeted
demographics.

Indirect competitors can be classified as “wanting to have a share

of the pie”
OTHER CORPORATE STRATEGIES
 Concentric Diversification

Is a corporate diversification option that involves

engaging or dealing with products or services
that are somehow related to or associated with
what the firm is presently handling
Situations favoring Concentric Diversification

• When an organization competes in a no-growth or a

slow-growth industry;
• When adding new, but related products significantly would
enhance the sales of current products;
• When new, but related, products could be offered at highly
competitive prices;
• When new, but related, products have seasonal sales levels that
counterbalance an organization’s existing peaks and valley;
• When an organization’s products are currently in the decline
stage of the product life cycle; and
• When an organization has a strong management team.
Directions of Corporate Level Strategies

• Growth Strategy expands the company’s

activities;
• Stability Strategies make no chance to the
company’s current activities; and
• Retrenchment Strategies reduce the
company’s level of activities
 Growth Strategy Options
• Merger- Involves a transaction involving two or more
corporations in which a stock is exchanged or swapped
among independent business organizations from which
only one company services
• Acquisition- Is an option that involves the purchase of a
company then completely absorbed as in operating
subsidiary or division of the acquiring corporation.
• Strategic alliance- is another option involving a partnership
among two or more corporations or business units to
achieve strategically significant objectives that are mutually
beneficial
 Stability Strategies
• Pause/proceed with caution. This is in effect, a
sort of time out. It is an opportunity to rest before
continuing a growth or retrenchment strategy.
• No change strategy. It involves a decision to do
nothing new.
• Profit strategy. It involves a decision to do nothing
new in a worsening situation and instead, to act
as though the company’s problems are only
temporary.
 Retrenchment Strategies
• Turnaround strategy. This strategy emphasizes on the improvement
of operational efficiency and is probably most appropriate when a
corporation’s problems are pervasive but not yet critical.
-Contraction
-Consolidation
• Sell-out/Divestment strategy. This strategy is resorted to when a
company has a weak competitive position in its industry.
• Bankruptcy strategy. Involves giving up management of the firm to
the courts in return for some settlement of the corporation’s
obligations.
• Liquidation strategy. Is the termination of the firm’s business
operation