Stratey Eman

I Chapter 5
Strategies in Action
Strategic Management:
Concepts & Cases
12th Edition
Fred David
Copyright@ 2009 Pearson Education, Inc. Ch 5-1

Publishing as Prentice Hall
Long-Term Objectives
Objectives -
• Quantifiable
• Measurable
• Realistic
• Understandable
• Challenging

Long-Term Objectives
Objectives -
■ Hierarchical
■ Obtainable
■ Congruent
■ Timeline

I Objectives
■ Objectives are commonly stated in terms

such as growth in assets, growth in sales,
profitability, market share, degree and
nature of diversification, and so on.

Varying Performance Measures
by Organizational Level
Organizational Level Basis for Annual Bonus or Merit

Pay
Corporate
75% based on long-term objectives
Division 25% based on annual objectives
50% based on long-tenn objectives
50% based on annual o jectives
Function
25% based on long-term objectives
75% based on annual objectives

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

I Strategic objectives
■ such as:
1. larger market share,
2. quicker on-time delivery than rivals,
3. quicker design-to-market times than rivals,
4. lower costs than rivals,
5. higher product quality than rivals,
6. wider geographic coverage than rivals, etc.
■ 3. There is frequently a tradeoff

between financial and strategic objectives.
Not Managing by Objective
•Strategists should avoid the following
alternative ways of "not managing by objectives."
•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 :::h 5 -
- second or third try.
'-- r. 1 ·· , ; ; , ·· - - - - - - . - - · - - · · - - - - - - - · - · · , ···--
8
The Balanced Scorecard
Robert Kaplan & David Norton -

• The balanced scorecard is
a stra evaluation and l• ' \ ; 4 " - , _ · - - - ....
derives its name from the perceived
controltechnique need
-' of firms to "balance"
financial measures, which are
oftentimes used exclusively in
strategy evaluation and control
with non- financial measures
such as product quality and customer service.
Copyright@ 2009 Pearson Education, Inc. Ch 5 -9

I The Balanced Scorecard
■ A balanced scorecard for a firm is

simply a listing of all key objectives to work
towards along with an associated time
dimension of when each objective is to be
accomplished, as well as a primary
responsibility or contact person,
department, or division for each objective.

A Comprehensive Strategic-M anagem ent M o d e l
Perform
Exte,nal Audit
O,apter 3
Implement
Develop Vision Estabhsh Gtnerate. Implement Strategies
Evaluate, Strate9ie1-
Meosure
andMluioo Long- Marketing. and Evaluate
Statement> ond 5el"1 Management Finance.
Term Perform•nce
Ch.lpter 2 Strategie, Issues Accounting, R&D,
Objectives Chapter
Chapter 6 Chapter 7 and MIS lm1e,
Chapter 5 9
Chapter 8
,J.
Perform
ln1emal Audh
Chapter4
1 - - - - - - - - - Strategy Strategy Strategy J

Formulation Implementation EvaluatioIn
Srm,t·r: !'red R, l),.,;,1, "How l'nmp.,nic, Define Their Ml"1011:· lo11,: Ro11.qe P/111111iug 22. nn 3 (June 19
k), ()

Types of Strategies
Corp
A Large Company Level
Division Level
Functional Level
Operational Level

Types of Strategies
ompan
A small Company
Functional
Level
Operational Level

Vertical Integratilon
Strateg1res
• Forward integration
• Backward integration
• Horizontal integration
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---------
Publishing as Prentice .,..,...,.4
Hall
Forward
Integrratio Exam,ole
n
• General Motors is
Defined acquiring 10% of its
dealers.
• Gaining
ownership or
increased
control
over distributors
Copyright@ 2009 Pearson Education, Inc.
Publishing as Prentice
Hall
Guidelines for Forward Integration
Present distributors are expensive, unreliable, or

incapable of meeting firm's needs
Availability of quality distributors is limited
When firm competes in an industry that is expected to
grow markedly
Advantages of stable production are high
Present distributor have high profit margins

I .I
_S_t_r_at_e_g_ie_s_i_n_A_c_
ti_o_n_
Backwar
, d]ntegratior Exam
n -
•cleMotel 8 acquired
Defi1ned furniture
a
= == = manufacturer.
• Seeking
ownership or
increased control
of a firm's
suppliers
Guidelines for Backward Integration
When present suppliers are expensive, unreliable, or

incapable of meeting needs
Number of suppliers is small and number of competitors
large
High growth in industry sector
Firm has both capital and human resources to manage
new business
Advantages of stable prices are important
Present supplies have high profit margins

Horizornt
a]ntegratiorn
Example
Defined -= =- =- ==,,,
• Hilton recently
acquired
• Seeking Promus.
ownership or
increased
control over
competitors
Guidelines for Horizontal Integration
Firm can gain monopolistic characteristics without being

challenged by federal government
Competes in growing industry
Increased economies of scale provide major competitive
advantages
Faltering/losing due to lack of managerial expertise or
need for particular resources

Intensive Strat§Sltes
• Market penetration
• Market
development
• Product
development

Mark,et
Penetratio
Example
n
Defined • Ameritrade, the
online broker, tripled
• Seeking increased = = its annual advertising
= expenditures to $200
market share for million to convince
present people they can
products or make their own
services in investment
present markets decisions.
'-= = = ""' "' r ' i ff a " J ff l " l ! c a f f l o n , Inc.
through
Publishing greater
as Prentice Hall
Guidelines for Market Penetration
Current markets not saturated

Usage rate of present customers can be increased
significantly
Market shares of competitors declining while total
industry sales increasing
Increased economies of scale provide major competitive
advantages

Marke
D evelopment
t 1
Example
Defined
= == ► • Khuzendar Tiles maker
• Introducing introduce his product
present products to Gulf markets.
or services
into new
geographic
area C.
,
Guidelines for Market Development
New channels of distribution that are reliable,

inexpensive, and good quality
Firm is very successful at what it does
Untapped or unsaturated markets
Capital and human resources necessary to manage
expanded operations
Excess production capacity
Basic industry rapidly becoming global

Product
D evelopmen
1
t Example
• Apple developed
Defineo the G4 chip that
runs at 500
• Seeking megahertz.
• Khuzendar Tiles
increased sales
by improving maker
present products introduce Ceramic as
or services or a new product.
developing
Publishing as Prenticenew
Hall
Guidelines for Product

Development
Products in maturity stage of life cycle

Competes in industry characterized by rapid
technological developments
Major competitors offer better-quality products at
comparable prices
Compete in high-growth industry
Strong research and development capabilities

Diversification St1rategies
• Concentric diversification
• Conglomerate
diversification
• Horizontal diversification

Concentri
Diversification
c
Exampl
e
Defined == ==► • National
Westminister Bank
• Adding new, but PLC in Britain
bought the leading
related., British insurance
or services
products company, Legal &
General Group PLC.
- - = = = c a J O n , Inc.
Guidelines for Concentric Diversification
Competes in no- or slow-growth industry

Adding new & related products increases sales of current
products
New & related products offered at competitive prices
Current products are in decline stage of the product life
cycle
Strong management team
Copyright@ 2009 Pearson Education, Inc. Ch 5 -

Publishing as Prentice Hall 30
Conglornerat
g;
eDiversificatio
n Example.
• Consultant
Construction
Defined Engineering acquired
• Adding new,
unrelated EI-Awda Bisects Co.
.
products
or services

Guidelines for Conglomerate Diversification
Declining annual sales and profits

Capital and managerial talent to compete successfully in
a new industry
Financial synergy between the acquired and acquiring
firms
Exiting markets for present products are saturated

Stra ies in Action
Horizornt i
Diversificat on
i
Example
Defined
• The EI-Awda Co.
• Adding new,
merging with
unrelated products
Palestinian
or services for Islamic Bank.
present
customers
Guidelines for Horizontal Diversification
Revenues from current products/services would increase

significantly by adding the new unrelated products
Highly competitive and/or no-growth industry w/low
margins and returns
Present distribution channels can be used to market new
products to current customers
New products have counter cyclical sales patterns
compared to existing products

Defensi1ve
Strategies
• Joint venture
• Retrenchment
• Divestiture
• Liquidation

I I Strategies in Action
'-----=========:::::::::=-------==-----;:=====
-::.-::.-::.-:.-:.-:.-:.-:.
Joint e
Ventur
Example
Defined
• Lucent
• Two or more Technologies and
sponsoring firms Philips Electronic
forming a NV formed Philips
separate Consumer
organization for Communications to
cooperative make and sell
telephones.
purposes
I Joint Venture
■ Joint venture is a popular strategy that

occurs when two or more companies form a
temporary partnership or consortium for the
purpose of capitalizing on some opportunity.
■ Other types of cooperative arrangements
include R&D partnerships, cross-distribution
agreements, cross-licensing agreements,
cross-manufacturing agreements, and joint
bidding consortia.
I Joint Venture
■ Joint ventures and cooperative

arrangements are being used
increasingly because they allow
companies to improve communications
and networking, to globalize operations
and minimize risk.

I Joint Venture
■ Many, if not most, organizations pursue a

combination of two or more strategies
simultaneously, but a combination strategy can be
exceptionally risky if carried too far. No
organization can afford to pursue all the strategies
that might benefit the firm. Difficult decisions
must be made.Priorities must be established.
Organizations, like individuals, have limited
resources. Both organizations and individuals
must choose among alternative strategies and
avoid excess indebtedness.
I Joint ventures may fail when:
■ Managers who must collaborate

regularly are not involved in the
venture.
■ The venture may benefit
partnering companies but not the
customers.
■ Both partners may not support the
venture equally.
■ The venture competes with one
of 2009
Copyright@ thePearson
partners
Education, Inc. Ch 5 -40
Joint ventures are especially effective
when:
■ A privately owned organization forms one
with a public organization.
■ A domestic organization works with a
foeign company.
■ The distinct competencies of the firms complement
each other especially well.
■ Some project is potentially profitable but
requires much risk.
■ Two or more smaller firms wish to compete
against a larger firm.
■ There is a need to introduce a new
technology quickly.

Guidelines for Joint Venture
Combination of privately held and publicly held can be

synergistically combined
Domestic forms joint venture with foreign firm, can obtain
local management to reduce certain risks
Distinctive competencies of two or more firms are
complementary
Overwhelming resources and risks where project is
potentially very profitable (e.g., Alaska pipeline)
Two or more smaller firms have trouble competing with
larger firm
A need exists to introduce a new technology quickly
-
·r"J'·v • _..., • • ., ..
Publishing as Prentice Hall .
Retrenchment
(turnaround)
Defined
• Regrouping through • EI-Awda sold off a
cost and asset land and 4
reduction to apartments to
reverse raise cash needed. It
declining sales and
profit. Sometimes introduce expense
it is called effective control
turnaround or system.
reorganizational
strategy.
Guidelines for Retrenchment
Firm has failed to meet its objectives and goals consistently

over time but has distinctive competencies
Firm is one of the weaker competitors
Inefficiency, low profitability, poor employee morale, and
pressure from stockholders to improve performance.
When an organization's strategic managers have failed
Very quick growth to large organization where a major
internal reorganization is needed.
-
vopyngrn <9 ; c u u ,-,earson t:aucauon, me.
'-------============--=-----;.--:.--:.-_- --
_-- - - - - - - --
Divestiture
J--
Example
Defined • Harcourt General,
the
• Selling a
division or large US publisher,
part of an is selling its Neiman
organization Marcus division.

Guidelines for Divestiture
When firm has pursued retrenchment but failed to attain

needed improvements
When a division needs more resources than the firm can
provide
When a division is responsible for the firm's overall poor
performance
When a division is a misfit with the organization
When a large amount of cash is needed and cannot be
obtained from other sources.

'-------========:::::=-- ::=----;:=====
-::.-::.-::.-:.-:.-:.-:.-:.
Liquidatio
n
Defined
• Selling all of a • EI-Ameer Block
company's factory sold all
assets, in its assets and
parts, for their ceased business.
tangible worth
Guidelines for Liquidation
When both retrenchment and divestiture have been

pursued unsuccessfully
If the only alternative is bankruptcy, liquidation is an
orderly alternative
When stockholders can minimize their losses by selling
the firm's assets

I Mergers and acquisitions
■ Mergers and acquisitions are two

commonly used ways to pursue strategies.
■ A merger occurs when two organizations
of about equal size unite to form one
enterprise.
■ An acquisition occurs when a large
organization purchases (acquires) a
smaller firm or vice versa.

I Reasons for mergers and acquisitions
1. a. To provide improved capacity utilization

2. b. To make better use of an existing sales
force.
3. C. To reduce managerial staff.
4. d. To gain economies of scale.
5. e. To smooth out seasonal trends in sales.
6. f. To gain access to new suppliers, distributors,
customers, products, and creditors.
7. g. To gain new technology.
a. h. To reduce tax obligations. Ch 5 -50
I Mergers and acquisitions may fail
■ due to the following reasons:

1. a. Integration difficulties
2. b. Inadequate evaluation of target
3. c. Large debt
4. d. Inability to achieve synergy
5. e. Too much diversification
6. f. Managers overly focused on acquisitions
7. g. Too large of an acquisition
a. h. Difficulty integrating different cultures
9. i. Reduced employee morale due to layoffs
and relocations

I Leveraged Buyouts (LBOs)
■ 1. An LBO occurs when a corporation's

shareholders are bought out (hence buyout) by the
company's management and other private investors
using borrowed funds (hence leveraged).
■ 2. Besides trying to avoid a hostile takeover,
other reasons for the initiation of an LBO by senior
management are that particular divisions do not fit
into an overall corporate strategy, must be sold to
raise cash, or receive an attractive offering price.
A LBO takes a corporation private

I First Mover Advantages
■ 1. First mover advantages refers to the

benefits a firm may achieve by entering a
new market or developing a new product or
service prior to rival firms.
■ 2. The advantages of being a first mover
include securing access to rare resources,
gaining new knowledge of key factors and
issues, and carving out market share and a
position that is easy to defend and costly for
rival firms overtake.
I Outsourcing
□ Business-Process Outsourcing (BPO):

Companies take over functional operations such
as human resources, information systems, and
marketing for other firms.
□ Outsourcing can be less expensive, can allow
firms to focus on core businesses, and
enables firms to provide better services.

Michael Porter's Generic Strategies

P or t e r ' s F i v e G e n e r i c S t r a t e g i e s
Type I: Cos t L e a d e r s h i p - L o w Cost
Type 2: Cos t L e a d e r s h i p - B e s t Value
Ty p e 3: OilTeren1ia1ion
Ty p e 4: F o c u s - L o w Cost
Type 5: F o c u s - B e s t Value
GENERIC STRATEGIES
Cos t Leadership Ditferentiation Focus
Large Type I
Ty p e 3
t;: Ty p e 2
;
:,,:
-<:
.G
l,.L..
LU
0N
vi
Smn/1
Ty p e 4
Ty p e 3
Ty p e s
SQun.·e: Adapt.:d from Mit:hud E. Purter. Competitfre Stmf<'I(\': Ted111iq11,•J'for A11aly:rJ11g fml11!ftriei;
01ui Competi(()r (Ne\\ Yuri..: Free P r e , , . 1 9 0 ) : 35--10.

I Michael Porter's Generic Strategies
■ Cost leadership emphasizes producing

standardized products at a very low per-unit cost for
consumers who are price-sensitive.
■ There are two types of cost leadership strategies.
■ a. A low-cost strategy offers products to a wide
range of customers at the lowest price available on
the market.
■ b. A best-value strategy offers products to a wide
range of customers at the best price-value available
on the market.

I Cost leadership
■ Striving to be the low-cost producer in

an industry can be especially effective when
the market is composed of many price-
sensitive buyers, when there are few ways
to achieve product differentiation, when
buyers do not care much about differences
from brand to brand, or when there are a
large number of buyers with significant
bargaining power.

I Cost leadership
■ The basic idea behind a cost leadership strategy

is to underprice competitors or offer a better value
and thereby gain market share and sales, driving
some competitors out of the market entirely.
■ 5. To successfully employ a cost leadership
strategy, firms must ensure that total costs across
the value chain are lower than that of the
competition. This can be accomplished by:
■ a. performing value chain activities more
efficiently than competition, and
■ b. eliminating some cost-producing activities in
the value chain.

I Differentiation
■ Differentiation is aimed at producing

products that are considered unique. This
strategy is most powerful with the source
of differentiation is especially relevant to
the target market

I Differentiation
■ A successful differentiation strategy allows

a firm to charge higher prices for its products
to gain customer loyalty because consumers
may become strongly attached to the
differentiation features.
■ 3. A risk of pursuing a differentiation strategy
is that the unique product may not be valued
highly enough by customers to justify the
higher price.
I Differentiation
■ Common organizational requirements for a

successful differentiation strategy include
strong coordination among the R&D and
marketing functions and substantial
amenities to attract scientists and creative
people.

I Focus
■ 1. Focus means producing products and services

that fulfill the needs of small groups of consumers.
■ 2. There are two types of focus strategies.
■ a. A low-cost focus strategy offers products or
services to a small range (niche) of customers at the
lowest price available on the market.
■ b. A best-value focus strategy offers products to a
small range of customers at the best price-
value available on the market. This is sometimes
called focused differentiation.
I Focus
■ Focus strategies are most effective when

the niche is profitable and growing, when
industry leaders are uninterested in the niche,
when industry leaders feel pursuing the niche
is too
costly or difficult, when the industry offers
several niches, and when there is little
competition in the niche segment.
M e e t i n g t h e C h a l l e n g e o f H i g h - Ve l o c i t y C h a n g e
Stnu-cgic Postu1·c ActiOl'IS St r a t e g y
• I 11troducc bet t r
• Re H.".1 and
products ln response
to nev1o• respond tts needed
Reacting
Defensive to offerings of rivals • lJefend an d
Change • Rc..":SpO.-td to protect the
u n e x p e c t e d changes in C(unp :1ny's positior't
buyer needs and
preferences
• A d j u s t to new·
i ; o v e r nm e nl policies
• Analyze t he prospects
• Plan ahead fol'
for n wr k et globaliz;.Hion
expected f u t u r e cl1anges
• Research buyer
- Ad d /adapt resources
Anticipating needs preferences. :.1nd
:mJ c o m p e l i t i v e
Change cxpcctalions
capabilities
• Monitor new
- I m p r o v e p ro d u c t l i n e
ted1nologic:.1J
dcv c lop,ncnts closely 10 - $1reng1hen dis tribu1it, n
predict f"l.1tw·c path
• Pioneer new nd better

tech r'IOIogics • Seize the offensive
• lntrodu..:e innov.:itive: - Ue the ag ent of indus I
Offen siv e Leading 1>1·oducts l h : l l o p e n ocw ry
Change rnarkets and s p u r the ehange; set Lhe p 1ce
cre:-ilion of w h o l e new • J nfluence the ruJes
i r H : l u I r-ie,; or th e g:.,n,e
• Seek to set ind ustry • Fote<' r i v a l s t o f o l l ow
st n d o rd s
Source: Repr i nt ed hy pc r m i s s k , n of Harvard Business Sc hool Press. From C om pet i ng o n the Edge: Strtlfe&.ry cu
S t r u c t u r e d C l u u , s h y S h o n a L . Brnw11 mtd K::Hhlcc11 M. l2i cr1hun.lt. B o s t o n . M A . 1998. p. 5 . Co,-.y,·ighl <O 1998 hy lhc
H:u·varcl Business Sc hool Publishing C o r p o r a t i o n : all rights re.served.

TABLE 5-4 The Largest Mergers Completed Globally in 2007
Price
Acquiring Firm Acquired Firm (In Billions)
AT&T (U.S.) BellSouth Corp. (U.S.) 72.7
E.On (Gennany) Endesa (Spain) 46.9
Suez (France) Gaz de France 39.5
Banca Intesa (Italy) (France) 37.6
Porsche (Gennany) SanPaolo IMI (Italy) 36.8
Mittal Steel (Netherlands) Volkswagen (Gern1any) 33.8
Investor Group (U.S.) Arcelor (Luxembow·g) 32.1
StatoiJ (Norway) TXU (U.S.) 30.8
A1nerica Movi] (Mexico) Norsk Hydro (Norway) 30.5
Freeport-Nlc.Nloran (U.S.) An1erica Teleco1n (Mexico) 25.8
\Vachovia (U.S.) Phelp Dodge (U.S.) 25.5
CVS (U.S.) Golden West Financial (U.S.) 23.0
Iberdrola (Spain) Care1na1k Rx (U.S.) 22.2
Airport Develop {Spain) Scottish Power (U.K.) 21.8
Investor Group (U.S.) BAA (U.K.) 21.2
Bayer (Gennany) HCA (U.S.) 20.6
Copyright@ 2009 Pearson Schering
Education, Inc. (Gennany) Ch 5 -66
I Review
■ How does strategy formulation differ for a

small versus large organization? For a
for
profit versus a nonprofit organization?
■ Strategy formulation is conceptually the same
for both small and large organizations. However,
for large firms, there are more variables to include
in both the external and internal audits. The
process is usually more formal in a large firm.

I Review
■ Give recent examples of forward integration,

backward integration, and horizontal
integration.
■ Forward integration means purchasing or
developing a distributor for a product. For instance,
Nike now has its own retail stores in various
locations. Backward integration means owning a
supply source for production. For instance,
recently garment producers in Sri Lanka began
seeking to purchase textile mills in India.
Horizontal integration means acquiring like
operations. For instance, a hospital group may
purchase another hospital.

I Review
■ Do you think hostile takeovers are

unethical? Why or why not?
■ It can best be argued that hostile takeovers
are ethical. Usually, only weak companies face
hostile takeovers, and, typically, shareholders and
customers of the company benefit from the new
organization. Most employees and managers
benefit, too, but some employees and top
managers usually lose their jobs when the
takeover is consummated. From this angle, some
students may argue that hostile takeovers are
unethical.
I Review
■ Why is it not advisable to pursue too many

strategies at once?
■ Organizational resources are spread too thin
when more than a few strategies are pursued at
the same time. All organizations have limited
resources. No organization can pursue all the
strategies that may benefit the firm. Similarly, no
individual can take on an unlimited amount of debt
to obtain goods and services. No more than a few
strategies can be financed, marketed, and
managed effectively at the same time. Some
practitioners say only a single strategy should be
pursued at a given time by a single organization.

Review
■ What strategies are best for turbulent, high-

velocity markets?
■ Firms in this type of market have a choice of whether to
react, anticipate, or lead the market in terms of its own
strategies. These choices are reflected in Figure 5-4. If a firm
primarily responds to the turbulent market by responding to
changes in the industry defensively. The react-to-change
strategy would not be as effective as the anticipate change
strategy, which entails devising and following through with
plans for dealing with the expected changes. Ideally, a firm will
strive to lead the market, by pioneering new and better
technologies and products.


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I Chapter 5

Copyright@ 2009 Pearson Education, Inc. Ch 5-1

Copyright@ 2009 Pearson Education, Inc. Ch 5-2

Copyright@ 2009 Pearson Education, Inc. Ch 5-3

■ Objectives are commonly stated in terms

Copyright@ 2009 Pearson Education, Inc. Ch 5-4

Organizational Level Basis for Annual Bonus or Merit

Copyright@ 2009 Pearson Education, Inc. Ch 5-5

Copyright@ 2009 Pearson Education, Inc. Ch 5-6

4. lower costs than rivals,

5. higher product quality than rivals,

6. wider geographic coverage than rivals, etc.

■ 3. There is frequently a tradeoff

Robert Kaplan & David Norton -

Copyright@ 2009 Pearson Education, Inc. Ch 5 -9

■ A balanced scorecard for a firm is

Copyright@ 2009 Pearson Education, Inc. Ch 5 -10

1 - - - - - - - - - Strategy Strategy Strategy J

Copyright@ 2009 Pearson Education, Inc. Ch 5 -11

Copyright@ 2009 Pearson Education, Inc. Ch 5 -12

Copyright@ 2009 Pearson Education, Inc. Ch 5 -13

Cop yr!!'!'!!!',g """""" !!!'!!!"!'!'"E""°u ca'!'!'!'!'1on!!!-,!'!!!'!!nc!'""".

Guidelines for Forward Integration

Present distributors are expensive, unreliable, or

Copyright@ 2009 Pearson Education, Inc. Ch 5 -16

Guidelines for Backward Integration

When present suppliers are expensive, unreliable, or

Copyright@ 2009 Pearson Education, Inc. Ch 5 -18

Guidelines for Horizontal Integration

Firm can gain monopolistic characteristics without being

Copyright@ 2009 Pearson Education, Inc. Ch 5 -20

Copyright@ 2009 Pearson Education, Inc. Ch 5 -21

Guidelines for Market Penetration

Current markets not saturated

Copyright@ 2009 Pearson Education, Inc. Ch 5 -23

Guidelines for Market Development

New channels of distribution that are reliable,

Copyright@ 2009 Pearson Education, Inc. Ch 5 -25

Guidelines for Product

Products in maturity stage of life cycle

Copyright@ 2009 Pearson Education, Inc. Ch 5 -27

Copyright@ 2009 Pearson Education, Inc. Ch 5 -28

Guidelines for Concentric Diversification

Competes in no- or slow-growth industry

Copyright@ 2009 Pearson Education, Inc. Ch 5 -

Publishing as Prentice Hall

Guidelines for Conglomerate Diversification

Declining annual sales and profits

Copyright@ 2009 Pearson Education, Inc. Ch 5 -32

Guidelines for Horizontal Diversification

Revenues from current products/services would increase

Copyright@ 2009 Pearson Education, Inc. Ch 5 -34

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■ Joint venture is a popular strategy that

■ Joint ventures and cooperative

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■ Many, if not most, organizations pursue a

■ Managers who must collaborate

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Guidelines for Joint Venture

Combination of privately held and publicly held can be

Guidelines for Retrenchment