REVIEWER IN STRATEGIC MANAGEMENT
1. Long-Term Objectives- represents the results expected from pursuing certain strategies.
- Strategies represents the actions to be taken to accomplish long-term objectives.
2. 8 desired characteristics of Objectives
- Quantitative
- Measurable
- Realistic
- Understandable
- Challenging
- Hierarchical
- Obtainable
- Congruent across departments
3. Objectives – should be associated with a timeline
- Growth in assets
- Growth in sales
- Profitability
- Market share
- Degree and nature of diversification
- Degree and nature of vertical integration
- Earnings per share
- Social responsibility
4. Level of Strategy
Large company Small Company
- Corporate level - company level
- Division level - functional level
- Functional level - operational level
- Operational level
5. Financial objectives and Strategic Objectives
FINANCIAL OBJ. STRATEGIC OBJ.
- Associated with growth in - larger market share
• Revenues - quicker on time delivery than rivals
• Earnings - lower costs than rivals
• Higher dividends - wider geographic coverage
• Profit margins - achieving technological leadership
• Return on investment - consistency getting new or
improved products to market ahead
of rivals
• Earnings per share
• Rising stock price
• Improved cash flow
6. Types of strategies
- Integration strategies
• Forward Integration- gaining ownership or increased control over distributors or retailers
• Backward Integration- seeking ownership or increased control of a firm’s suppliers
• Horizontal Integration- seeking ownership or increased control over competitors
, - Intensive strategies
• Market Penetration- seeking increased market share for present products or services in present
markets through greater marketing efforts
• Market Development- introducing present products or services into new geographic area
• Product Development- seeking increased sales by improving present products or services or
developing new ones
- Diversification strategies
• Related Diversification- adding a new but related products or services
• Unrelated Diversification- adding new, unrelated products or services
- Defensive strategies
• Retrenchment- regrouping through cost and asset reduction to reverse declining sales and profit;
called a turnaround or reorganizational strategy
• Divestiture- selling a division or part of an organization; often used to raise capital for further
strategic acquisitions or investments
• Liquidation- selling of all a company’s assets, in parts, for their tangible worth; can be a difficult
emotional strategy; company files bankruptcy
7. Why adopt a Forward Integration Strategy
- Organization’s present distributors are especially expensive, unreliable, or incapable of meeting the
firm’s distribution needs
- Availability of quality distributors is so limited as to offer a competitive advantage to those firms
- Organization competes in an industry that is growing and is expected to continue to grow markedly
- Has both the capital and human resources needed to manage the new business of distributing its own
products
- Advantages of stable production are particularly high
- Present distributors or retailers have high profit margins
8. Why adopt a Backward Integration Strategy
- Organization’s present suppliers are especially expensive, unreliable, or incapable of meeting the firms
needs for parts, components, assemblies or raw materials
- Number of suppliers is small, number of competitors is large
- Organizations competes in an industry that is growing rapidly
- Has both the capital and human resources needed to manage the new business of distributing its raw
materials
- Advantages of stable prices are particularly important
- Present suppliers have high profit margins
- Organizations needs to quickly acquire a needed resource
9. Why adopt a Horizontal Integration Strategy
- Organization can gain monopolist characteristics in a particular area or region without being
challenged by the government for “tending substantially” to reduce competition
- Competes in a growing industry
- Increase economies of scale
- Successfully managed an expanded organization
- Competitors are faltering as a result of a lack of managerial expertise
10. Michael Porter
- Harvard Professor of Strategy
- Generic strategies:
- cost leadership- emphasizes producing standardized products at a low per unit cost for consumers who
are price sensitive
1. Long-Term Objectives- represents the results expected from pursuing certain strategies.
- Strategies represents the actions to be taken to accomplish long-term objectives.
2. 8 desired characteristics of Objectives
- Quantitative
- Measurable
- Realistic
- Understandable
- Challenging
- Hierarchical
- Obtainable
- Congruent across departments
3. Objectives – should be associated with a timeline
- Growth in assets
- Growth in sales
- Profitability
- Market share
- Degree and nature of diversification
- Degree and nature of vertical integration
- Earnings per share
- Social responsibility
4. Level of Strategy
Large company Small Company
- Corporate level - company level
- Division level - functional level
- Functional level - operational level
- Operational level
5. Financial objectives and Strategic Objectives
FINANCIAL OBJ. STRATEGIC OBJ.
- Associated with growth in - larger market share
• Revenues - quicker on time delivery than rivals
• Earnings - lower costs than rivals
• Higher dividends - wider geographic coverage
• Profit margins - achieving technological leadership
• Return on investment - consistency getting new or
improved products to market ahead
of rivals
• Earnings per share
• Rising stock price
• Improved cash flow
6. Types of strategies
- Integration strategies
• Forward Integration- gaining ownership or increased control over distributors or retailers
• Backward Integration- seeking ownership or increased control of a firm’s suppliers
• Horizontal Integration- seeking ownership or increased control over competitors
, - Intensive strategies
• Market Penetration- seeking increased market share for present products or services in present
markets through greater marketing efforts
• Market Development- introducing present products or services into new geographic area
• Product Development- seeking increased sales by improving present products or services or
developing new ones
- Diversification strategies
• Related Diversification- adding a new but related products or services
• Unrelated Diversification- adding new, unrelated products or services
- Defensive strategies
• Retrenchment- regrouping through cost and asset reduction to reverse declining sales and profit;
called a turnaround or reorganizational strategy
• Divestiture- selling a division or part of an organization; often used to raise capital for further
strategic acquisitions or investments
• Liquidation- selling of all a company’s assets, in parts, for their tangible worth; can be a difficult
emotional strategy; company files bankruptcy
7. Why adopt a Forward Integration Strategy
- Organization’s present distributors are especially expensive, unreliable, or incapable of meeting the
firm’s distribution needs
- Availability of quality distributors is so limited as to offer a competitive advantage to those firms
- Organization competes in an industry that is growing and is expected to continue to grow markedly
- Has both the capital and human resources needed to manage the new business of distributing its own
products
- Advantages of stable production are particularly high
- Present distributors or retailers have high profit margins
8. Why adopt a Backward Integration Strategy
- Organization’s present suppliers are especially expensive, unreliable, or incapable of meeting the firms
needs for parts, components, assemblies or raw materials
- Number of suppliers is small, number of competitors is large
- Organizations competes in an industry that is growing rapidly
- Has both the capital and human resources needed to manage the new business of distributing its raw
materials
- Advantages of stable prices are particularly important
- Present suppliers have high profit margins
- Organizations needs to quickly acquire a needed resource
9. Why adopt a Horizontal Integration Strategy
- Organization can gain monopolist characteristics in a particular area or region without being
challenged by the government for “tending substantially” to reduce competition
- Competes in a growing industry
- Increase economies of scale
- Successfully managed an expanded organization
- Competitors are faltering as a result of a lack of managerial expertise
10. Michael Porter
- Harvard Professor of Strategy
- Generic strategies:
- cost leadership- emphasizes producing standardized products at a low per unit cost for consumers who
are price sensitive
