Corporate Directional
Strategies
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Corporate Strategy
Directional Strategy:
– Three Grand Strategies:
• Growth strategies
• Stability strategies
• Retrenchment strategies
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Corporate Strategy
Growth Strategies:
– Most widely pursued strategies
– External mechanisms:
• Mergers
– Transaction involving two or more firms in which
stock is exchanged but only one firm survives.
• Acquisition
– Purchase of a firm that is absorbed as an operating
subsidiary of the acquiring firm.
• Strategic Alliance
– Partnership of two or more firms to achieve
strategically significant objectives that are mutually
beneficial.
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Corporate Strategy
2 Basic Growth Strategies:
– Concentration
– Current product line in one industry
– Diversification
– Into other product lines in other industries
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Corporate Strategy
Basic Concentration Strategies:
–Vertical growth
–Horizontal growth
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Corporate Strategy
Concentration:
Vertical growth
– Vertical integration
• Full integration
• Taper integration
• Quasi-integration
– Backward integration
– Forward integration
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Corporate Strategy
Concentration:
Horizontal Growth
– Horizontal integration
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Corporate Strategy
Basic Diversification Strategies:
– Concentric Diversification
– Conglomerate Diversification
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Corporate Strategy
Diversification:
Concentric:
– Growth into related industry
– Search for synergies
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Corporate Strategy
Diversification:
Conglomerate:
– Growth into unrelated industry
– Concern with financial considerations
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Corporate Strategy
International
Entry
Options
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Exporting
Licensing
Franchising
Joint Ventures
Acquisitions
Green-Field Development
Production Sharing
Turnkey Operations
BOT Concept
Management Contracts
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Corporate Strategy
Stability Strategies:
–Pause/proceed with caution
–No change
–Profit strategies
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Corporate Strategy
Retrenchment Strategies:
– Turnaround
– Captive Company Strategy
– Selling out
– Bankruptcy
– Liquidation
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International Portfolio Analysis
2 Factors:
•
Country’s attractiveness
• Market size, rate of growth, regulation
•
Competitive strength
• Market share, product fit, contribution
margin, market support
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