工商管理专业MBALecture

CorporateLevelStrategyDrItaO’DonovanLectureSixKeyConsiderationsWearelookingattheissueofcorporatestrategyfromtheperspectiveofwhatisthemulti-businessscopeoftheorganisation.WhatistheoptimalnumberofbusinessesforthefirmShouldwestayinthisbusinessHowshouldourbusinessesbemanagedHowisthecorporationgoingtooperateasawhole2DrItaO'DonovanBeechgroveAssociatesThesourcesofsuperiorprofitabilityRATEOFRETURNABOVETHECOSTOFCAPITALHowdowemakeMoney?INDUSTRYATTRACTIVENESSWhichindustriesshouldwebein?CORPORATESTRATEGYCOMPETITIVEADVANTAGEHowshouldwecompete?BUSINESSSTRATEGY3DrItaO'DonovanBeechgroveAssociatesStrategiesDiversificationtwobroadtypes:Relateddiversificationisdevelopmentbeyondthepresentproductandmarket,butstillwithinthebroadconfinesofthe‘industry’.ForExampleUnileverisadiversifiedcorporation,butvirtuallyallitsinterestsareintheconsumergoodsindustry.(a)Backwardintegrationreferstoinputsintothecurrentbusinessfurtherbackinthevaluesysteme.g.Rawmaterials,machinery,labour(b)Forwardintegrationreferstoactivitieswhichareconcernedwiththecompany’soutputse.g.Transport,distribution,repairs,andservicing.Thesearefurtherforwardinthevaluesystem(c)Horizontalintegrationreferstoactivitieswhicharecompetitivewithordirectlycomplementarytoacompany’spresentactivitiesUnrelateddiversificationreferstoactivitydevelopmentbeyondthepresentindustryintoproducts/markets,whichatfacevalue,maybearnoclearrelationshipwithpresentproducts/markets.4DrItaO'DonovanBeechgroveAssociatesRelateddevelopments;relatedandunrelateddiversification5DrItaO'DonovanBeechgroveAssociatesSomeReasonsforrelatedDiversificationPossibleadvantagesExamples/Comments1.ControlofsuppliesQuantityQualityPriceTeaProcessorsownplantationstosecurecontinuityofSupply.ComponentsformotorcarsmayneedtobemanufacturedbythecompanyPrintingfacilitycanbecheaperin-house2.ControlofmarketsUKshoemanufacturersownretailoutletstogainguaranteeddistribution3.AccessofinformationManufacturersareinvolvedinmachinerydevelopmentcompaniestokeepabreastofdevelopment4.CostsavingsFullyintegratedsteelplantssavecostonreheatingandtransportBuildingon:ExpertiseTechnologyAccountancyFirmsmovingintotaxadviceorcorporaterecoveryTransfertosimilartechnicalrequirementsinanotherfield6.SpreadingRiskAvoidoverrelianceononeproduct/market,butbuildonrelatedexperience7.ResourceUtilisationUnder-utilisedmanufactureracquirescompanywithcompatibleproductstofillcapacity6DrItaO'DonovanBeechgroveAssociatesSomereasonsforunrelateddiversificationPossibleAdvantagesExamples/CommentsNeedtouseexcesscashorsafeguardprofitsBuyingataxlosssituation2.PersonalvaluesorobjectivesofpowerfulfiguresPersonalimagelocallyornationallymaybeastrongmotiveExploitingunderutilisedresourcesFarmersusefieldsforcampsites,festivalsCompanieshiretheirconferencesfacilities4.EscapefrompresentbusinessAcompany’sproductsmaybeindeclineandunrelateddiversificationistheonlyescape5.SpreadingriskSomecompaniesbelieveitisgoodsensetohave‘alltheireggsinonebasket’.6.EvenoutcyclicaleffectsinagivensectorToymanufacturersmakeasubcontractforplasticmouldproductsforindustry.7.BenefitsfromsynergisticeffectsPositivecashflowfromonebusinessusedtofundingrequirementsofanother7DrItaO'DonovanBeechgroveAssociatesStrategiesforDevelopmentWithdrawal:thisoptionneedstobeconsideredbyorganisationswhencompleteorpartialwithdrawalneedstobeconsidered.Assetscanchangeovertime,mayneedtodispose,acquireothersetc.Entrepreneurmayhaveachievedgoalswishestomoveonacquiredifferentthings.Consolidation:Ingrowingmarket,companyexpandswithmarkettomaintainshareofmarketInmaturemarketmoredifficultchallenges,tendencyisforemphasisoncost,qualityofproductorservice.CompetitorsareallseekingtoconsolidatetherepositionsStrategiescontinuedConsolidationIndecliningmarkets;needtoconsidersignificantchangese.g.Buyinguptheorderbooksofthoseleavingthemarket,distributorsmayneedtofindnewsuppliers.Newinternalagreementstomaincompetitiveedge.Duringatransitionformamaturetoadecliningmarket,theymightconsiderharvestingi.e.gainingmaximumpayofffromstrongposition.e.g.Licensingoftechnology,ordistributionrights,orleasingfacilities.DifficultdecisionwhethertoremaininmarketwherethereisproductdeclinebutchanceofrecoveryStrategiesContinuedMarketPenetration:howeasythisisdependsonnatureofthemarketandpositionofcompetitors.Ingeneraleasieringrowingmarkets,thanstaticmarketsormaturemarkets.Productdevelopment:afirmmightthinkconsolidationisnotsufficientinitself.Nospecialstrategyforthisbutthefollowingfactorsinfirmshavebeenshowntohaveinfluencedtheirsuccess.TheyaremoremarketfocusedinselectingopportunitiesforproductdevelopmentandintailoringthemtomarketneedsTheyconcentratedondevelopingproductswhichbuiltontheircorecompetencesandskillsThecommunicatedthenewproductswellwithinthefirmthusavoidingdisruptionstothenewdevelopmentsTheyusedcross-disciplinaryteams,aswellasskillsandviewsformoutsidethefirm,includingsuppliersandcustomers.10DrItaO'DonovanBeechgroveAssociatesStrategiesContinuedMarketDevelopment:inthecaseofmarketdevelopmenttheorganisationmaintainsthesecurityofitspresentproductswhileventuringintonewmarketareas.ThesemayincludeNewmarketsegments;exploitingnewusesoftheproductornewgeographicalareasOptionofproductdevelopmentandmarketdevelopmenttogetherorseparatelyExportdriveOutsourcingtoothercountriesforcostsoflabour,transportsupplies.11DrItaO'DonovanBeechgroveAssociatesPortfolioAnalysisMarketPowerandMarketShareareimportantconceptsforastrategicbusinessunittoconsider.RelativemarketsharemeanstheamountofmarketshareafirmhasrelativetoitcompetitorsThereisanestablishedrelationshipbetweenmarketpowerandperformanceincommercialorganisations.UsefultobreakdownmarketsharebysegmentsandtoexaminemarketsharewithinthosesegmentsWhatisimportantistoseewhichmarketsegmentsareimportantfromcorporate/profitpointofview.Segmentmaybemorecompetitiveorgrowingmoreorbigger12DrItaO'DonovanBeechgroveAssociatesGrowthShareMatrix

MarketShareCOMPETITIVEPOSITIONHighLowStrongAverageWeakHighHighMarketStars?sIndustryGrowthAttractiveness

LowCashDogsMEDCowsLow

TheoriginalBostonConsultingGroupmatrix(BCG)13DrItaO'DonovanBeechgroveAssociatesGrowthShareMatrixcontinuedAstarisanSBUwhichhasahighmarketshareinagrowthmarket.Thefirmmaybespendingheavilytogainthatshare,butexperiencecurvebenefitsshouldmeanthatcostsarereducingovertimeandatfasterratethancompetitorsThequestionmarkisanSBUwithhighgrowbutdoesnothaveahighmarketshare.FirmcouldbespendingheavilybutnotreducingcostsandnotmakinginroadsoncompetitionTheCashCowhasahighmarketshareinamaturemarket.Lowgrowthmarketconditionsstable,needtospendisless.HighrelativemarketsharemeansSBUabletomaintainunitcostlevelsbelowcompetitors.Dogshavelowshareinstaticordecliningmarkets,worstofallcombinations,maydraincashandusedisproportionateamountoftimeandresources.14DrItaO'DonovanBeechgroveAssociatesMarketattractivenessandbusinessstrengthIndicatorsofSBUStrengthIndicatorsofmarketattractivenessMarketshareMarketsizeSalesforceMarketgrowthrateMarketingCyclicalityCustomerserviceCompetitivestructureR&DBarrierstoentryManufacturingIndustryprofitabilityDistributionTechnologyFinancialresourcesInflationImageRegulationWorkforceavailabilityBreadthofproductlineSocialIssuesQuality/reliabilityEnvironmentalissuesManagerialCompetencePoliticalissuesLegalissues15DrItaO'DonovanBeechgroveAssociatesIssuestoconsiderDifficultiesofexactitudeWhatexactlyisthemarketposition,whatarethegrowthrates,whatarethedominantpositions.?Whatevidenceareman