Chapter 5

Strategies in Action

Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Long Term Objectives

Quantitative Challenging

Measurable Hierarchical

Realistic Obtainable

Understandable Congruent
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Financial vs. Strategic Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Larger profit margins
Greater ROI
Higher earnings per share
Rising stock price
Improved cash flow
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The Balanced Scorecard

Robert Kaplan & David Norton

Strategy evaluation & control technique

Balance financial measures with
nonfinancial measures
Balance shareholder objectives with
customer & operational objectives
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Levels of Strategies
Large Company

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Levels of Strategies
Small Company

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Types of Strategies

Forward
Integration

Vertical Backward
Integration Integration
Strategies

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Vertical Integration Strategies
Forward Gaining ownership or increased
Integration control over distributors or retailers

Backward Seeking ownership or increased

Integration control of a firms suppliers

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Types of Strategies

Market
Penetration

Intensive Market
Strategies Development

Product
Development

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Intensive Strategies
Seeking increased market share for
Market present products or services in
Penetration present markets through greater
marketing efforts

Market Introducing present products or

Development services into new geographic areas

Seeking increased sales by

Product
improving present products or
Development services or developing new ones

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Types of Strategies

Related
Diversification

Diversification
Strategies

Unrelated
Diversification

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Diversification Strategies

Related Adding new but related products or

Diversification services

Unrelated
Adding new, unrelated products or
Diversification services

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Types of Strategies

Retrenchment

Defensive Divestiture
Strategies

Liquidation

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Defensive Strategies
Regrouping through cost and asset
Retrenchment reduction to reverse declining sales
and profit

Divestiture Selling a division or part of an

organization

Selling all of a companys assets, in

Liquidation parts, for their tangible worth

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Porters Five Generic Strategies

Type 1 Cost Leadership Low cost

Type 2 Cost Leadership Best value

Type 3 Differentiation

Type 4 Focus Low cost

Type 5 Focus Best value

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