Pertemuan Keempat
Corporate Strategy Decisions
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Corporate Growth Strategies
• Expansion;
– Expansion by increasing penetration of current product-markets
– Expansion by developing new product for current customers
– Expansion by selling existing products to new segments or
countries
– Expansion by diversifying through organizational relationships or
networks
• Diversification:
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Vertical integration
Forward integration
Backward integration
Related or non related diversification
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Expansions by Increasing
Penetration and Developing New
Products
• Requires actions such as making product
or service improvements, cutting costs and
prices, outspending competitors on
advertising or promotions.
• A second type is through a product
development strategy emphasizing the
introduction of product-line extension or
new product or service aimed at current
customers
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Expansion by Existing Products
and Diversifying
• Examples: theaters, orchestras and other
performing arts organizations. This may
involve the creation of marketing programs
aimed at non user or occasional user
segments.
• The second type by building organizational
networks. Such as Japanese keiretsu and
korean chaebol.
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Diversification
• Vertical integration;
– Forward vertical integration; when a firm
moves downstream in terms of the product
flow
– Backward integration; when a firm moves
upstream by acquiring a supplier
– Related diversification; when a firm develops
or acquires another business that has
products or customers in common with its
current business
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Allocating Corporate
Resources
• Porfolio Models:
– Boston Consulting Groups
– Resource allocation and strategy implications
– Alternative portfolio models
• Value Based Planning:
– Discounted cash flow model
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Conclusions:
• A clearly defined corporate mission answers the
question “what business should we be in?” It
provides guidance to a firm’s managers
concerning what alternative product categories
and market segments fit best with the firm’s
competencies, resources and objectives.
• The four major paths to corporate growth:
market penetration, market development, and
diversification strategies.
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