What Corporate Strategy Is
 Single-Business Organization – is in primarily one
industry Ex. Coca-Cola
 Multiple-Business Organization – is in more than one
industry Ex. PepsiCo
 Why is this distinction important?
Three Corporate Directions
 1. Moving an organization forward – Expanding the
organizations activities and/or operations
 2. Keeping an organization as is – Not growing but
also not falling behind
 3. Reversing an organization’s decline –
Organization has problems and seeing declines in one
or more performance areas
Figure 7.2 Possible Growth
International
Strategies
Concentration
Organizational
Growth
Diversification
Vertical Integration
• Related
• Unrelated
• Backward
• Forward
Horizontal
Integration
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Growth Strategy
 Expands the products offered or markets served by an
organization or expands its activities/operations either
through current businesses or new businesses.
 Goals for growth include increased revenues, profits,
and financial/performance measures
Figure 7.3 Concentration
Options
Product(s)
Current
Current
New
Product-Market
Exploitation
Product
Development
Market
Development
Product/Market
Diversification*
Customers
New
* not a concentration option
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Concentration
 Is a growth strategy in which an organization
concentrates on its primary line of business and looks
for ways to meet its growth goals by expanding its core
business.
Vertical Integration Strategy
 Organization grows by gaining control of its inputs,
outputs, or both
 Backward integration gains control of its inputs or
resources by becoming its supplier
 Forward integration gains control of its outputs or
products/services by becoming its own distributor
Diversification
 Strategy in which an organization grows by moving
into a different industry.
 1. Related (concentric) diversification
Ex. Apples iTunes, iPod, iPhone
 2. Unrelated (conglomerate) diversification
Ex. GE, Toyota, Fortune Brands
International
 Corporate strategy might
involve looking for ways
to grow by taking
advantage of the
potential opportunities
offered by global
markets or by protecting
core operations from
global competitors
Horizontal Integration Strategy
 Strategy in which organization grows by combining
operations with its competitors
 Keeps an organization in the same industry and
provides a way to expand market share and strengthen
competitive position
 Ex. L’Oreal acquired London based retailer “Body
Shop” for 1.1 billion
 Failed Attempt was Coca Cola trying to purchase
China’s Huiyuan Juice Group for 2.3B
Implementing the Growth
Strategies
 Mergers/Acquisitions
 Internal development
 Strategic Partnering
Mergers/Acquisitions
 Merger – a legal transaction in which two or more
organizations combine operations through an
exchange of stock and create a third entity
 Acquisition – an outright purchase of an organization
by another
 Hostile takeover – when organization being acquired
doesn’t wish to be acquired.
Internal Development
 When an organization grows by creating and
developing new business activities itself. This may be
the route the firm chooses when strategic decision
makers believe they have the necessary resources,
distinctive capabilities, and core competencies to do it
themselves.
Strategic Partnering
 Where two or more organizations establish a
legitimate relationship by combining their resources,
distinctive capabilities, and core competencies for
some business purpose.
 Vertical Integration – Partnering with a distributor
 Horizontal Integration – Strategic partnering with
competitor
 3 main types of strategic partnering

Joint venture, long term contract, strategic alliance
3 Main types of strategic
partnering
 Joint venture – two or more separate organizations
form a separate independent organization. Often used
as a legal scapegoat, partners will create a new entity to
do business.
 Involves less risk
 Long term contract – legal contract between
organizations covering a specific business purpose.
 Alternative to vertical integration
 Strategic alliance – were two or more organizations
share resources, capabilities, or competencies to
pursue some business purpose.
 Similar to joint venture, but no separate entity
Stability Strategy
This one
 When an organizations goals are to
maintain size and current activities.
 When and Why?
 Slow, or no growth industries, there is not
a market for expansion due to the red
ocean of competitors.
 If a firm is coming off a steep incline of
growth and needs to recoup its resources.
 If industry life cycle is in maturity or
decline stage, expansion is unrealistic.
Renewal Strategies
 Strategies focused on reviving companies facing a
recent downturn or those who have unable to achieve a
competitive advantage
 Causes:
 Declining Performance
 Poor Management
 Economic Downturn
Reasons for a Renewal Strategy
Types of Renewal Strategies
 Retrenchment – a short run renewal strategy designed
to address organizational weaknesses that are leading
to performance declines
 Used when firm continually fails to meet strategic goals
 Turnaround – used in situations where organizations
performance problems are more severe.
 Used in situations where firm faces ruin if not
implemented.
Implementing Renewal Strategies
 Cost cutting
 Short run approach to gaining cash to revitalize the
organizations performance in the long run
 Restructuring
 Divest and Discontinue – Selling a process to another
firm
 Spin off – Setting up a business unit as a separate,
independent business
 Liquidation – selling off business entirely
 Downsizing – laying off employees – short term fix
 Bankruptcy – failure of a business.
Evaluating Corporate Strategy
Four Evaluation Techniques
 Corporate Goals and Productivity Measures
 Efficiency & Effectiveness
 Benchmarking
 Portfolio Analysis
Corporate Goals
 Corporate goals indicate the desired end results or
targets that strategic managers have established.
Efficiency, Effectiveness, and
Productivity measures
 Efficiency- Is an organizations ability to minimize
resource use in achieving organizational goals.
 Effectiveness- is an organization’s ability to reach its
goals,
 Productivity- Is a specific measure of how many
inputs it took to produce outputs and is typically used
in the production-operations area.
Benchmarking
 Benchmarking- The search for the best practices inside
or outside an organization.
Portfolio Analysis
 Portfolio- An organizations various business Units
 A Portfolio Analysis is done with a two-dimensional
matrices that summarize internal and external factors.
Three Main Portfolio Analysis Approaches
1 ) The BCG Matrix
2) The McKinsey-GE Stoplight Matrix
3) The Product-Market Evolution Matrix
BCG Matrix
 Measure of business units
relative market share.
 Y axis is the measure of the
industry growth rate( Cash
Usage).
 X axis is the measure of the
relative market share (Cash
Generation).
Examples
 Cash Cow- JZ
 Star – Lady Gaga
 ? – Emerging Talent
 Dog- Blink 182
McKinsey-GE Stoplight Matrix
Business Strength-Competitive Position
Industry (Product-Market) Attractiveness
Strong
(5)
Winners
High
Average
(3)
Weak
(1)
Winners
(5)
Question
marks
Winners
Medium(3)
Average
Business
Losers
Low
(1)
Profit
Producers
Losers
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Product-Market Evolution
Matrix
The Business Unit’s Competitive Position
Strong
Development
Average
Weak
A
C
B
Growth
Industry’s
Stage
in the
Evolutionary
Life Cycle
Competitive
Shakeout
D
F
E
Maturity

G
Saturation
Decline
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When to Change Corporate Strategies
When evaluation shows
 Growth objectives aren’t being attained
 Organizational stability causes organization
to fall behind
 Organizational renewal efforts aren’t working
Possible strategies to change
 Functional
 Competitive
 Corporate direction
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