CORPORATE STRATEGIES
STRATEGIC MANAGEMENT IN ACTION
Heather Hignojos
Katie Kringele
John Stewart
Overview
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What is Corporate Strategy
Organizational Growth Strategies
Organizational Stability Strategies
Organizational Renewal Strategies
How Corporate Strategy is Evaluated and Changed
Corporate Strategy
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A strategy concerned with the choices of what
business to be in and what to do with those
businesses
Single –Business Organization
A
business in one industry
 Coca-Cola

Multiple-Business Organization
A
business in more than one industry
 PepsiCo
Corporate Strategy Related to Other
Strategies
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Corporate strategy establishes the overall direction
that the organization hopes to go
Functional and Competitive strategies provide the
means for making sure the organization gets there
 Resources
 Distinctive
capabilities
 Competitive advantages
 Core competencies
Corporate Strategic Directions

Moving an organization forward
 Strategic
managers hope to expand the organization’s
activities or operations.

Keeping an organization as is
 It’s

not growing or falling behind. A stability strategy.
Reversing an organization's decline
 An
organization has declines in one or more
performance areas. They are addressed with a
renewal strategy.
Growth Strategy
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One that expands the products offered or markets
served by an organization or expands its activities
or operations either through current business or
through new business
Used to meet performance goals
 Increase
revenues or profits
 Increase number of clients
 Broaden geographic area of coverage
Growth Strategies
International
Diversification
-Related
-Unrelated
Concentration
Organizational
Growth
Horizontal
Integration
Vertical
Integration
-Backward
-Forward
Concentration
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An organization concentrates on its primary line of
business and looks for ways to meet its growth goals by
expanding its core business.
Three concentration options
Product-market exploitation- attempts by the organization
to increase sales of its current products in its current markets
 Product development- organizations create new products to
sell to its current market.
 Market development- an organization sells its current
products in new markets.

Concentration
 An
organization looks for ways to grow its core business
using different combinations of products and markets.
 An
advantage of this strategy is an organization
becomes very good at what it does.
A
disadvantage is the organization is vulnerable to
both industry and other external changes.
Vertical Integration
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A strategy in which an organization grows by
gaining control of its inputs, its outputs, or both.
Backward vertical integration- gains control of its
inputs or resources by becoming its own supplier
Forward vertical integration- gains control of its
outputs by becoming it own distributor
It is still a single-business organization because it is
expanding into industries connected to its primary
business.
Horizontal Integration
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A strategy in which an organization grows by
combining operations with its competitors.
It can be an appropriate strategy as long as (1) it
enables the company to meet its growth goals, (2) it
can be strategically managed to attain a
sustainable competitive advantage, and (3) it
satisfies legal and regulatory guidelines
Diversification
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Growing by moving into a different industry.
Two types
 Related
(concentric) is diversifying into a different
industry but one that’s related in some way to the
current business.
 Unrelated (conglomerate) is diversifying into a
completely different industry not related to current
business

The diversification strategy is hard to use, but you
can create a sustainable competitive advantage.
International

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A corporate strategy to look for ways to grow by
taking advantage of the potential opportunities
offered by global markets or by protecting the
organization’s core operations from global
competitors.
It’s possible for an organization to “go
international” as it pursues growth using any of the
other strategies
Implementing the Growth Strategies
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Options for strategies to grow:
 Mergers
 Internal
& Acquisitions
Development
 Strategic
Partnering
Mergers & Acquisitions
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‘Purchase’ what the company needs to grow

Merger- a legal transaction in which two or more
organizations combine operations through an exchange of
stock and create a third entity
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Organizations are usually about the same size and “friendly”
Acquisition- outright purchase of an organization by another
Usually organizations are different sizes, can either be friendly or
hostile
 Hostile Takeover- When an organization does not want to be
acquired by another
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Mergers & Acquisitions
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Popularity goes in cycles
Is possible in ANY implementation of a growth
strategy
 Concentration
 Vertical
Integration
 Horizontal Integration
 Diversification
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Main feature of a merger or acquisition is that the
company is “buying” an expanded product line,
markets, activities or operations
Internal Development
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When an organization grows by creating and developing new
business activities itself
Occurs when decision makers believe they have the necessary
resources, distinctive capabilities and core competencies to do it
themselves
Managers chose to acquire the needed resources and develop
crucial capabilities to meet desired growth goals rather than deal
with the hassle of combining two or more organizations
Depends on:
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The new industry’s barriers to entry
The relatedness of the new business to the existing one
The speed and development costs associated with each approach
The risks associated with each approach
The stage of the industry cycle
Strategic Partnering
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Two or more organizations establish a legitimate
partnership by combining their resources, distinctive
capabilities, and core competencies for some
business purpose
Covers anything from loose partnerships to formal
partnerships – umbrella term
3 Main types:
 Joint
Venture
 Long-term Contracts
 Strategic Alliance
Strategic Partnering
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Joint Venture- two or more separate organizations
for a separate independent organization for
strategic purposes
 Often
used when the partners do not want to or cannot
legally join together permanently
 Poplar in international growth
 GM
and Toyota formed New United Motor Manufacturing
Company (NUMMC)
 Created to introduce a new automobile production system in
the US… Still in use today
Strategic Partnering
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Long-term Contract- a legal contract between
organizations covering a specific business purpose
Typically used between a business and its suppliers
Locks a supplier into a long-term relationship in
which both partners understand the importance of
developing resources, capabilities and core
competencies for a sustainable competitive
advantage
Both sides benefit from knowing they will always
have the other partners business
Strategic Partnering
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Strategic Alliance- two or more organizations share
resources, capabilities or competencies to pursue some
business purpose
Different from a joint venture because there is no
separate entity created, they simply just share the
resources they already have
Usually used to encourage product innovation
PepsiCo and Lipton- canned ice tea
 Pepsi brought its strong marketing in canned beverages
 Lipton brought its recognized tea brand and customer base

When is Stability an Appropriate
Strategic Choice?
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Stability Strategy- which an organization maintains its
current size and activities
When the industry is in a period of rapid upheaval with
several forces drastically changing
When the future is highly uncertain
When the industry is facing little or no growth
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Allows them time to analyze their strategic options
When the organization has had rapid growth and
needs some “down” time
Organization is in a mature stage
Implementing the Stability Strategy
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Involves not growing, but also not shrinking
Must maintain a certain level at all times
 No
new products, programs or adding production
capacity
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Usually just an opportunity to let an organization
rest in between growth periods
More of a short-run strategy
Susceptible to losing its competitive advantage
Renewal Strategies
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Businesses periodically fall short of strategic
objectives.
Why they’re important:
 Designed
to reverse any decline in productivity
 Designed to get the company functioning as it should be
 Designed to re-align goals
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Two renewal strategies:
 Retrenchment
 Turnaround
Retrenchment
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The retrenchment strategy is designed to address
weaknesses that are leading to performance
decline.
Usually designed to achieve strategic goals
 Meeting
strategic goals usually means making more
profit
 Goal is to stabilize operations, replenish or revitalize
resources and capabilities
Turnaround
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This renewal strategy is for companies in severely
bad condition.
 Only
losses being reported
 Performance results are significantly low
 Company is in danger of collapsing

Managers must conduct a complete overhaul of
operations, and strategic planning.
 Ex:
K-Mart, Delta Airlines, General Motors
Putting the Plan in to Action
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Implementing these renewal strategies is a
challenge.
This consists of:
 Restructuring
 Refocuses
on the primary business
 Proven to be the most beneficial action
 Cutting
 Bring
Costs
results back in line with expectations
 Eliminates redundancies, and inefficiencies
Evaluating Corporate Strategies
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This is a follow up action taken in order to make
sure that implemented strategies are working.
Evaluation focuses on four areas:
 Corporate
goals
 Efficiency, effectiveness, and productivity
 Benchmarking
 Portfolio Analysis
Corporate Goals
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Corporate Goals indicate the desired end results or
targets that strategic managers have established.
These goals are broader, more comprehensive, and
longer-term.
If functional and competitive goals aren’t met,
neither are the corporate goals.
Corporate Goals (cont.)
Increased
Earnings
Increased
Market
Share
Increased
Productivity
Corporate
Goals
Positive
Image
Increased
Revenue
Strong
Global
Presence
Efficiency, Effectiveness, Productivity
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Three very important measures that can be used in
evaluating an organization’s corporate strategy.
Efficiency
 The
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Effectiveness
 The
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ability to minimize resource use in achieving goals
organization’s ability to reach it’s goals
Productivity
A
measure of how many inputs it took for an output
Benchmarking
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Essential in setting goals to compete in an industry.
Used to observe strategic management in relation
to competitors, and determine where improvement is
needed.
Southwest Airlines:
 Studied
Indy 500 pit crews to determine how they could
get their gate crews to achieve a faster turnaround
time at the airline gate
Portfolio Analysis
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Usually the final step in the evaluation process.
Used to evaluate all areas of the organization, and
determine overall performance.
Three main portfolio analysis approaches:
 BCG
Matrix
 McKinsey-GE Stoplight Matrix
 Product-Market Evolution Matrix
BCG Matrix
Take Aways
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Corporate strategies and their function.
 Strategies
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Growth, stability, an renewal strategies
 Strategies
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for single & multiple organization businesses
used to impact overall performance
Evaluation and implementation
 Techniques
used to make sure the company is on track