Strategic Management Chapter 7
Cher, Daisy, Sara, Sarah, Sean
What is Corporate Strategy?
• Strategy concerned with the choices of
business(es) to be in and what to do with those
businesses
▫ Single-business Organization
▫ Multiple-business Organization
*It’s important to know the distinction between
these two types of organizations because it
influences an organization’s overall strategic
direction, what corporate strategy is used, and
how that strategy is implemented and managed.
Corporate Strategy
• The corporate strategy establishes the overall
direction that the organization hopes to go and
the other organizational strategies (functional
and competitive) provide the means for making
sure the organization gets there.
▫ Corporate
▫ Competitive
▫ Functional
Corporate Strategic Directions
• What are they?
1) Moving and organizing forward
2) Keeping an organization as is
3) Reversing an organization’s decline
Growth Strategy
• A strategy that expands the products offered or
markets served by an organization or expands its
activities or operations either through current
business(es) or through new business(es)
Types of Growth Strategy
• Concentration
▫ Product-market exploitation
▫ Product-development
▫ Market-development
• Vertical integration strategy
▫ Ex: eBay, CVS, Coach, Apple, etc.
• Horizontal integration
▫ When is this an appropriate strategy?
• Diversification
▫ Related diversification
▫ Unrelated diversification
• International
Implementing Growth Strategies
• Choosing a strategy is only part of the picture,
the strategy must also be implemented.
▫ 1) Mergers-acquisitions
▫ 2) Internal Developing
▫ 3) Strategic Partnering
 Joint Venture, Long-term Contract, Strategic
Alliance
Stability Strategy
• A strategy which an organization maintains its
current size and current activities
• Involves not growing, but also not allowing the
organization to decline
• When is stability an appropriate strategic choice?
▫ When an industry is in a period of rapid upheaval
▫ When an industry is facing slow or no growth
opportunities
▫ When an organization has experienced rapid growth
and needs “down” time
▫ When large firms are in the maturity stage of the
industry life cycle
▫ When you are a small business
Renewal Strategies
• Strategies that reverse the decline and put the
organization back on a more appropriate path to
successfully achieve its strategic goals
What leads to performance declines?
There are two renewal strategies:
• Retrenchment strategies
• Turnaround strategy
You can implement these strategies in two ways:
• Cost cutting
• Restructuring
▫ Divestment, Spin-off, Liquidation, Downsizing,
Bankrupcy
Evaluating Corporate Strategies
• How do you know it’s all working?
▫ EVALUATE
▫ Without evaluation, strategic managers wouldn’t
have a clue as to whether the implemented
strategies are working
Evaluation Techniques
• 1) Corporate goals
• 2) Efficiency, effectiveness, and productivity
measures
• 3) Benchmarking
• 4) Portfolio analysis
▫ BCG Matrix
▫ McKinsey-GE Stoplight Matrix
▫ Product-Market Evolution Matrix
Changing Corporate Strategies
• If evaluation of corporate strategies shows that
they aren’t having the intended results then
some changes are needed
▫ Ex: Microsoft
*Remember that an organization’s corporate
strategy is important to establishing the overall
direction the organization wants to go
Take-aways
• 1) Corporate strategy is concerned with what businesses to be
in and what to do with those businesses. It also establishes the
direction that the organization hopes to go.
• 2) The growth strategy expands products offered, markets
served, and activities or operations of businesses. You must
choose a growth strategy and implement it!
• 3)A stability strategy is when an organization maintains
current size and activities.
• 4) A renewal strategy reverses a decline and puts an
organization on a more appropriate path to achieve its
strategic goals.
• 5) To know that a corporate strategy is working it must be
evaluated and then changed if the evaluation shows that it
isn’t working.