ORGANIZATION STRATEGY
Muchammad Asy’ari Mashbur Nasran-125020305111002
Ahmad Teguh Perkasa-1250203021110
Dickxie Audiyanto-125020305111001
Outline
1. Level of Organization Strategy
2. Identifying Current Corporate Strategy
3. Corporate Strategy Analysis
-Techniques for the Analysis of Strategy
-The BCG Growth-Share Matrix
-The GE Business Portfolio Matrix
4. Business Strategy Analysis
-Generic Business Strategies
-Strategies for Dominant Firms
-Strategies for Low Market-Share Firms
-Strategies for Firms in Stagnant Industries
--Product Life Cycle
5. Functional Strategy Analysis
6. Choosing an Organization Strategy
-Internal Consideration
-External Consideration
7. Closing
Review of Previous Presentations
A Model of the Strategic Management
Assesment of
SWOT
Formulation of
Organization
Mission
Formulation of
Organization
Philosophy
and Policies
Determination
of Strategic
Objectives
Determination
of
Organization
Strategy
Implementation
of Organization
Strategy
Control of
Organization
Strategy
(Ch. 2)
(Ch. 3)
(Ch. 3)
(Ch. 3)
(Ch. 3 & 4)
(Ch. 5)
(Ch. 5)
Feedback, Feedforward, and Recycle
OUTLINE 1:
Level of Organization
Strategy
Levels of Organization Strategy
Four levels in Organization Strategy:
Societal Strategy
Corporate Strategy
Business Strategy
Functional Strategies
What is Societal Strategy?
Societal Strategy is concerned with the
relationships between an organization
and its external environment, as well as
the board issues of corporate citizenship,
social responsibility and accountability,
and business ethics. It is formulated by
the board of direction.
What is Corporate Strategy?
Corporate Strategy is TOP
MANAGEMENT’S grand design for
managing the whole organization. The
aim of corporate strategy is to manage
the company’s current and future
portfolio of businesses to effect the
fulfillment of the company’s strategic
objectives.
What is Business Strategy?
The Focus of Business Strategy is on
“how to compete in a particular industry
or product/market segment”. Business
Strategy is to provide the firm with the
competitive approach that enables it to
achieve its business objectives.
What is Functional Strategy?
Functional Strategy is concerned with the
development of strategies in each the
functional areas within a business, for
example: production, marketing, finance,
and research and development
Hierarchial Strategy Interrelationship
Societal Objective
Societal Strategy
Corporate Objective
Corporate Strategy
Business Objective
Business Strategy
Functional Objective
Functional Strategy
OUTLINE 2:
Identifying Current Corporate
Strategy
Identifying Current Corporate Strategy
It is important to identify the current
corporate strategy of single or multi
business enterprise. It is involved the
evaluation of the current business and
making decision about which business
deserves greater or fewer resources in the
future.
The Spokes of Corporate Strategy
Organization’s attitude towards risk
obtained from liquidity and debt ratios
Strategic objectives of the
organization: growth, profitability,
financial
Role assigned to each business in the
total business portfolio: growth,
stability, retrenchment
Number of different business in the
portfolio
Products and targeted market
segments of each business
Relative sizes of different business
Types of strategic advantages (if any)
in various business
Current
Corporate
Strategy
Business acquired and why
Profitability prospect of each business
Market share each business
Growth rate of each business
Business divested or liquidated and
why
Vertical/horizontal integration
consummated
Nature of diversification: concentric.
conglomerate
Degree of diversification
Criteria used for allocating investment
funds to various business
OUTLINE 3:
Corporate Strategy Analysis
Techniques for the Analysis of Strategy
The BCG Growth-Share Matrix
The GE Business Portfolio Matrix
Corporate Strategy Analysis
An effective corporate strategy gives the firm
balanced portfolio of business that enables it
to achieve its strategic objectives, especially
those in the areas of profitability, growth,
and financial performance. Corporate
strategy must decide where to allocate the
organization’s resources among the existing
business in its portfolio or to enter new
business. Corporate Strategy Analysis are
meant to help the corporate strategist
obtain such business portfolio
Techniques for the Analysis of
Corporate Strategy
Portfolio analysis is the predominant
approach of corporate strategy analysis in
diversified firms.
-The Boston Consulting Group (BCG)
Growth-Share Matrix
-The General Electric (GE) Business
Portfolio Matrix
The Boston Consulting Group
(BCG) Growth-Share Matrix
In 1968, BCG created the BCG "GrowthShare Matrix", a simple chart to assist the
company in determining how to allocate
cash among their business units.
BCG matrix is a set of strategies to
provide guidance on resource allocation
decisions based on market share and
growth.
The BCG Growth-Share Matrix
High
Busines
Growth
rate
(percent)
10%
STARS
QUESTION MARK
CASH COWS
DOGS
Low
High
1,0
Relative Market Share
Low
The BCG Growth-Share Matrix
High
Busines
Growth
rate
(percent)
QUESTION MARK
STARS
10%
CASH COWS
DOGS
Low
High
1,0
Relative Market
Share
Low
STARS
A “STARS” is a business that
is growing rapidly and has
high market-share. When the
growth rate of business
slows, as it does in al
business, the stars drop into
“COW CASH” category. And
also, it may slip into “DOG”
category
The BCG Growth-Share Matrix
High
Busines
Growth
rate
(percent)
STARS
QUESTION MARK
CASH COW
DOGS
A “CASH COW” business
has high market-share
position, but it is in lowgrowth business.
10%
CASH COWS
Low
High
1,0
Relative Market
Share
Low
The BCG Growth-Share Matrix
High
Busines
Growth
rate
(percent)
STARS
QUESTION MARK
QUESTION
MARK
A “QUESTION MARK”
businesses are high-growth
businesses, but with a low
market-share. Their low
share often means low profits
and weak cash flows from
operation.
10%
CASH COWS
DOGS
Low
High
1,0
Relative Market
Share
Low
The BCG Growth-Share Matrix
High
Busines
Growth
rate
(percent)
STARS
QUESTION MARK
A “DOG” business have low
growth rate and low marketshare. Their poor competitive
position puts them in a poor
profitability situation.
10%
CASH COWS
DOGS
Low
High
1,0
Relative Market
Share
DOGS
Low
The Basic Postulate of the BCG
Growth-Share Matrix
BCG recommends that a company’s business
portfolio should be balanced, that is, there
should be enough cash cow business to
support the star. Furthermore, there should be
an ample of number of stars because they will
eventually turn into cash cow.
Limitations of the BCG Matrix
-The High-low classification system does not give enough
attention to businesses in an intermediate position, in other
words, not all business fall neatly within one cell
-The two factor comparisons do not give explicit
considerations to other important strategic factor, such as
strategic fit across product, competitive advantage, and the
like.
-Growth rate and market-share factor are not always good
indicator of cash flow, profitability, and business
attractiveness.
-The matrix is not helpful in comparing relative
opportunities across business, for example, is a star always
better than cash cow?
The GE Business Portfolio Matrix
The GE business portfolio matrix consist of
nine cells with long-term product/market
attractiveness on one axis and business
strength /competitive position on the other
axis




Green = invest and grow
Yellow = selective
investment
Red = harvest /divest
Orange = situational
investment
The GE Business Portfolio position
INVEST and GROW
A business that fall within
the boundaries of those
cells that call for an invest
and grow strategy is
expected to grow and have
considerable profit potential
SELECTIVE INVESTMENT
A business is that qualifies for a
selective investment strategy
receives investments in order to
maximize the returns nits exiting
assets, resources, and skill
HARVEST or DIVEST
A business that falls in this
group is a loser .it should be
harvested by selling idle
equipment lightening up
spending ,cutting cost,
aggressively reducing
working capital, and
investing proceeds in more
promising areas.
Situational
investment
The level of
investment in a
business that falls in
this category is based
on the judgment and
experience of the
manager who make
this decision.
OUTLINE 4:
Business Strategy Analysis
Business Strategy Analysis
As stated earlier ,the focus of business
strategy is how the firm should compete in
a particular industry or product/market
segment to obtain a strategic advantage
over the competition. porter has identified
three generic strategy approach to obtain a
competitive advantage designed to
outperform competitors.
Generic Business Strategies
Overall cost leadership
A low cost position yields above average
returns in the industry in spite
competition. Strategy to obtain cost
leadership involves construction of
efficient scale facilities.
Differentiation
This strategy focuses on creating a
product or service perceived by the
customer as unique. The idea is to attract
the customer and increase sales volume
.differentiation can make many forms
Focus
This strategy involves focusing the firms
attention on particular buyer group,
segment of the product line, or graphic
area.
Several authors have recommended specific
business strategies for firm in specific
situation
1. Strategies for dominant firms.
2. Strategies for low market share firms.
3. Strategies for firms in stagnant industries.
4. Stratgies contingent on competitive strenght
and product life cycle stage.
Strategies for dominant firms.
A firm with dominant position in the
industry is concerned mainly about
maintaining or improving its position in
the industry Philip Kotler suggest the
following for dominant firms:
 Be on the offensive
 Fortify against enemy
 Confrontation
Strategies for Low Market Share
Firms







Companies with low market-share position are
most concerned aboout improving their
competitive position and market standing.
Segment Markets
Efficient use of R&D
Think Small
The Vacant Niche
“Our is better than their”
Distinctive image
Channel innovation
Strategies for Firms in Stagnant
Industry
Hamermesh and Silk suggest that successful
firms in stagnant industries do the following:
 Identify,create, and exploit the growth segment
in the industry
 Emphasize
 Systematically and constantly improve
efficiency of production and distribution system
Situational Business Strategies
Dominant
Positition
Low Market value
position
• Be on the offensive
fortify againts the
enemy
confrontation
• Segment markets
efficient use of
R&D
• think small
• fill the vacant niche
• "Ours is Better than
theirs"
• channel Innovation
Stagnant Industry
• Lowest delivered cost
position
• Product/ service quality
differentation
• Identity and exploit
growth segments
• Emphasize product
quality and innovation
• constantly improve
production and
distribution efficiency
Strategy Contingencies: Competitive
strenght and product life cycle stage
Patel and Younger have developed a
contingency model that proposes strategies
contingent on the position of the business or
product in its life cycle and the competitive
position of the firm.
Strategy, Product Life Cycle, and
Competitive position
OUTLINE 5:
Functional Strategy
Functional Strategy Analysis
Analysis of fuctional strategy focuses on
the evaluation and selection of strategies
in areas such as Finance, Production,
R&D, marketing, personnel, industrial,
and labor relations,goverment affairs, and
public relations.
OUTLINE 6:
Choosing an Organization
Strategy
Choosing An Organization Strategy
There were several questions about consideration
performed in selecting strategies in this functional level
be it internal or external considerations consideration.
The question is one of the clues to choose the right
strategy for implementation. When these questions give
a negative response does not mean that the company
chose the wrong strategy to be implemented, there may
be no strategy that can be found for each of these
questions. Internal considerations reflect the strengths
and weaknesses of the company, while the external
considerations reflect the opportunities and threats that
are likely to be obtained by the company.
Internal Consideration






Does the Strategy effectively utilize the financial , human,
and physical resources of the company?
Is the strategy consistent with the strategic objectives?
Is the strategy consistent with the personel value of the
managers and employess of the company?
Is there a direct relationship between the market expectation
resulting from the strategy and the internal capabilities of the
company?
Does the strategy provide sufficient flexibility to change or
alter it if it proves inappropriate?
Is the company capable of the planning and development
required from the strategy, for example, is the strategy
consitent with managerial abilities?
External Consideration







Does the strategy lead to a market niche or niches now by unfilled
by others?
Does the strategy improve competitive conditions for current
market or product lines?
Is the minimum attainable market sufficient to produce the
minimum return of investment?
Does the Strategy utilize or take advantage of existing market and
product strenght?
Does the strategy include product and market outside the current
sphere of product and markets so that the risk of threats is spread?
Does the strategy fit within the legal and political framework so that
the success of the strategy will not raise legal or political questions?
Will the strategy be perceived by society as a responsible and
ethical ones?
OUTLINE 7:
Closing
Summary
The focus of this chapter is on corporate and
business strategy.
 Corporate strategy is top management’s grand
design for the total organization.
 There are three generic business strategies:
overall cost leadership,differentation, and focus.
 The key to getting a strategic advantage in the
market is to adapt the generic business strategies
to the situations of the industry and the firm’s
position.
