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MGT 350 Portfolio Project (Grand Strategy Elements (Concentrated growth…
MGT 350 Portfolio Project
Grand Strategy
Grand Strategy Elements
Concentrated growth
involves focusing resources on the profitable growth of a single product, in a single market, with a single dominant technology.
Market development
consists of marketing present products, often with only cosmetic modifications to customers in related market areas, by adding channels of distribution or changing content of advertising or promotion.
Product development
Involves substantial modification of existing products or creation of new but related products. It is based on penetrating existing markets by incorporating product modifications into existing items or developing new products connected to existing products.
Innovation
involves creating a new product life cycle, thereby making similar existing products obsolete.
Horizontal aquisition
is based on growth via acquisition of one or more similar firms operating at the same stage of the production-marketing chain. Combining firms with same product/service market. Increases operation efficiency, increases product differentiation, reduces market rivalry, increases bargaining power with suppliers
Vertical acquisition
Involves acquiring firms that supply acquiring firm with inputs (backward integration) or are customers for firm’s outputs (forward integration).Participates in multiple stages of industry's value change system.
Concentric diversification
involves acquisition of businesses related to acquiring firm in terms of technology, markets, or products.
Conglomerate diversification
involves acquisition of a business because it represents a promising investment opportunity.
Turnaround
involves a concerted effort over a period of time to fortify a firm’s distinctive competencies, returning it to profitability.
Divestiture
involves selling a firm or a major component of a firm.
Liquidation
involves selling parts of a firm, usually for its tangible asset value and not as a going concern.
Bankruptcy
includes two approaches:
Liquidation – Involves complete distribution of a firm’s assets to creditors, most of whom receive a small fraction of amount owed.
Reorganization – Involves creditors temporarily freezing their claims while a firm reorganizes and rebuilds its operations more profitably.
Joint Ventures
involves establishing a third company (child), operated for the benefit of the co-owners (parents). Cooperative agreement with foreign companies to enter foreign market. Benefits from local company's knowledge of govt. regulations, buying habits, product preferences, distribution, economies of scale.
Strategic alliances
involve creating a partnership between two or more companies that contribute skills and expertise to a cooperative project. The alliance exists for a defined period and does not involve the exchange of equity. Cooperative agreement with foreign companies to enter foreign market. Benefits from local company's knowledge of govt. regulations, buying habits, product preferences, distribution, economies of scale.
Consortia, Keiretsus, chaebols
are defined as large interlocking relationships between businesses of an industry.
Business Strategy Evaluation
Low-cost
In the cost leadership philosophy, the company strives to be the low-cost leader in the industry, as Wal-Mart spent so many years perfecting.
differentiation
In the differentiation strategy, the company chooses to be as unique as possible in its industry, such as Nordstrom’s legendarily flexible return policy.
speed-based
The third generic strategy is focus, in which a company chooses to concentrate on a particular target market. An example of this strategy is Southwest Airlines’ focus on low-cost, short-haul flights to limited destinations.
Which one is best?
Business strategy implementation
How?
Functional tactics for implementation