6 Long-Term ObjectivesVarying Performance Measures by Organizational LevelOrganizational LevelBasis for Annual Bonus/Merit PayCorporate75% on long-term objectives 25% on annual objectivesDivision/Business50% on long-term objectives 50% on annual objectivesFunction25% on long-term objectives 75% on annual objectives
11 Types of Strategies A Large Company Corp Level Division Level Functional LevelOperational Level
12 Financial vs. Strategic Objectives Financial ObjectivesGrowth in revenuesGrowth in earningsHigher dividendsHigher profit marginsHigher Earnings per shareImproved cash flow
13 The Balanced Scorecard Robert Kaplan & David Norton --Strategy evaluation & control techniqueBalance financial measures with non-financial measuresBalance shareholder objectives with customer & operational objectivesการเงิน-ไม่ใช่การเงินภายใน-ภายนอกอดีต-อนาคต
17 มุมมองของ Balanced Scorecard Financial“To succeed financially, how shouldwe appear to our shareholders?”LOOK BACKCustomer“To achieve our vision,how should we appear toour customers?”VisionandStrategyInternal Business Process“To satisfy our shareholders &customers, what businessprocesses must we excel at?”LOOK INSIDE OUTLOOK OUTSIDE INInnovation & Learning“To achieve our vision,how will we sustain ourability to change & improve?”LOOK AHEAD
18 ทฤษฎี Z “ทำเรื่องให้ง่ายสำหรับทีมงานของเรา” การเงิน & ธุรกิจFinancialลูกค้าCustomerกระบวนการภายในInternal Business Processการพัฒนาและการเรียนรู้Innovation & Learning
24 2003 Examples Forward Integration Backward Integration Doll maker & mail order firm, Pleasant Co., opened a retail store in ManhattanBackward IntegrationMcDonalds recently acquired a paper cup producerHorizontal IntegrationCallaway Golf recently acquired Top-Flite Golf Company
27 Types of Strategies Market Penetration Market Development Intensive StrategiesMarket DevelopmentProduct Development
28 2003 Examples Market Penetration Market Development SABMiller Plc spent $500 million in 2003 on marketing its Miller brands of beerMarket DevelopmentJetBlue is adding dozens of new routesProduct DevelopmentGM developing hydrogen powered automobiles or Pfizer developing a new antismoking pill
29 Types of Strategies Concentric Diversification Diversification StrategiesConglomerate DiversificationHorizontal Diversification
30 2003 Examples Concentric Diversification Conglomerate Diversification Microsoft launched its first personal computers that double as entertainment centersConglomerate DiversificationThe video-rental firm Blockbuster may acquire the DVD and music direct-marketing firm Columbia HouseHorizontal DiversificationViacom acquired Comedy Central, from AOL
33 Types of Strategies Retrenchment Divestiture Liquidation Defensive StrategiesDivestitureLiquidation
34 2003 Examples Retrenchment Divestiture Liquidation America West Airlines closing its hub at Columbus, Ohio and laying off 390 employeesDivestitureConocoPhillips recently sold its Circle K convenience store chain to Alimentation Couche-Tard, a Canadian firmLiquidationSprint liquidated its Web-hosting division
35 Grand Strategy Growth/expansion strategy Stable strategy Retrenchment strategyCombine strategy
36 Strategies Grand strategy – Corporate Generic strategy -- Business Strategies -- FunctionMarketingProductionFinanceHR
37 Formulating Corporate-Level Strategies Concentration in Single BusinessCan become a strong competitor, but can be risky.DiversificationRelated diversification into similar market areas to build upon existing competencies.Synergy: two divisions working together perform better than the sum of their individual performances.Unrelated diversification is entry into industries unrelated to current business.Attempts to build a portfolio of unrelated firms to reduce risk of single industry; difficulty to manage.
38 International Expansion Basic Question:To what extent do we customize products and marketing for different national conditions?Global strategySelling the same standardized product and using the same basic marketing approach in all countries.Standardization provides for lower production cost.Ignores national differences that local competitors can address to their advantage.
39 International Expansion (cont’d) Mulitdomestic StrategyCustomizing products and marketing strategies to specific national conditions.Helps gain local market share.Raises production costs.
40 Vertical Integration Vertical Integration A strategy that allows an organization to create value by producing its own inputs or distributing its own products.Backward vertical integration occurs when a firm seeks to reduce its input costs by producing its own inputs.Forward vertical integration occurs when a firm distributes its outputs or products to lower distribution costs and ensure the quality service to customers.A fully integrated firm faces the risk of bearing the full costs of an industry-wide slowdown.
42 Formulating Business-Level Strategies Low-Cost StrategyDriving the organization’s total costs down below the total costs of rivals.Manufacturing at lower costs, reducing waste.Lower costs than competition means that the low cost producer can sell for less and still be profitable.DifferentiationOffering products different from those of competitors.Differentiation must be valued by the customer in order for a producer to charge more for a product.
43 Michael Porter’s Generic Strategies mass market / niche marketCost LeadershipDifferentiationFocus
45 Formulating Business-Level Strategies “Stuck in the Middle”Attempting to simultaneously pursue both a low cost strategy and a differentiation strategy.Difficult to achieve low cost with the added costs of differentiation.Focused Low-CostServing only one market segment and being the lowest-cost organization serving that segment.Focused DifferentiationServing only one market segment as the most differentiated organization serving that segment.
46 Functional-level Strategies A plan that indicates how a function intends to achieve its goalsSeeks to have each department add value to a good or service. Marketing, service, and production functions can all add value to a good or service through:Lowering the costs of providing the value in products.Adding new value to the product by differentiating.Functional strategies must fit with business level strategies.