Profitability is an important

goal, but a firm should also adopt goals vis-a-vis employees, suppliers, costumers, and
community. The product of these two ratios is the return on investment: profit margin
percentage and investment turnover. The formula is
Diversified firms undertake strategy formulation at two levels: corporate and business
unit.
Strategy Level Key Strategic Issues Generic Strategic Options Primary Organizational
Levels Involved
Corporate
level
Are we in the right mi of
industries!
"ingle #ndustry. $orporate office
%hat industries or
subindustries should we be
in!
&elated diversification.
'nrelated diversification.
Business unit
level
%hat should be the mission
of the business unit!
(uild.
)old.
)arvest.
Divest.
$orporate office and business
unit general manager
)ow should the business
unit compete to reali*e its
mission!
+ow cost.
Differentiation.
(usiness unit general manager
$orporate +evel "trategy
"ingle #ndustry &elated
diversification
'nrelated
diversification
Degree of &elatedness )igh ,iddle +ow
-tent of Diversification +ow ,iddle )igh
(usiness 'nit "trategies
.f the many planning models, two of the most widely used are (oston $onsulting
/roup 0($/12s two by two growth share matri and /eneral -lectric
$ompany3,c4insey 5 $ompany2s three by three industry attractiveness business
strength matri. Three tools can help in developing business unit strategies: portfolio
matri,industry structure analysis, and value chain analysis.
Profit margin percentage * Investment turnover = Return on
investment
Revenues - Expenses * Revenues = Return on
Investment
Revenues Investment
($/2s model
Cash source
High Low
High High
Market groth rate Cash !se
Low Low
High Low
"elative market share
,c4insey2s ,odel
6. Portfolio matri typically position a business unit on a grid where one ais is
7market attractiveness8 and the other ais is 7market share8. "uch matrices
are useful in deciding on the business unit mission.
#$
The Portfolio Matrix
%igh
#verage
Lo
Strong #verage &eak
'Business Strength(
B$
Recommended Business Strategies
%igh
#verage
Lo
Strong #verage &eak
9. #ndustry structure analysis is a tool to systematically assess the opportunities
and threats in the eternal marketplace. This is accomplished by analy*ing
the collective strength of five competitive forces eisting competition
buyers, suppliers, substitutes, and new entrants.
7"tar8
)old
7:uestion ,aking8
(uild
7$ash $ow8
)arvest
7Dog8
Divest
%inners %inners :uestion marks
%inners Average business +osers
Profit
Producers
+osers +osers
(uild (uild Divest
(uild )old )arvest3Divest
)old )arvest3Divest )arvest3Divest
;ew -ntrants
#ndustry
$ompetitors
"uppliers
$ostumers
"ubstituties
<. The value chain for a business is the linked set of value creating activities to
produce a product, from basic raw material sources for component suppliers
to the ultimate end use product delivered into the final consumers hands.
-ach business unit must be understood in the contet of the overall chain of
value creating activities of which it is only a part. =alue chain analysis is a
useful tool in developing competitive advantage based on low cost, or
differentiation, or preferably, cost cum differentiation.
"upport activities: >inance, )uman resources, #nformation Technology
Nama : Tika Nur
Hidayatilah
NIM : 120.100.10
Smt. : V
"ervice3
+ogistic
,arketing
and "ales
,anufac-
turing
Product
Development