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environmental
4. Liquidation
opportunities
2. Vertical integration 2. Horizontal integration 2. Divestment
of related businesses 3. Strategic alliances
Many
Specialty
Shop 3. Mergers
Supermarket
Group 4. Horizontal
Group diversification
StateoftheExternalEnvironment
Weak
Competitive Drug Cell B Cell E Cell H
Position Store
Strong 1. Vertical integration 1. Stability 1. Turnaround
environmental
Group
opportunities
Competitive
andthreats
Moderate
of related businesses 2. Mergers 2. Divestment
Position
2. Horizontal related 3. Horizontal integration
diversification 4. Strategic alliances
1. Turnaround or 1. Concentric 5. Divestment
retrenchment diversification
2. Concentric 2. Conglomerate
diversification diversification
3. Joint ventures
Cell C Cell F Cell I
3. Conglomerate
diversification 1. Liquidation
1. Horizontal-related 1. Divestment
4. Divestiture
5. Liquidation diversification 2. Horizontal-related
environmental
2. Horizontal-unrelated diversification
Critical
threats
diversification 3. Horizontal-unrelated
Slow Market Growth (conglomerate) diversification
3. Vertical integration of 4. Stability
Source: John A. Pearce & Richard B. Robinson, Strategic Management,
Homewood, Illinois: Irwin, Inc., 1982 p. 210.
unrelated businesses
4. Divestment
Fig. 5, Feasible Corporate Generic Strategies
CHOOSE THE SPECIFIC CORPORATE-LEVEL
STRATEGY (PORTFOLIO OF BUSINESS UNITS)
1. Specific Corporate-Level Strategy Fig. 5.5, SWOT Portfolio Framework
answers the question: “What businesses
should we be in?” STRATEGIC FIT ANALYSIS
2. For each generic strategy, decide the business, if Market size Cyclicality 1. Does each business fit with other businesses in
any, that you wish to add to or subtract from your and growth rate of demand the portfolio? Compare the value analysis
portfolio. For example, if you were a Industry profit margins Financial norms
Competitive intensity Economies of scale chains of each.
manufacturer of golf carts and decided to follow Bargaining power of Barriers to entry 2. Does each business fit the strategic direction of
a concentric diversification strategy, you might customers and supplier Capital intensity the total company? Does each business
select the purchase of a power lawn mower contribute heavily to corporate financial
company to add to your portfolio. Invest aggressively performance?
3. When you have reviewed all your feasible generic
strategies and made such decisions, the Invest selectively
companies remaining represent your portfolio Harvest or divest Competitive
and set the direction for the total company. Position
Industry Attractiveness
Using SWOT (Strength, Weaknesses,
Opportunities, Threats) to derive generic High Medium Low Strong Average Weak
corporate strategies (P. Wright, M. J. Kroll,
and J. Parnell) Business
Low
Strength Development
SWOT analysis ties together strengths, weaknesses,
opportunities, and threats vs. competitive position.
Place each SBU in a cell, giving recommended
Medium
business-level strategy.
ISBN-13: 978-142320707-8
3. Each functional manager prepares his/her STRATEGY
ISBN-10: 142320707-6
component of the total business strategy, EVALUATION
showing major additions and programs for FOUNDATION FOR
the next five years. STRATEGY EVALUATION
4. The General Manager then directs the Foundation for Evaluation of Strategy
reconciliation of all functional programs and
The basis for evaluation is to compare strategy with
free downloads &
budgets, as indicated in Fig. 8 (this page, at right). hundreds of titles at
quantitative or qualitative criteria. In addition, strategy quickstudy.com
IMPLEMENTING may be evaluated at different stages.
Quantitative Criteria
THE STRATEGY 1. Overall financial performance, such as ROI, ROE,
Customer Hotline # 1.800.230.9522
IMPLEMENTING WITH STRUCTURE profit margin, market share, earnings per share.
2. Time of implantation vs. planned time.
Implementing strategy is the conversion of concepts 3. Increase in productivity, quality, number of
into action and results. It is the total and detailed employees, etc.
activities to fulfill the strategy and achieve the long- Qualitative Criteria (from S. Tilles *)
term objectives. The first part consists of: 1. Is the strategy internally consistent?
4