Types of strategy
- 1. PRESTIGE INSTITUTE OF MANAGEMENT AND REASEARCH 1 “ TYPES OF STRATEGIES” “STRATEGIC PLANNING PROCESS” “TOWS MATRIX” “PORFOLIO ANALYSIS” SUBMITTED BY: AYUSH YADAV MBA(FA) BATCH 2013-15 Sch .No 1121806727
- 2. INDEX TYPES OF STRATEGIES STRATEGIC PLANNING PROCESS TOWS MATRIX PORFOLIO ANALYSIS 2
- 3. TYPES OF STRATEGIES Vertical integration. Intensive. Diversification. Defensive . 3
- 4. VERTICAL INTEGRATION STRATEGIES When a company expands its business into areas that are at different points on the same production path, such as when a manufacturer owns its supplier and/or distributor. Vertical integration can help companies reduce costs and improve efficiency by decreasing transportation expenses and reducing turnaround time, among other advantages. Backward and forward integration are types of vertical integration. 4
- 5. VERTICAL INTEGRATION STRATEGIES “Forward integration is a strategy where a firm gains ownership or increased control over its previous customers (distributors or retailers).” Backward integration is a strategy where a firm gains ownership or increased control over its previous suppliers.” 5
- 6. VERTICAL INTEGRATION STRATEGIES 6 Forward Integration Backward Integration Balance Integration
- 8. INTENSIVE STRATEGIES Market penetration:- Seeking increase the market share for present product in present market. Market development:- Introducing a current product in a new market area. Product development:- Seeking increased in sales by improving or modifying present product. 8
- 9. DIVERSIFICATION STRATEGIES Diversification is a corporate strategy to increase sales volume from new products and new markets. The other three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques and new facilities. 9
- 10. DIVERSIFICATION STRATEGIES (TYPES) Concentric diversification:- Adding new, but related product. E.g. Owner of Sugar Factory Started Producing Paper and Wine from Wastage which he use to throw First. With main product Sugar. Conglomerate diversification :- Adding new, unrelated product or services. E.g. If you were manufacturing clothes and then you move to food industries is a good example of unrelated diversification. 10
- 11. DIVERSIFICATION STRATEGIES (TYPES) Horizontal diversification:- Adding new unrelated product with a present customers. E.g. An example of horizontal diversification would be when a company that is well known for making winter clothing decides to start investing money into manufacturing summer clothing. 11
- 12. DEFENSIVE STRATEGIES 12 Defensive strategies Retrenchment Divestiture Liquidation
- 13. RETRENCHMENT Retrenchment :- corporate level strategies. Seeks to reduced the size or diversity of organizations operation. Reduction in expenditure in order to become financial stable. 13
- 14. DIVESTITURE Selling a division or part of organization. Used to raised capital for further strategies acquisition or investment. When firm try to focus on their core strength lessening their level of diversification. 14
- 15. LIQUIDATION Selling all companies assets. Recognizing of defeat. Cease operation than to continue loosing large sum of money. 15
- 16. STRATEGIC PLANNING PROCESS Mission Objectives Situation Analysis Strategy Formulation Implementation Control 16
- 17. MISSION A company’s mission is its reason for being. The mission often is expressed in the form of a mission statement, which conveys a sense of purpose to employees and projects a company image to customers. 17
- 18. OBJECTIVES Objectives are concrete goals that the organization seeks to reach. The objectives should be challenging but achievable. They also should be measurable so that the company can monitor its progress and make corrections as needed. 18
- 19. SITUATION ANALYSIS Situation Analysis refers to a collection of methods that manager use to analyze an organization internal or external environment to understand the organization capabilities and business environment. S.A. consists 5cs Methods- Company Competitors Customers Collaborators Climate 19
- 20. STRATEGY FORMULATION • Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be developed. • While different company’s have different alternatives depending on their situation, there also exist generic strategies that can be applied across a wide range of firms. 20
- 21. IMPLEMENTATION The selected strategy is implemented by means of programs, budgets, policies and procedures. Implementation involves organization of the firm’s resources and motivation of the staff to achieve objectives. 21
- 22. CONTROL Once implemented, the results of the strategy need to be measured and evaluated, with changes made as required to keep the plan on track. Standards of performance are set, the actual performance measured and appropriate action taken to ensure success. 22
- 23. Mission Objectives Situation Analysis Strategy Formulation Implementation Control 23
- 24. INTRODUCTION SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. 24
- 25. SWOT SWOT stands for STRENGTH WEAKNESSES OPPORTUNITY THREATS 25
- 26. STRENGTHS They are resources and capabilities that can be used as a basis to develop a competitive advantage. E.g. : - An access to proprietary know-how Patents 26
- 27. WEAKNESS Absence of certain strengths or the flip side of the strength E.g. : A poor reputation High Cost structure 27
- 28. OPPORTUNITIES The external environment may reveal certain opportunities for growth and development. • E.g. : Loosening of regulations. Removal of international trade barriers 28
- 29. THREATS Changes in external environment may present certain threats E.g. Shift in consumer taste Emergence of substitute product New regulations Increased trade barries 29
- 30. 30
- 31. 31
- 32. S-O strategies pursue opportunities that fit well the company's strengths. W-O strategies overcome weaknesses to pursue opportunities. S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. W-T strategies make a defensive plan to prevent the firm's weaknesses from making it susceptible to external threats. 32
- 34. TYPES OF PORTFOLIO ANALYSIS 1. The BCG (Boston Consulting Group) Growth Share Matrix 2. The GE (General Electric) Business screen 34
- 35. THE BOSTON CONSULTING GROUP’S GROWTH-SHARE MATRIX 35 20%- 18%- 16%- 14%- 12%- 10%- 8%- 6%- 4%- 2%- 0 Market Growth Rate 10x 4x 2x 1.5x 1x Question marks 3 ? ? 2 Dogs 8 .5x .4x .3x .2x .1x 7 Relative Market Share 1 Cash cows 6 Stars 5 4
- 36. STAR STRATEGIES A business unit in the star category enjoys a relatively high market share in a rapidly growing market. Stars generate large amount of cash. 36
- 37. QUESTION MARKS A business unit in the question-mark category has a relatively low market share and high-growth rate .since they are growing rapidly. They consume large amount of cash . 37
- 38. CASH COW The cash cows are leaders in a mature market where there is little additional growth, but a lot of stability. The have a relatively high market share which is growing slowly 38
- 39. DOGS Dogs have low market share and low growth rate. A dog is a moderate user and supplier of cash. A dog does not need much investment but it blocks capital that could be invested in industries with better returns. 39
- 40. Q &A 40