Modern Strategic Analysis презентация

Modern Strategic Analysis Dr. Prof. Aleksandr Kozlov 2016/17 academic year Fall semester

Theme 2. Strategy definition, strategy pyramid. Corporate strategy. Dr. Prof. Aleksandr Kozlov 27/09/2016

Strategy definition (1) „..the determination of the long-run goals and objectives of an enterprise and the adoption of courses of action and the allocation of resource necessary for carrying out these goals‟ Alfred Chandler „Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value‟ Michael Porter Sources: A.D. Chandler, Strategy and Structure: Chapters in the History of American Enterprise, MIT Press, 1963, p. 13 M.E. Porter, „What is strategy?‟, Harvard Business Review, 1996, November–December, p. 60

Strategy definition (2) STRATEGY is the direction an organization takes with the objective of achieving business success in the long term.

Strategy pyramid

Corporate strategy Corporate strategy is a proprietary set of actions that enables a company to be successful in its multimarket activities in the long term. The process of corporate strategy formulation includes setting priorities for development of company’s business units operating in a different markets and decision making about investment, keeping the status quo or withdrawal

Corporate strategy For corporate strategy the fundamental task is to develop a balanced portfolio of businesses which will achieve the goals of the corporation and satisfy its stakeholders.

Corporate Strategy. Tools for analysis of Strategic Business Unit (SBU) Boston Consulting Group matrix General Electric matrix

Corporate Strategy. Boston Consulting Group matrix

Cash Cows These units generate cash in excess of the amount of cash needed to maintain the business. Typically belonging to a "mature" market, and every corporation would be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

Dogs Low market share in a mature, slow-growing industry. From an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return of assets ratio. They should be sold off.

Question marks They are a starting point for most businesses. Question marks have a potential to gain market share and become stars, and eventually cash cows when market growth slows. If question marks do not succeed in becoming a market leader, they will degenerate into dogs when market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

Stars Stars are successful question marks and become a market leader in a high growth sector. . Require high funding to fight competitions and maintain a growth rate. When growth slows, if they have been able to maintain their category leadership stars become cash cows, else they become dogs due to low relative market share.

Tools for analysis of Strategic Business Unit (SBU) General Electric matrix

Business Strength Characteristics

Business Attractiveness Characteristics

General Electric matrix

General Electric matrix

General Electric matrix

Shortcomings of the GE matrix