INTERNATIONAL STRATEGIC MANAGEMENTPROFESSOR: TATIANA VELEZ ANGEL

TYPES OF STRATEGIES

Vertical Integration Strategies Forward IntegrationBackward Integration TYPES OF STRATEGIES

FORWARD INTEGRATION

Control of the direct distribution of its products

BACKWARD INTEGRATION

Control of the suppliers

Intensive Strategies Market PenetrationMarket DevelopmentProduct Development TYPES OF STRATEGIES

MARKET PENETRATION

Deals with enhancing the share of market by effective and innovative strategies in order to make the present product more effective and attractive.

MARKET DEVELOPMENT

Deals with adding products in different geographic areas.

PRODUCT DEVELOPMENT

Deals with increasing the sales as well as revenues by enhancing the quality of existing products.

The quality of existing products can be easily enhanced by adding different flavors in it.

Diversification Strategies Concentric DiversificationConglomerate DiversificationHorizontal Diversification TYPES OF STRATEGIES

DIVERSIFICATION STRATEGIESWhy Firms Diversify:

To growTo more fully utilize existing resources and capabilities.To escape from undesirable or unattractive industry environments.To make use of surplus cash flows.

CONCENTRIC

A company acquires or develops new products or services (closely related to its core business or technology) to enter one or more new markets.

Adding related or similar product/service lines to existing core business, either through acquisition of competitors or through internal development of new products/services. HORIZONTAL

Firms pursue this strategy for several reasons:

Continue to grow after a core business has matured or started to decline.To reduce cyclical fluctuations in sales revenues and cash flows.

CONGLOMERATE

CRUCIAL ROLE OF MANAGERS Successful diversification strategies result from the ability of managers to develop skill and competency at MANAGING diversification.

Managers must develop two important types of mental models:Must have well-developed understandings of their firms diversity and relatedness that define their companies.Must also have well-developed beliefs about how diversification should be managed in order to achieve synergies.

The Learning HypothesisManagers learn from trial and error.They evaluate success of past strategic decisions.These acquired beliefs become embedded in an organizations routine operating procedures.Usually difficult for rivals to imitate.By engaging in a number of acquisitions over time, managers can come to develop an expertise about how the acquisition process should be managed. CRUCIAL ROLE OF MANAGERS

Those firms with management teams that have more experience at managing diversification will enjoy higher performance than those firms that do not have that experience.Evidence suggests that firms stock market performance is directly related to diversification experience (see exhibit on following slide). CRUCIAL ROLE OF MANAGERS

Defensive Strategies RetrenchmentDivestitureLiquidation TYPES OF STRATEGIES

RETRENCHMENTA corporate-level strategy.Seeks to reduce the size or diversity of an organization's operations. Reduction of expenditures in order to become financially stable.Retrenchment is a pullback or a withdrawal from offering some current products or serving some markets.

DIVESTITURESelling a division or part of an organization.

Used to raise capital for further strategic acquisitions or investments.

When firms try to focus on their core strengths, lessening their level of diversification.

LIQUIDATIONSelling all of a companys assets, in parts, for their tangible worth Recognition of defeat.

Cease operating than to continue losing large sums of money

SOURCESAll of the information which is on these slides was taken from:

http://www.businessdictionary.com/definition/concentric-diversification.html#ixzz1lYJMhiI

www2.gsu.edu/~wwwsmg/BA8993week10.ppt

http://www.mba-tutorials.com/strategy/1112-intensive-strategies.html

http://www.investopedia.com/terms/f/forwardintegration.asp#ixzz1lYfXLCay

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