Politeknik Keuangan Negara

STAN

Types of
Strategies

Materi kuliah ke 2
Long-Term
Objectives
• The results expected from
pursuing certain strategies
• 2-to-5 year timeframe

2
Varying Performance Measures by Organizational Level

3
The Desired Characteristics of Objectives

4
The Nature of Long-Term Objectives
Objectives

provide direction allow synergy

assist in establish
evaluation priorities

reduce
minimize conflicts
uncertainty

aid in both the

allocation of
stimulate exertion
resources and
the design of jobs

5
Financial versus Strategic Objectives
Financial objectives
• include growth in revenues,
• growth in earnings,
• higher dividends,
• larger profit margins,
• greater return on investment,
• higher earnings per share,
• a rising stock price,
• improved cash flow,
• and so on.
Strategic objectives
• include a larger market share,
• quicker on-time delivery than rivals,
• shorter design-to-market times than rivals,
• lower costs than rivals,
• higher product quality than rivals,
• wider geographic coverage than rivals,
• achieving technological leadership,
• consistently getting new or improved products to
market ahead of rivals,
• and so on.
6
 Managing by Extrapolation
Not Managing by
Objectives
Managing by Crisis

Managing by Subjectives

Managing by Hope

Copyright ©2017 Pearson Education, Limited 4-7

A Comprehensive Strategic-Management Model

8
Types of Strategies

Most organizations
simultaneously pursue a
No organization can afford to
combination of two or more
pursue all the strategies that
strategies, but a combination
might benefit the firm.
strategy can be exceptionally
risky if carried too far.

Difficult decisions must be

made and priorities must be
established.

9
Alternative Strategies Defined and Exemplified

10
Alternative Strategies Defined and Exemplified

11
 Click icon to add picture
Levels of Strategies
with Persons Most
Responsible

12
Integration Strategies

Forward
Integration involves gaining ownership or
increased control over distributors or
retailers

Backward
Integration
strategy of seeking ownership or
increased control of a firm's suppliers

Horizontal
Integration a strategy of seeking ownership of or
increased control over a firm's
competitors
13
Forward Integration Guidelines
When an organization's present
distributors are especially
expensive
When an organization
has both capital and
human resources to
manage distributing
their own products
When the availability of When an organization
quality distributors is competes in an
so limited as to offer a industry that is
competitive advantage growing
When present
When the advantages
distributors or retailers
of stable production
have high profit
are particularly high
margins
14
Backward Integration Guidelines

When an organization's When the number of When the When an

present suppliers are suppliers is small and organization organization has
especially expensive or the number of competes in a both capital and
unreliable competitors is large growing industry human resources

When the When an

When present
advantages of stable organization needs
suppliers have high
prices are particularly to quickly acquire a
profit margins
important needed resource

15
Horizontal Integration Guidelines

When an organization can gain

When increased
monopolistic characteristics in a When an organization economies of scale
particular area or region without competes in a growing provide major
being challenged by the federal industry competitive
government
advantages

When an organization
When competitors are
has both the capital
faltering due to a lack
and human talent
of managerial expertise
needed

16
Intensive Strategies

Market
Penetration
seeks to increase market share for present
Strategy
products or services in present markets
through greater marketing efforts

Market
Development
involves introducing present products or
services into new geographic areas

Product
Development
Strategy
seeks increased sales by improving or
modifying present products or services
17
Market Penetration Guidelines

When the market shares

When current markets
When the usage rate of of major competitors
are not saturated with a
present customers could have been declining
particular product or
be increased significantly while total industry sales
service
have been increasing

When the correlation

When increased
between dollar sales and
economies of scale
dollar marketing
provide major
expenditures historically
competitive advantages
has been high

18
Market Development Guidelines
When new channels of
distribution are available that
are reliable, inexpensive, and of
good quality
When an organization
has the needed capital
and human resources
to manage expanded
operations
When an organization When new untapped or
is very successful at unsaturated markets
what it does exist
When an organization's
When an organization
basic industry is rapidly
has excess production
becoming global in
capacity
scope
19
Product Development Guidelines

When an organization has
successful products that are in
the maturity stage of the
product life cycle
When an organization
When major
competes in an
competitors offer
industry characterized
better-quality products
by rapid technological
at comparable prices
developments

When an organization
When an organization
has strong research
competes in a high-
and development
growth industry
capabilities

20
Diversification Strategies

Related Unrelated
Diversification Diversification
• value chains • value chains
possess are so
competitively dissimilar that
valuable cross- no
business competitively
strategic fits valuable cross-
business
relationships
exist
21
Synergies of Related Diversification
Transferring competitively
valuable expertise, technological
know-how, or other capabilities
from one business to another
Exploiting common use
of a known brand name
Combining the related
activities of separate
businesses into a single
operation to achieve
lower costs
Using cross-business
collaboration to create
strengths
22
Related Diversification Guidelines

When adding new, but

When an organization When new, but related,
related, products would
competes in a no-growth or a products could be offered
slow-growth industry significantly enhance the
at highly competitive prices
sales of current products

When new, but related,

products have seasonal When an organization’s
sales levels that products are currently in When an organization has a
counterbalance an the declining stage of the strong management team
organization’s existing product’s life cycle
peaks and valleys
23
Unrelated Diversification Guidelines

When revenues derived from an
organization's current products
would increase significantly by
adding the new, unrelated
products
When an organization
When an organization's
competes in a highly
present channels of
competitive or a no-growth
distribution can be used to
industry, as indicated by
market the new products to
low industry profit margins
current customers
and returns

When the new products When an organization's

have countercyclical sales basic industry is
patterns compared to experiencing declining
present products annual sales and profits

24
Unrelated Diversification Guidelines

When an organization has

When an organization has the
capital and managerial talent
needed to compete successfully
in a new industry
the opportunity to
purchase an unrelated When there exists financial
business that is an synergy
attractive investment
opportunity

When antitrust action could

be charged against an
When existing markets for
organization that
an organization's present
historically has
products are saturated
concentrated on a single
industry
25
Defensive Strategies

Retrenchment
• Regroups through cost and asset reduction
to reverse declining sales and profits

Divestiture
• Selling a division or part of an organization
• Often used to raise capital for further
strategic acquisitions or investments

Liquidation
• Selling all of a company’s assets, in parts,
for their tangible worth
26
 occurs when an also called a
Defensive Strategies organization regroups turnaround or
through cost and asset
Retrenchment reduction to reverse reorganizational
declining sales and profits strategy

designed to fortify
an organization’s
basic distinctive
competence

27
Retrenchment Guidelines

When an organization has a
distinctive competence but has
failed consistently to meet its
goals
When an organization
When an organization
is plagued by
is one of the weaker
inefficiency, low
competitors in a given
profitability, and poor
industry
employee morale

When an organization When an organization

fails to capitalize on has grown so large so
external opportunities quickly that major
and minimize external internal reorganization
threats is needed
28
Divestiture Guidelines

When an organization has

When a division needs When a division is
pursued a retrenchment more resources to be responsible for an
strategy and failed to competitive than the organization's overall
accomplish improvements
company can provide poor performance

When a division is a When a large amount When government

misfit with the rest of of cash is needed antitrust action
an organization quickly threatens a firm

29
 selling all of a company’s
Defensive Strategies assets, in parts, for their
tangible worth
Liquidation

can be an emotionally difficult

strategy

30
Liquidation Guidelines

When an organization has

pursued both a
When an organization's
retrenchment strategy
only alternative is
and a divestiture strategy,
bankruptcy
and neither has been
successful

When the stockholders of

a firm can minimize their
losses by selling the
organization's assets

31
Porter's Five Generic Strategies

32
Michael Porter's Five
Generic Strategies
Cost Leadership emphasizes
producing standardized products
at a very low per-unit cost for
consumers who are price-
sensitive
Type 1
low-cost strategy that offers products or
services to a wide range of customers at the
lowest price available on the market
best-value strategy that offers products or
Type 2 services to a wide range of customers at the
best price-value available on the market
Differentiation is a strategy aimed at producing
products and services considered unique
Type 3 industry-wide and directed at consumers who
are relatively price-insensitive
low-cost focus strategy that offers products or
Type 4 services to a niche group of customers at the
lowest price available on the market
best-value focus strategy that offers products
Type 5 or services to a small range of customers at the
best price-value available on the market
33
 Merger/ Private-Equity
Acquisition Acquisitions

Joint
Venture/Partn
ering
Means for
Achieving First Mover
Advantages

Cooperation
Strategies
Among
Competitors

Outsourcing/
Reshoring

34
Key Reasons Why Many Mergers and
Acquisitions Fail

35
Potential Benefits of Merging With or Acquiring Another Firm

36
Benefits of a Firm Being the First Mover

37
Thank You
Bilmar Parhusip
+62 812-8698-4859
Parhusipbilmar@yahoo.com
Politeknik Keuangan Negara STAN