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Ch. 5-1
Strategic ManagementConcepts & Cases
8thedition
Fred R. DavidChapter 5:
Looking at Strategies in
Action(Continuation)
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Ch. 5-2
Strategies in ActionStrategies in Action
Means of Achieving StrategiesMeans of Achieving Strategies
Joint Venture/Partnering
Merger/AcquisitionOutsourcing
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Ch. 5-3
Strategies in ActionStrategies in Action
DefinedDefined
Two or morecompanies form a
temporary partnershipor consortium for thepurpose of capitalizingsome opportunity
ExampleExample
Property giant Ayala Land Inc.has formed a joint venture with
ACC (El Nido resort) for thedevelopment of eco-friendlyresorts in Northern Palawan.
Joint Venture/Joint Venture/PartneringPartnering
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Ch. 5-4
Strategies in ActionStrategies in Action
To improveTo improvecommunicationscommunicationsand networkingand networking
To globalizeTo globalize
operationsoperations
To minimize riskTo minimize risk
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Ch. 5-5
Opportunity
Opportunity
Too complexToo complex uneconomicaluneconomical
Risky for a singleRisky for a single
firm to pursuefirm to pursuealonealone
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Ch. 5-6
Strategies in ActionStrategies in Action
RetrenchmentRetrenchment MarketMarketDevelopmentDevelopment
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Ch. 5-7
Strategies in ActionStrategies in Action
Common Problems that cause JV to failCommon Problems that cause JV to fail
Managers who must collaborate daily in operatingthe venture are not involved in forming or shaping
the venture. The venture may benefit the partnering companies
but may not benefit customers.
The venture may not be supported equally by bothpartners.
The venture may begin to compete more with one ofthe partners than the others.
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Ch. 5-8
Strategies in ActionStrategies in Action
Guidelines for Joint VentureGuidelines for Joint Venture
Combination of privately held and publicly held canbe synergistically combined
Domestic forms joint venture with foreign firm, canobtain local management to reduce certain risks
Distinctive competencies of two or more firms arecomplementary
Overwhelming resources and risks where project ispotentially very profitable (e.g., Alaska pipeline)
Two or more smaller firms have trouble competingwith larger firm
A need exists to introduce a new technology quickly
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Ch. 5-9
Strategies in ActionStrategies in Action
DefinedDefined
Two organizations ofabout equal size unite
to form one enterprise A large organization
purchases a smallerfirm, or vice versa
Philip Morris International
announced that it has merged
with Fortune Tobacco
Corporation to form a newcompany called PMFTC that
will control 90 percent of the
Philippines tobacco market
Merger/Merger/AcquisitionAcquisition
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Ch. 5-10
Strategies in ActionStrategies in Action
Takeover orTakeover orHostileHostileTakeoverTakeover
Friendly MergerFriendly Merger
Merger/Merger/AcquisitionAcquisition
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Ch. 5-11
Strategies in ActionStrategies in Action
Reasons why mergers and acquisitions failReasons why mergers and acquisitions fail
Integration difficulties
Inadequate evaluation of target
Large or extraordinary debt
Inability to achieve synergy
Too much diversification
Managers overly focused on acquisitions Difficult to integrate different organizational cultures
Reduced employee morale due to layoffs andrelocations
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Ch. 5-12
Strategies in ActionStrategies in Action
Reasons for mergers and acquisitionsReasons for mergers and acquisitions
To provide improved capacity utilization
To make better use of the existing sales force
To reduce managerial staff
To gain economies of scale
To smooth out seasonal trends in sales
To gain access to new suppliers, distributors,customers, products and creditors
To gain new technology
To reduce tax obligations
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Ch. 5-13
Strategies in ActionStrategies in Action
DefinedDefined
Benefits a firmmay achieve byentering a newmarket ordeveloping a newproduct or servicesprior to rival firms
First MoverFirst MoverAdvantageAdvantage
1. Build a firms imageand reputation
2. Prod uce costadvantages
3. Create strongly loyalcustomers
4. Make imitation orduplication by a rivalhard or unlikely
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Ch. 5-14
Strategies in ActionStrategies in Action
UnionBank of the Philippines launched the country's first true cyberaccount branded "E-On", patterned after the pure Internet accounts
in the United States that offer 24 x 7 banking from anywhere in theworld. E-On is an Internet-only bank account handled by a virtualInternet branch, with better yields and lower service fees than theregular bank account offered by the "brick-and-mortar" UnionBank
branches
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Ch. 5-15
Strategies in ActionStrategies in Action
DefinedDefined
Rapidly growing newbusiness that involves
companies taking overthe functionaloperations of otherfirms
ReasonsReasons(Functional Operations)(Functional Operations)
a.a. Less expensiveLess expensiveb.b. Allows the firm toAllows the firm to
focus on its corefocus on its corebusinessesbusinesses
c.c. Enables the firm toEnables the firm toprovide better servicesprovide better services
OutsourcingOutsourcing(BPO)(BPO)
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Allow the firm to align itself with the nest in worldsuppliers
Provides the firm flexibility
Allows the firm to concentrate on other internal valuechain activities
2001 Prentice Hall
Ch. 5-16
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Ch. 5-17
Strategies in ActionStrategies in Action
Strategic Management in Nonprofit andStrategic Management in Nonprofit andGovernmental OrganizationsGovernmental Organizations
Educational Institutions
Medical Organizations
Governmental Agencies and Departments
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Ch. 5-18
Educational InstitutionsEducational Institutions
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Ch. 5-19
Medical OrganizationsMedical Organizations
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Ch. 5-20
Government Agencies and DepartmentsGovernment Agencies and Departments
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Ch. 5-21
Strategies in ActionStrategies in Action
Strategic Management in Small FirmsStrategic Management in Small Firms
A major conclusion is that a lack of strategic managementknowledge is a serious obstacle for many small
business owners. Other problems encountered by thefirm are a lack sufficient capital to exploit externalopportunities and a day-to-day cognitive frame of
reference.
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Ch. 5-22
Strategic Management is more informalStrategic Management is more informal
Firm engaging in strategic management outperform thoseFirm engaging in strategic management outperform those
that do notthat do not
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Ch. 5-23
Thank You!Thank You!
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2001 Prentice Hall
Ch. 5-24
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Ch. 5-25
Strategies in ActionStrategies in Action
Sample product frompasttopresent(year)
Beeper- iphoneTypewriter-ipad
Telegram-emails/text/chat
Floppydisk- flash drive
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Ch. 5-26
Strategies in ActionStrategies in Action
DefinedDefined
Some industriesthat are changingso fast
ExampleExample
Telecommunications,medical,biotechnology,pharmacueticals,computer hardware,
software, industries astoys, phones, banking,defense, publishing &communication
Turbulent, HighTurbulent, High--Velocity MarketsVelocity Markets
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Ch. 5-27
Meeting the Challenge of High Velocity ChangeMeeting the Challenge of High Velocity Change
ReactingTo
Change
LeadingChange
AnticipatingChange
Introduce better products inresponse to new offerings of
rivals
Respond to unexpected
changes in buyer needs &
preferences
Adjust to new governmentpoliciesAnalyze the prospects formarket globalization
Research buyer needs,
preferences , and
expectations\
Monitor closely new
technological developmentsto predict future path
Defensiv
e
Offensiv
e
Pioneer new and bettertechnologies
Introduce innovative
products that open new
markets and spur the
creation of whole new
industries
React and respond
as needed
Defend and protect
the companys
positionPlan ahead for
expected futurechanges
Add/adapt
resources &
competitive
capabilities
Improve productline
Strengthen
distribution
Seize the offensiveBe the agent of
industry change; set
the pace
Influence the rules of
the game
Force rivals to follow
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This is the game that will test on howeach group will strategize to acquire
that certain spot.
The objective of the game is bring allthe blindfolded members in their
respective spot, color and word throughfollowing the instruction given by theteam leader.
2001 Prentice HallCh. 5-28
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Only the team leader can speak.He/She cant touch his/her group
member to guide him/her to the rightspot. Hence, the group is given afreedom to strategize.
2001 Prentice HallCh. 5-29
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GAMEGAME
They will be grouped according to thereporting groups.
Each group ahs its own color ( red,green, yellow)
There will be one representative that
will serve as their team leader.
(chosen as volunteers of the group)
2001 Prentice HallCh. 5-30
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They will be given a time to strategize.
The team leader will also given a timeto do an environmental scanning.
Once the blindfolded member enter theplace, the game will start. There will be
the go signal.
2001 Prentice HallCh. 5-31
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There will be 3 blows. Each blow will begiven 5 min.
Each group will be given starting pointsof 100, 90,80 based on the rankingfrom last game.
If each member will sat at the rightplace, color and word additional 5pts, ifnot, deduction of 5pts.
2001 Prentice HallCh. 5-32
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The winning group at each blow will begiven a power to exchange member
from losing group or stay at ease.
The one who gather the highest pointswill be the winner.
2001 Prentice HallCh. 5-33
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