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Professor: Tatiana Velez Angel: International Strategic Management

This document discusses various types of business strategies. It outlines intensive strategies like market penetration, market development, and product development which focus on increasing sales of existing products. It also discusses diversification strategies including concentric, conglomerate, horizontal diversification which involve entering new markets. Defensive strategies like retrenchment, divestiture, and liquidation are used to reduce costs or exit businesses. Successful diversification depends on managers developing expertise through experience in managing acquisitions and understanding how to achieve synergies across diverse businesses.

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34 views22 pages

Professor: Tatiana Velez Angel: International Strategic Management

This document discusses various types of business strategies. It outlines intensive strategies like market penetration, market development, and product development which focus on increasing sales of existing products. It also discusses diversification strategies including concentric, conglomerate, horizontal diversification which involve entering new markets. Defensive strategies like retrenchment, divestiture, and liquidation are used to reduce costs or exit businesses. Successful diversification depends on managers developing expertise through experience in managing acquisitions and understanding how to achieve synergies across diverse businesses.

Uploaded by

vignesh_sundaresan_1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 22

INTERNATIONAL STRATEGIC MANAGEMENT

PROFESSOR: TATIANA VELEZ ANGEL

TYPES OF
STRATEGIES

TYPES OF STRATEGIES
Forward
Integration

Vertical
Integration
Strategies
Backward
Integration

FORWARD INTEGRATION

Control of the direct distribution of its


products

BACKWARD
INTEGRATION

Control of the suppliers

TYPES OF STRATEGIES
Market
Penetration

Intensive
Strategies

Market
Development

Product
Development

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 .

TYPES OF STRATEGIES
Concentric
Diversification

Diversification
Strategies

Conglomerate
Diversification

Horizontal
Diversification

DIVERSIFICATION
STRATEGIES
Why Firms Diversify:
To grow
To 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.

HORIZONTAL

Adding related or similar


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

CONGLOMERATE

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.

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.

CRUCIAL ROLE OF
MANAGERS
The Learning Hypothesis
Managers 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).

TYPES OF STRATEGIES

Retrenchment

Defensive
Strategies

Divestiture

Liquidation

RETRENCHMENT
A 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.

DIVESTITURE
Selling 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.

LIQUIDATION
Selling all of a companys assets, in
parts, for their tangible worth
Recognition of defeat.
Cease operating than to continue
losing large sums of money

SOURCES
All of the information which is on these slides was taken from:
http://www.businessdictionary.com/definition/concentric-diversification.html#ixzz1
lYJMhiI
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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