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Strategic Management Notes Chapt 1-5-11-15
Accounting 1 (ACC 1)
Northern Bukidnon State College
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Life Cycle Strategies -lifespan that a commodity/service undergoes from its introduction stage to its growth, maturity, and decline stages.
Ø Introduction stage: launching the product/service for acceptance (promotion, giving discounts, market development) Ø Growth stage: gains acceptance by the consumers, sales slowly increase (continuous market development and improvement, branding, building customer loyalty, promoting repeat business through customer patronage) Ø Maturity Stage: established products tends to be steady (start reinventing, formulation of marketing strategies) Ø Decline stage: reach its lowest point, sales and profits decline (aggressive marketing or simply exit the market)
Stability Strategies - Decide to keep the status quo - -not adopting any growth or competitive strategy - Comfortable with their current market niche
Retrenchment Strategies- encounters serious difficulties 1.) Liquidation-losing, business may be terminated and its assets may be sold 2.) Divestment-when the company does not fit well in the organization, stockholders would sell it or set it as a separate corporation 3.) Turnaround Strategy -climate and culture -products and services -production and operations -infrastructure -finance
V. Corporate Strategies
Integrative Growth Strategies -external growth strategies, involve investing the resources of the organization in another company or business to achieve growth goals. -Acquisition Strategies
1.) Horizontal Integration - acquires another competing business -eliminate potential/real competitors- deadly threats to an organization -expand its market demographically -help increase its revenues 2.) Vertical Integration -Backward and Forward Integration -consolidation into an organization other companies involved in all aspects of a product’s process from raw materials to distribution. Backward Integration: buys one of its suppliers (more reliable and cost effective supply of input, secures quality output, help increase profitability) Forward Integration: buys distributors or companies that are part of its distribution chain.(eliminating distribution costs, reinvent its marketing outlook)
Boston Consulting Group Model (BCG) -Boston Consulting Group Growth-Share Paradigm -classifies the products or business units of an organization in terms of market share and market growth. Market share: relative sales percentage of a company in relation to the total sales percentage of the market in consideration. -How the company stands with respect to the market and its competitors Market growth: refers to an increase in demand over time.
General Electric Model -improvement of the BGC Model -assess the strength of a Strategic Business Unit (SBU) -considering their market attractiveness and business strength. Global Strategies 1.) International Strategies- sells their excess products outside their home markets 2.) Multinational Strategies- involved in a number of markets outside the home country 3.) Global Strategies- treats or considers the world as a whole, one market and one source of supply with slight local variations
Reference: Young, Felina C. (2015). Strategic Management Made Simple. Philippines: Rex Book Store, Inc. Prepared by: Toni Rose T. Tahil, RN, CFMP, MBA
Internal Growth Strategies Market Penetration - selling more of its products/services to its current customers/buyers. (least risky) (coca cola six pack, 12 pack then 24 pack) Market Development - sell more of its current products by seeking and tapping new markets. (pastel to visayas and luzon) Product Development - sells new product to an existing market. (downy with perfume scent) Diversification - creating differentiated products for new customers (new products for new customers)
Competitive Strategies -essentially long-term action plans prepared with the end goal of directing how an organization will survive and compete. -formulated to help them gain competitive advantage after evaluating and comparing their strengths and weaknesses against their competitors. 1. Low-cost Leadership Strategy- offer products and services at the lowest cost possible in the industry (piso fare) 2 Differentiated Strategy- provide variety of products, services or product/service features that competitors do not or are not able to offer to consumers. (Sierra del Oro, Paragliding) 3. Best-cost Provider Strategy- combination of the low-cost leadership and broad differentiated strategies. Goal: keeping its customer (Aizylim, ukay-ukay, Kaking, etc.) 4. Focused Lower Cost Strategy – concentrates on a limited market segment and creates a market niche based on lower costs (purchase stocks in bulk, avail in discounts, and therefore sell at low prices: plastic cellophane business) 5. Focused Differentiated Cost Strategy- concentrates on a limited market segment and creates a market niche based on differentiated features like design, utility, and practicality. (Rolex. Usually branded)
Other Competitive Strategies 1. Innovation Strategy - difficult to implement, new and original 2. Operational Effectiveness Strategy - avoid financial leaks and inefficiencies, harnessing better facility and equipment maintenance, increasing work force productivity 3. Economies of Scale - lowers costs because of volume. (more product is produced, the lower the costs of producing the product) 4. Technology Strategy - going digital (accounting, marketing and purchasing etc.) Enterprise Resource planning- facilitates processes to radical speed by shortening completion time.
Life Cycle Strategies -lifespan that a commodity/service undergoes from its introduction stage to its growth, maturity, and decline stages. Introduction stage: launching the product/service for acceptance (promotion, giving discounts, market development) Growth stage: gains acceptance by the consumers, sales slowly increase (continuous market development and improvement, branding, building customer loyalty, promoting repeat business through customer patronage) Maturity Stage: established products tends to be steady (start reinventing, formulation of marketing strategies) Decline stage: reach its lowest point, sales and profits decline (aggressive marketing or simply exit the market)
Stability Strategies - Decide to keep the status quo - not adopting any growth or competitive strategy - Comfortable with their current market niche
Retrenchment Strategies -encounters serious difficulties 1.) Liquidation-losing, business may be terminated and its assets may be sold 2.) Divestment-when the company does not fit well in the organization, stockholders would sell it or set it as a separate corporation 3.) Turnaround Strategy -climate and culture -products and services -production and operations -infrastructure -finance Corporate Strategies
Integrative Growth Strategies external growth strategies, involve investing the resources of the organization in another company or business to achieve growth goals.
“Acquisition Strategies” 1.) Horizontal Integration acquires another competing business -eliminate potential/real competitors- deadly threats to an organization -expand its market demographically
Strategic Management Notes Chapt 1-5-11-15
Course: Accounting 1 (ACC 1)
University: Northern Bukidnon State College
