Example of corporate strategy Increase sales through additional sales staffing. Increase sales by increasing the number of locations. Increase profitability by laying off staff. Example of directional strategy Whether you're just starting out in your new business or planning to grow your existing one, preparing for the future can be important in guiding your company in the right direction. When budgeting and planning with your staff, choosing a directional strategy to implement company-wide can encourage managers and staff to see the whole picture as the business moves forward. Directional strategy is the game plan a company decides on and implements to grow business, increase profits, and accomplish goals and objectives. Small businesses to large corporations can create their own types of directional strategies that work for the focus and scope of each individual business. For example, certain companies may find that a directional portfolio strategy works best, while other businesses may choose to follow a parenting directional strategy. A directional strategy is often created with an eye toward one or more of three elements: stability, growth and retrenchment. As a small- business owner, before creating your directional strategy, you must
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Example of corporate strategy
Increase sales through additional sales staffing.
Increase sales by increasing the number of locations.
Increase profitability by laying off staff.
Example of directional strategy
Whether you're just starting out in your new business or planning to grow your existing one, preparing
for the future can be important in guiding your company in the right direction. When budgeting and
planning with your staff, choosing a directional strategy to implement company-wide can encourage
managers and staff to see the whole picture as the business moves forward.
Directional strategy is the game plan a company decides on and implements to grow business, increase
profits, and accomplish goals and objectives. Small businesses to large corporations can create their own
types of directional strategies that work for the focus and scope of each individual business. For
example, certain companies may find that a directional portfolio strategy works best, while other
businesses may choose to follow a parenting directional strategy.
A directional strategy is often created with an eye toward one or more of three elements: stability,
growth and retrenchment. As a small-business owner, before creating your directional strategy, you
must define what your goal is, whether it's to stabilize your company's earnings, grow profits, or cut
back on staff or spending to move forward. Once you assess your business needs, you can better choose
the type of directional strategy that suits your company. For example, if your small business is
hemorrhaging money, a retrenchment strategy may work best for you. During retrenchment, you may
conduct layoffs, eliminate specific products from your line, or file for bankruptcy or liquidation.
customer base.
Portfolio Strategy
A strategy portfolio is a coherent set of options that address new capabilities and new potential markets.
This enables tactical opportunism within the company's long-term mission.
Developing your strategy portfolio is an essential step in your company's strategic road mapping
process. It ensures that all product strategies and marketing strategies are aligned with the company's
mission and that the company remains (or becomes) nimble.
Definition of 'Vertical Integration'
When a company expands its business into areas that are at different points on the
same production path, such as when a manufacturer owns its supplier and/or
distributor. Vertical integration can help companies reduce costs and improve
efficiency by decreasing transportation expenses and reducing turnaround time,
among other advantages. However, sometimes it is more effective for a company to
rely on the expertise and economies of scale of other vendors rather than be vertically
integrated.
Examples of
vertical
integration
include:
- A mortgage
company that
both originates
and services
mortgages,
meaning that
it both lends
money to
homebuyers
and collects
their monthly
payments.
- A solar power
company that
produces
photovoltaic
products and
also
manufacturers
the cells,
wafers and
modules to
create those
products
would be
considered
vertically
integrated.
- The merger
of Live Nation
and
Ticketmaster
created a
vertically
integrated
entertainment
company that
manages and
represents
artists,
produces
shows and
sells event
tickets.
Horizontal integration is when a group of businesses or firms decides to merge because they will appeal
to more people based off of similarity of products. An example of horizontal integration would be a
business that normally manufactures televisions merging with another business that sells the same
product, such as Zenith merging with Sony. Horizontal integration is used to end competition between
businesses and to maximize profit or create a monopoly. Horizontal integration is the opposite of
vertical integration which is investing in natural resources used to manufacture the product instead of
merging similar companies.
An example of horizontal integration is an automobile manufacturer's acquisition of a sport utility
vehicle manufacturer.
Definition of 'Horizontal Integration'
The acquisition of additional business activities that are at the same level of the value
chain in similar or different industries. This can be achieved by internal or external
expansion. Because the different firms are involved in the same stage of production,
horizontal integration allows them to share resources at that level. If the products
offered by the companies are the same or similar, it is a merger of competitors. If all
of the producers of a particular good or service in a given market were to merge, it
would result in the creation of a monopoly. Also called lateral integration.
Investopedia
explains
'Horizontal
Integration'
Examples of
horizontal
integration
include an oil
company's
acquisition of
additional oil
refineries, or
an automobile
manufacturer's
acquisition of a
light truck
manufacturer.
Horizontal
integration
offers several
advantages,
including
favorable
economies of
scale,
economies or
scope,
increased
market power
and reduction
in the costs
associated with
international
trade by
operating in
foreign
markets.
Horizontal
integration is in
contrast to
vertical
integration,
where firms
expand into
different
activities,
known as
upstream or
downstream
activities.
Diversification is a strategy for company growth through starting up or acquiring businesses outside the
company's current products and markets (p.44 Kotler) This means that a company is developing new
markets and new products.
I first found about McCafe in Japan and was amazed by its different style from traditional McDonald
store. I found more information online at McCafe's website. http://www.mccafecoffee.com/
McDonald's starting of McCafe is an excellent example of diversification. By starting McCafe,
McDonald's is offering new products that were not available in traditional McDonald's stores. McCafe
specializes in serving cafes, which attracts customers that usually don't come to McDonald's to eat
fastfood. McCafe is also not only a product development. McCafe has its own section of the store and
clearly distinguishes itself from the traditional McDonald store. The store has modern, yet relaxing
mood. This is important to attract new market segments, probably customers that go to cafe not to
satisfy hunger, but possibly to take a sip of coffee and chat in a relaxing environment. Thus, McDonald's
McCafe serves as an example performing diversification by developing both new products and new
markets.
The older your business gets, the more difficult it might be to increase market share or profits, especially
if you’re seeking exponential growth. Diversifying into new business areas not only gives you the
opportunity to significantly increase your income, but it also protects you in the event your core
business takes a temporary or long-term nosedive. Analyze diversification strategies based on their
potential revenues and affect on your core business to achieve them.
Diversification
Diversification means branching out into new business opportunities, not just expanding your existing
business. For example, if you have a dine-in restaurant in one town, opening a second restaurant in the
next town is expansion, not diversification. Adding corporate catering is an example of diversification.
Offering cooking classes during the mornings, when you are not open for breakfast, would be another
example of diversification.
Reasons for Diversification
Before you begin planning a diversification strategy, write the reasons you are considering doing so. You
might have excess capital you can’t put into your existing business with a reasonable return on this
reinvestment. Your company might be too dependent on one product or a handful of customers, which
could have devastating consequences if you see new competition or one or two customers leave you.
You might have built business relationships or a customer base that make it easy to enter a new market.
Once you know exactly why you are considering diversifying, you can better look at the specific
advantages and disadvantages of doing so.
Related vs. Unrelated Strategies
As you consider diversifying, decide if you want to stay in a related business or go into a completely
different market. Staying within your market lets you use your contacts, brand and customer base, such
as a pet sitter offering grooming services. Going into a new market, such as a pet sitter opening a
landscaping business, offers more protection against a downturn in a specific industry. Moving into a
related business can damage your brand if the new effort fails. Starting a business in a completely new
area will often require more time and money, since you are starting from scratch.
Brand Diversification
In some cases, you can diversify by selling the same product, or a similar one, under a different name. A
women’s apparel store that adds men’s and children’s clothing to try to expand its business might
damage its brand among women who are seeking a store that specializes in high-end women’s apparel.
Opening a second store under another name and selling men’s and children’s apparel diversifies your
business. Another example of diversification by brand would be an upscale women’s clothing store
opening a second women’s clothing store under another name and selling affordable women’s apparel.
Considerations
When choosing diversification strategies, look at your current customer base to determine if you can sell
them different items or if you can add new customers by selling them a similar product at a different
price or under a different name. Review your current suppliers, sales reps and distribution partners to
determine if you can use them to sell different products, reducing your start-up costs. Calculate the
ongoing operating costs and stress on your administration of a diversification strategy and determine if
you can support two different businesses or product lines. Consider the impact of one product line
competing with the other if you will sell similar items.
Merger and acquisitions
in the banking industry in 2013.
Posted: December 31st, 2012 in Headlines | Read More »
Globe Telecom extends offer period for Bayan debt
Ayala-led Globe Telecom is extending its early tender offer period to buy Bayan Telecommunications
obligations from the smaller telco’s creditors, in line with moves for the two firms’ impending merger.
Posted: November 22nd, 2012 in Latest Business Stories | Read More »
BPI inches closer to sealing deal with PNB
In a game-changing move, Bank of the Philippine Islands will consolidate with Philippine National Bank,
ushering in a new wave of mergers and acquisitions among local banks.
Posted: November 22nd, 2012 in Editor's Pick,Headlines | Read More »
DMCI in bid to take over British mining company
DMCI Holdings is leading a consortium that plans to take over UK-listed nickel production company ENK
Plc, which is developing the Acoje mining project in Zambales, in a deal that values the British company
at £49.8 million.
Posted: August 9th, 2012 in Latest Business Stories | Read More »