1. 1
Ch 5 -1
Chapter 5
Strategies in Action
Ch 5 -2
Ch 5 -3
Long Term Objectives
 Quantitative
 Measurable
 Realistic
 Understandable
 Challenging
 Hierarchical
 Obtainable
 Congruent
Ch 5 -4
Ch 5 -5
Financial vs. Strategic Objectives
Financial Objectives
Growth in revenues
Growth in earnings
Higher dividends
Larger profit margins
Greater ROI
Higher earnings per share
Rising stock price
Improved cash flow
Ch 5 -6
The Balanced Scorecard
Robert Kaplan & David Norton –
Strategy evaluation & control technique
Balance financial measures with
nonfinancial measures
Balance shareholder objectives with
customer & operational objectives

2. 2
Ch 5 -7
Levels of Strategies –
Large Company
Ch 5 -8
Levels of Strategies –
Small Company
Ch 5 -9
Types of Strategies
Vertical
Integration
Strategies
Forward
Integration
Backward
Integration
Ch 5 -10
Vertical Integration Strategies
Forward
Integration
Gaining ownership or increased
control over distributors or retailers
Backward
Integration
Seeking ownership or increased
control of a firm’s suppliers
Ch 5 -11
Types of Strategies
Intensive
Strategies
Market
Penetration
Market
Development
Product
Development
Ch 5 -12
Intensive Strategies
Market
Penetration
Seeking increased market share for
present products or services in
present markets through greater
marketing efforts
Market
Development
Introducing present products or
services into new geographic areas
Product
Development
Seeking increased sales by
improving present products or
services or developing new ones

3. 3
Ch 5 -13
Types of Strategies
DiversificationStrategies
Related
Diversification
Unrelated
Diversification
Ch 5 -14
Diversification Strategies
Related Diversification
Adding new but related products or services
Unrelated Diversification
Adding new, unrelated products or services
Ch 5 -15
Types of Strategies
DefensiveStrategies
Retrenchment
Divestiture
Liquidation
Ch 5 -16
Defensive Strategies
Retrenchment
Regrouping through cost and asset reduction to reverse declining sales and profit
Divestiture
Selling a division or part of an organization
Liquidation
Selling all of a company’s assets, in parts, for their tangible worth
Ch 5 -17
Porter’s Five Generic Strategies
Type 1 Cost Leadership –Low cost
Type 2 Cost Leadership –Best value
Type 3 Differentiation
Type 4 Focus –Low cost
Type 5 Focus –Best value