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economies of scope across SBU's

1. Scrutinised company objectives use core competence in new SBU


relatedness among assets
2. Evaluated macro environment Utilise core competence, create new strategic asset
related /unrelated diversification expand pool of competence
3. Analysed market - ETOP Structure for rational choice
4. Examined company - SAP already exploited
may not be possible
No automatic course of action Basis for an informed choice competitive legislation

Backward
protect current market position
forward
company strengths Essential first step vertigral integration
identify potential strategic thrust captive company
market opportunities
SWOT Does it add value?
SAP - Strategic Advantage Profile
matching environmental & company recognising unrealised value
Opportunities from ETOP charactheristics
buying market share
= SWOT Strategy variations
reduce competitve preasure
Acquisitions
synergy
relatively small performance gaps
balancing portfolio
markets are mature
core competence
Increased efficiency
Internal weaknesses
Just-In-Time JIT Strategic alliance is a poor substitue for merger
Alliances & joint ventures
unstable finacial history Stability - analysis result
Poor economic prospetcs focus on competitive advantage that can be transferred

Competitve threat Volatile exhange rates relative factor costs vary by country

Perceived cost of change


International expansion government protect home industry
managers averse to risk productivity varies among countries

Diversifying risk Economies move in different pace/steps


culture var fundamentally
Searching for competencies
Module 7 economies of scale
Expansion uncertain future - predict with some certainty
Experience effect Corporate level complexity
strategy concerned with means & ends
building advance capacity
mangerial motivation remuneration - revenue retrenchment
maximise shareholder wealth stable
expand
NPV comparison
Downsizing delayering restructuring
PLC resource allocation vs value creation
Dogs Retrenchment
expand
losing money on some customers
Overextended markets gap identifies which generic strategy to pursue stable
retrenchment
multiple SBU company pursue different performance gaps
strategies compared to induvidual SBU Gap indicates significant reallocation of
Choices among strategies resources to close gap
pursue different generic policy sequentially
combination concentrate internal or external
Opportunity cost
product portfolio eliminate dogs
select optimum portfolio stars to replace questions marks
effective explotation of individual product market
focus balanced but linked portfolio
achieve comp advantage in a given market
Corporate management
strategic response to competitors
lower unit cost / higher profit economies of generic strategies alternatives
scale / experience effect project appraisal complete PLCS
Overall cost leadership new ventures
Investment process - resource allocation Choose on NPV

increase profit by segmentation different achieve comp advantage on chosen product


price in each market market share impact on ROI
quality type of market to aim at
service perceived characteristics differentiation method to achieve relatively low unit cost
image SBU level
Strategy choice total market, market share & price
different not lower cost Porters generic strategies SBU management scenario framework unit cost, contribution

avoid confrontation with competitors Cumulative CF & NPV


identify niche markets not high volume Project appraisal
focus on cost or differentiation sensitivity analysis
focus
Priority not on market share - Find ID crucial variables
unsatisfied customers clarifies pay-offs from different potential
courses of action
no distinctive strategy
relative poor performance no strategy - stuck in the middle subjective probability
trade off between return & possible failure
confused marketing perspective on risk
v attitude to managers of risk
new market opportunity
prospector uncertainty cannot be quantified because
growth by differentiation or low cost Risk & uncertainty analysis future event cannot be foreseen
spohisticated internal info systems technical - minimize probability of loss due to risk
analyser strategy to cope with a wide variety of scenarios
does not enter new markets without info / experience contingency planning strategic response to major unpredictable events
decision maker
keep options open as long as possible
maintain current market position
defender
mature markets / cash cows External dependence
minimax criterion
deals with it as they arise attitudes to risk
reactor

possible future disaster - no change


generic strategy is MEAN - company previous strategies
performance ENDS managerial perceptions
profitability relates to value added by alternatives principal / agent
generic stragey & company performance managerial power relationships
scientific method & hypotheses testing in no
options for conclusions paradox of voting - A better than B better
than C better than A
consensus decisions

- 30/11/2011 - - - prepared by Carl Olav Staff / Rune Fjellvang


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