STRAMA CHAPTER 5

Backward Integration

Seeking ownership or increased control of a firm’s suppliers

Horizontal Integration

Seeking ownership or increased control over competitors

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 area

Product Development

Seeking increased sales by improving present products or services or developing new ones

Related Diversification

Adding new but related products or services

Unrelated Diversification

Adding new, unrelated products or services

Retrenchment

• Regrouping through cost and asset reduction to reverse declining sales and profit

• also called a turnaround or reorganizational strategy

• designed to fortify an organization’s basic distinctive competence

Divestiture

Selling a division or part of an organization

Liquidation

Selling all of a company’s assets, in parts, for their tangible worth

Large Company

Corporate Level, Divisional Level, Functional Level, Operational Level

Small Company

Company Level, Functional Level, Operational Level

Value chain analysis

the process whereby a firm determines the value (price minus cost) of each and all activities that went into producing and marketing a product, from purchasing raw materials to manufacturing, distributing, and marketing those products

Benchmarking

entails examination of value chain activities across an industry to determine “best practices” among competing firms; firms engage in benchmarking for the purpose of duplicating or improving on those best practices

Cost Leadership

emphasizes producing standardized products at a very low per-unit cost for consumers who are price-sensitive

Type 1 - Low Cost Strategy

offers products or services to a wide range of customers at the lowest price available on the market

Type 2 - Narrow/Focused low-cost

offers products or services to a small range of customers at one of the lowest prices in the market

Differentiation

a strategy aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively price-insensitive

Wide Target Market

Types of Differentiation (Type 3)

Narrow Target Market

Type of differentiation (Type 4)