Nghiệp vụ ngân hàng - Chapter 9: Strategy selection

Nội dung text: Nghiệp vụ ngân hàng - Chapter 9: Strategy selection

1. BUSINESS STRATEGY Chapter 9: Strategy Selection Lecturer: PHD. PHẠM QUỐC KHÁNH Banking Academy (Vietnam) khanhhvnh@gmail.com Mobile: 0913210000
2. Strategy Selection Learning outcomes Strategic management process: External Audit Implement Generate, Implement Strategies: Measure & Vision Long-Term Evaluate, Strategies: Marketing, Evaluate & Objectives Select Mgmt Issues Fin/Acct, Performance Mission Strategies R&D, CIS Internal Audit
3. Strategy Selection Learning outcomes ▪ After finishing these chapters, you will understand: ▪ Apply detail Ansoff matrix for selecting strategies. ▪ Apply methods of growth for selecting strategies.
4. Strategy Selection Product- Market Strategy entry market Selection strategy strategy
5. Strategy Selection Product- market strategy Existing PRODUCTS New Existing INCREASING RISK MARKET PRODUCT PENETRATION DEVELOPMENT INCREASINGRISK MARKETS MARKET DIVERSIFICATION EXTENSION New
6. Strategy Selection Product- market strategy • Product- market mix: Market penetration 1. Maintain or to increase its share of current markets with current products, e.g. through competitive pricing, advertising, sales promotion 2. Secure dominance of growth markets 3. Restructure a mature market by driving out competitors 4. Increase usage by existing customers
7. Strategy Selection Product- market strategy • Product- market mix: Market development – New geographical areas and export markets. – Different package sizes for food and other domestic items so that both those who buy in bulk and those who buy in small quantities are catered for. – New distribution channels to attract new customers. – Differential pricing policies to attract different types of customer and create new market segments.
8. Strategy Selection Product- market strategy • Product- market mix: Product development – Product development is the launch of new products (innovation) to existing markets. – Advantages • Product development forces competitors to innovate • Newcomers to the market might be discouraged – The drawbacks include the expense and the risk.
9. Strategy Selection Product- market strategy • Product- market mix: Diversification – Growth. New products and new markets should be selected which offer prospects for growth. – Diversification is a high risk strategy, having many of the characteristics of a new business start-up. Related Unrelated Diversificat diversificati diversificati ion on on
10. Strategy Selection Product- market strategy • Related Diversification – Development beyond the present product market, but still within the broad confines of the industry. Related Horizontal Vertical diversificati integration integration on Horizontal integration is Vertical integration the development into occurs when a company activities which are becomes its own competitive with or supplier or distributor directly complementary to a company's present activities
11. Strategy Selection Product- market strategy • Related Diversification – Give some possibilities for Apple if they plan to apply vertical integration for Vietnam market. – What are advantages and disadvantages for Apple if they apply vertical integration for Vietnam market?
12. Strategy Selection Product- market strategy • Related Diversification – Advantages of vertical integration • A secure supply of components or materials, hence lower supplier bargaining power • Stronger relationships with the final consumer of the product • A share of the profits at all stages of the value chain • More effective pursuit of a differentiation strategy • Creation of barriers to entry – Disadvantages of vertical integration: • Overconcentration. • The firm fails to benefit from any economies of scale or technical advances in the industry into which it has diversified.
13. Strategy Selection Product- market strategy • Unrelated Diversification – Unrelated or conglomerate diversification is development beyond the present industry into products/ markets which, at face value, may bear no close relation to the present product/market. – Give an example about a VN company which applied conglomerate diversification strategy. – What are advantages and disadvantages with conglomerate diversification strategy?
14. Strategy Selection Product- market strategy • Unrelated Diversification – Advantages of conglomerate diversification • Risk-spreading • High profit opportunities. • Escape from the present business. • Better access to capital markets • No other way to grow. • Use surplus cash. • Exploit under-utilized resources. • Obtain cash, or other financial advantages. • Use a company's image and reputation in one market to develop into another where corporate image and reputation could be vital ingredients for success
15. Strategy Selection Product- market strategy • Unrelated Diversification – Disadvantages of conglomerate diversification • The dilution of shareholders' earnings • Lack of a common identity and purpose. A conglomerate will only be successful if it has a high quality of management and financial ability at central headquarters, where the diverse operations are brought together. • Failure in one of the businesses will drag down the rest, as it will eat up resources. • Lack of management experience
16. Strategy Selection Product- market strategy • Diversification and synergy – Synergy occurs when the combined results produce a better rate of return than would be achieved by the same resources used independently. Synergy is used to justify diversification.
17. Strategy Selection Product- market strategy • Diversification and synergy: Marketing synergy Management Obtaining Operating synergy synergy synergy Investment synergy
18. Strategy Selection Product- market strategy • Diversification and synergy – Marketing synergy: use of common marketing facilities such as distribution channels, sales staff and administration, and warehousing. – Operating synergy: arises from the better use of operational facilities and personnel, bulk purchasing and a greater spread of fixed costs whereby the firm's competence can be transferred to making new products.
19. Strategy Selection Product- market strategy • Diversification and synergy – Investment synergy: The wider use of a common investment in fixed assets, working capital or research, such as the joint use of plant, common raw material stocks and transfer of research and development from one product to another – Management synergy: the advantage to be gained where management skills concerning current operations are easily transferred to new operations because of the similarity of problems in the two industries.
20. Strategy Selection Product- market strategy • Diversification and synergy – Activity (page 165) • A large organisation in road transport operates nationwide in general haulage. This field has become very competitive and with the recent down-turn in trade has become only marginally profitable. It has been suggested that the strategic structure of the company should be widened to include other aspects of physical distribution so that the maximum synergy would be obtained. • Suggest two activities which might fit into the suggested new strategic structure. • Explain how each of these activities could be incorporated into the existing structure. State the advantages and disadvantages of such diversification.
21. Strategy Selection Product- market strategy • Divestment strategy: withdrawal – Divestment means selling off a part of a firm's operations, or pulling out of certain product-market areas. – Reasons for exit: • The company's business may be in buying firms, selling their assets and improving their performance, and then selling them at a profit. • Resource limitations mean that less profitable businesses have to be abandoned. A business might be sold to a competitor, or occasionally to management (as a buy-out). • Forced to quit. – Divestment strategy: difficult or not difficult?
22. Strategy Selection Product- market strategy • Divestment strategy: Difficulties. – Cost barriers include redundancy costs and the difficulty of selling assets. – Managers might fail to grasp the idea of decision-relevant costs ('we've spent all this money, so we must go on'). – Political barriers include government attitudes. – Marketing considerations may delay withdrawal. – Managers hate to admit failure, and there might be a desire to avoid embarrassment. – People might wrongly assume that carrying on is a low risk strategy.
23. Strategy Selection Market entry strategy • Methods of growth. Build up Acquire new existing business business Joint Merger venture
24. Strategy Selection Market entry strategy • Purpose of acquisitions: – Unilever (Vietnam) acquired PS (Vietnam). Marketing Production Finance and advantages advantages management Overcome Risk-spreading Independence barriers to entry
25. Strategy Selection Market entry strategy • Problems with M&A: Cost Customers Incompatibility Human Driven by the Incomplete resources and personal goals personnel issues
26. Strategy Selection Market entry strategy • Organic growth: – Organic growth (sometimes referred to as internal development) is the primary method of growth for many organisations, for a number of reasons. Organic growth is achieved through the development of internal resources. – What are advantages and disadvantages?
27. Strategy Selection Market entry strategy • Organic growth: Reasons for organic growth. Hidden or No suitable Learning and unforeseen target for Innovation losses are less acquisition Same style of More convenient Can be planned management and for managers corporate culture
28. Strategy Selection Market entry strategy • Organic growth: Problems with organic growth. 1. Time - sometimes it takes a long time to climb a learning curve. 2. Barriers to entry (e.g. distribution networks) are harder to overcome 3. The firm will have to acquire the resources independently. 4. Organic growth may be too slow for the dynamics of the market.
29. Strategy Selection Market entry strategy • Innovation: – It provides the organisation with a distinctive competence. – It maintains the organisation's competitive advantage and market share. – Successful innovation depends on the following. • Responding to or anticipating customer and market needs. • Having people within the organisation who are innovators in outlook, and have sufficient authority to innovate. • Having a culture, leadership and organisation structure that encourages innovation. – Apple strategy for Vietnam?
30. Strategy Selection Market entry strategy • Innovation: – Innovation question for Apple in Vietnam: • Who are our customers? • What do they want now? • What will they want next year? • Why should they come to us rather than one of our rivals? • How do we generate, capture and develop ideas? • How should we set about identifying and meeting business opportunities?
31. Strategy Selection Market entry strategy • Innovation: Attack or leader strategies Defensive or follower strategies Counter-attack strategies
32. Strategy Selection Market entry strategy • Joint ventures: – Advantages: • Share costs. • Cut risk. • Participating enterprises benefit from all sources of profit. • Close control over marketing and other operations. • Overseas joint ventures provide local knowledge, quickly.
33. Strategy Selection Market entry strategy • Joint ventures: – Advantages: • Synergies. One firm's production expertise can be supplemented by the other's marketing and distribution facility. • Learning. • Technology. • Generate innovations. • Testing the firm's core competence in different conditions.
34. Strategy Selection Market entry strategy • Joint ventures: – Disadvantages: • Conflicts of interest between the different parties. • Disagreements may arise over profit shares, amounts invested, the management of the joint venture, and the marketing strategy. • One partner may wish to withdraw from the arrangement.