Corporate Directional

Strategies

Prentice Hall, 2004 Chapter 6 1

Wheelen/Hunger
 Corporate Strategy

Directional Strategy:
– Three Grand Strategies:
• Growth strategies
• Stability strategies
• Retrenchment strategies

Prentice Hall, 2004 Chapter 6 2

Wheelen/Hunger
 Corporate Strategy
Growth Strategies:
– Most widely pursued strategies
– External mechanisms:
• Mergers
– Transaction involving two or more firms in which
stock is exchanged but only one firm survives.
• Acquisition
– Purchase of a firm that is absorbed as an operating
subsidiary of the acquiring firm.
• Strategic Alliance
– Partnership of two or more firms to achieve
strategically significant objectives that are mutually
beneficial.

Prentice Hall, 2004 Chapter 6 3

Wheelen/Hunger
 Corporate Strategy

2 Basic Growth Strategies:

– Concentration
– Current product line in one industry

– Diversification
– Into other product lines in other industries

Prentice Hall, 2004 Chapter 6 4

Wheelen/Hunger
 Corporate Strategy

Basic Concentration Strategies:

–Vertical growth

–Horizontal growth

Prentice Hall, 2004 Chapter 6 5

Wheelen/Hunger
 Corporate Strategy
Concentration:

Vertical growth

– Vertical integration
• Full integration
• Taper integration
• Quasi-integration

– Backward integration

– Forward integration

Prentice Hall, 2004 Chapter 6 6

Wheelen/Hunger
 Corporate Strategy

Concentration:

Horizontal Growth

– Horizontal integration

Prentice Hall, 2004 Chapter 6 7

Wheelen/Hunger
 Corporate Strategy

Basic Diversification Strategies:

– Concentric Diversification

– Conglomerate Diversification

Prentice Hall, 2004 Chapter 6 8

Wheelen/Hunger
 Corporate Strategy

Diversification:

Concentric:

– Growth into related industry

– Search for synergies

Prentice Hall, 2004 Chapter 6 9

Wheelen/Hunger
 Corporate Strategy

Diversification:

Conglomerate:

– Growth into unrelated industry

– Concern with financial considerations

Prentice Hall, 2004 Chapter 6 10

Wheelen/Hunger
 Corporate Strategy

Exporting
Licensing
Franchising
International Joint Ventures
Entry Acquisitions
Options Green-Field Development
Production Sharing
Turnkey Operations
BOT Concept
Management Contracts

Prentice Hall, 2004 Chapter 6 11

Wheelen/Hunger
 Corporate Strategy

Stability Strategies:

–Pause/proceed with caution

–No change

–Profit strategies

Prentice Hall, 2004 Chapter 6 12

Wheelen/Hunger
 Corporate Strategy
Retrenchment Strategies:

– Turnaround

– Captive Company Strategy

– Selling out

– Bankruptcy

– Liquidation
Prentice Hall, 2004 Chapter 6 13
Wheelen/Hunger
 International Portfolio Analysis
2 Factors:

• Country’s attractiveness
• Market size, rate of growth, regulation

• Competitive strength
• Market share, product fit, contribution
margin, market support

Prentice Hall, 2004 Chapter 6 14

Wheelen/Hunger