Chapter Two Corporate Strategy Decisions and Their Marketing Implications.
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Transcript of Chapter Two Corporate Strategy Decisions and Their Marketing Implications.
Chapter Chapter TwoTwo
Corporate Strategy Decisions Corporate Strategy Decisions
and Their Marketing and Their Marketing ImplicationsImplications
Chapter Two: Corporate Strategy Decisions and Their Marketing
Implications
Learning Objectives:
• Understand the corporate strategy components and issues:
- Scope and mission - Objectives
- Growth and competitive advantage - Growth strategies
• Improve analytical skills, especially in forming objectives
Corporate Scope and Mission
• Corporate Mission
examples
RIC SOM
• Corporate Scope: In what business should the firm be?
In what business is Rhode Island College?
The railroads collapsed because they thought they were in the railroad business, when really they were in the transportation business.
Broad Specific
FunctionalBased on customer needs
Transportation business
Long-distance transportation for large-volume producers of low-value, low-density products
PhysicalBased on existing products or technology
Railroad business Long-haul, coal carrying railroad
Corporate Strategy Video
Ansoff Strategies
Growth Strategies and Allocating Corporate ResourcesB
usi
nes
s’s
com
pet
itiv
e p
osi
tio
n
High
Low
Medium
Industry attractivenessHigh Medium Low
1 1 2
1 2 3
2 3 3
BCG Portfolio Model
GE Nine-Cell Matrix
1 Invest/grow2 Selective investment/
maintain position3 Harvest/divest
Factors Affecting the Creation of Shareholder Value
Creatingshareholder
value
Shareholder return• Dividends• Capital gains
Corporateobjective
Sales growth• Operating profit margin
• Income tax rate
Discount rate Debt
Operating
Cash flowfrom
operations
Investment Financing
• Working capital investment
• Fixed capital investment
• Cost of capital
• Value growth duration
Valuationcomponents
Valuedrivers
Managementdecisions
Source: Reprinted with permission of The Free Press, A Division of Macmillan, Inc., from Crating Shareholder Value by Alfred Rappaport. Copyright © 1986 by Alfred Rappaport.
Exhibit 2.9.
Is Santana Worth It?