Page 163 - Fundamentals of Management Myths Debunked (2017)_Flat

What strategies
Do Managers use?

Exhibit 5–4 Organizational Strategies

Corporate Multibusiness
Corporation

Competitive Strategic Strategic Strategic
Business Unit 1 Business Unit 2 Business Unit 3

Functional Research and Manufacturing Marketing Human Finance
Development Resources
1 Corporate Multibusiness
Corporate Strategy
Corporation
Specifies what businesses to be in and what to do with those businesses.
Strategic
Strategic
Competitive Business Unit 1 Business Unit 2 Business Unit 3
Strategic
▸ ▸ ▸ Three main corporate strategies
Functional Research and Manufacturing Marketing Human Finance
1 Growth strategy. Organization expands the number of markets served or products
Resources
Development
offered, either through its current business(es) or through new business(es).
WAyS to grow:

• Concentration: Growing by focusing on primary line of business and
increasing the number of products offered or markets served
in this primary business.
• Vertical integration: Growing by gaining control of inputs or outputs or both.
▪ ▪ Backward vertical integration—organization gains control of inputs by becoming its own supplier.
▪ ▪ Forward vertical integration—organization gains control of outputs by becoming its own distributor.
• Horizontal integration: Growing by combining with competitors.
• Diversification: Growing by moving into a different industry.
▪ ▪ Related diversification—different, but related, industries. “Strategic fit.”
▪ ▪ Unrelated diversification—different and unrelated industries. “No strategic fit.” Jojje11/ Fotolia

2 stability strategy. Organization continues—often during periods of
uncertainty—to do what it is currently doing; to maintain things as they are.

• Examples: continuing to serve the same clients by offering the same product or service, maintaining
market share, and sustaining current business operations.

The organization doesn’t grow,

but doesn’t fall behind, either.

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