Chapter Five
Copyright 2015 Pearson Education, Inc
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Objectives
provide direction
allow synergy
aid in evaluation
establish priorities
reduce uncertainty
minimize conflicts
aid in both the allocation of resources and the
design of jobs
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Forward integration
Backward integration
Horizontal integration
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Market development
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Related diversification
Unrelated diversification
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Retrenchment
occurs when an organization regroups through
cost and asset reduction to reverse declining
sales and profits
also called a turnaround or reorganizational
strategy
designed to fortify an organizations basic
distinctive competence
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Divestiture
Selling a division or part of an organization
often used to raise capital for further strategic
acquisitions or investments
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Liquidation
selling all of a companys assets, in parts, for
their tangible worth
can be an emotionally difficult strategy
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Cost leadership
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Type 1
Type 2
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Differentiation
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Type 4
Type 5
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Two ways:
1. Perform value chain activities more
efficiently than rivals and control the factors
that drive the costs of value chain activities
2. Revamp the firms overall value chain to
eliminate or bypass some cost-producing
activities
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