Description
Strategic thinking is defined as a mental or thinking process applied by an individual in the context of achieving success in a game or other endeavor. As a cognitive activity, it produces thought.
Chapter Understanding Strategies
2
Chapter Objectives
?
To study and understand the goals in any organization To understand strategies at two levelsThe corporate level and The business unit level
?
GOALS
?
- Profitability
Profitability- most important goal, broadest is a product of two ratios: 1. profit margin percentage X 2. investment turnover i.e. (revenues-expenses/revenues) X (revenues/investment) Result is Return on Investment (ROI)= ((revenue-expenses)/investment)
?
Profitability refers to profits in long run
Q)
?
What does profitability depict?
Does the company’s goal, change its interpretation of profitability equation?
?
GOALS - Maximizing Shareholder Value Q)
?
?
Maximizing Shareholder Value means what? Is earning maximum and increasing profitability same?
Maximizing shareholder value may be a major goal but not the only goal
?
GOALS?
Risk
Risk also means POSSIBILITIES The risk-taking varies from company to company, among personalities and managers Some companies make it very clear that the primary responsibility is to preserve company’s assets
?
?
GOALS -Multiple Stakeholder Approach
?
Organizations deal in – capital market, product market, factor market The firm has responsibilities to all these multiple stakeholders
?
The Concept of Strategy
?
Strategies describe the general direction in which an organization plans to move to attain its goals Industry Opportunities
Core Competencies
Strategies
?
Two Levels Of Strategy Corporate Level Business Unit Level Corporate Level Strategy
?
?
Is about being in the right mix of businesses
Concerns of questions like where to compete than how
?
Corporate-level Strategies
High McDonald’s
Degree of Relatedness
P&G
Textron Low High
Extent of Diversification
Contd…
?
Single Industry Firms Unrelated Diversified Firms Related Diversified Firms
?
?
Business Unit Strategies
Depends on two interrelated aspects: ? Its mission ? Its competitive advantage
?
Business Unit Mission
?
The BCG Model build, hold, harvest, divest Porter’s Five Force Model Value Chain for Business
?
Business Unit Competitive Advantage
? ?
doc_415743122.ppt
Strategic thinking is defined as a mental or thinking process applied by an individual in the context of achieving success in a game or other endeavor. As a cognitive activity, it produces thought.
Chapter Understanding Strategies
2
Chapter Objectives
?
To study and understand the goals in any organization To understand strategies at two levelsThe corporate level and The business unit level
?
GOALS
?
- Profitability
Profitability- most important goal, broadest is a product of two ratios: 1. profit margin percentage X 2. investment turnover i.e. (revenues-expenses/revenues) X (revenues/investment) Result is Return on Investment (ROI)= ((revenue-expenses)/investment)
?
Profitability refers to profits in long run
Q)
?
What does profitability depict?
Does the company’s goal, change its interpretation of profitability equation?
?
GOALS - Maximizing Shareholder Value Q)
?
?
Maximizing Shareholder Value means what? Is earning maximum and increasing profitability same?
Maximizing shareholder value may be a major goal but not the only goal
?
GOALS?
Risk
Risk also means POSSIBILITIES The risk-taking varies from company to company, among personalities and managers Some companies make it very clear that the primary responsibility is to preserve company’s assets
?
?
GOALS -Multiple Stakeholder Approach
?
Organizations deal in – capital market, product market, factor market The firm has responsibilities to all these multiple stakeholders
?
The Concept of Strategy
?
Strategies describe the general direction in which an organization plans to move to attain its goals Industry Opportunities
Core Competencies
Strategies
?
Two Levels Of Strategy Corporate Level Business Unit Level Corporate Level Strategy
?
?
Is about being in the right mix of businesses
Concerns of questions like where to compete than how
?
Corporate-level Strategies
High McDonald’s
Degree of Relatedness
P&G
Textron Low High
Extent of Diversification
Contd…
?
Single Industry Firms Unrelated Diversified Firms Related Diversified Firms
?
?
Business Unit Strategies
Depends on two interrelated aspects: ? Its mission ? Its competitive advantage
?
Business Unit Mission
?
The BCG Model build, hold, harvest, divest Porter’s Five Force Model Value Chain for Business
?
Business Unit Competitive Advantage
? ?
doc_415743122.ppt