CHAPTER 8: CORPORATE STRATEGY: DIVERSIFICATION AND THE MULTIBUSINESS COMPANY

WEEK 10



Assalamualaikum to all readers...

Today I want share with you what I learn in the lecture. In this week we learn about "Corporate  Strategy: Diversification And The Multibusiness Company". Firstly in this chapter, I learn about diversification; which is to builds shareholders value when a diversified group of businesses can perform better under the auspices of a single corporate parent than they would as independent. Then, the task of crafting a diversified company's overall corporate strategy falls squarely in the lap of top-level executives and involves four distinct facet, there are :

• picking new industries to enter and deciding on the means of entry, 
• pursuing opportunities to leverage cross-business value chain relationship and strategy fit into competitive advantage,
• establishing investment priorities and steering corporate resources into the most attractive business units,
• initiating actions to boost the combined performance of the corporations' collection of business.

Furthermore, entry into new business ca take any three forms: acquisition, internal start up , or joint venture. The choice of which is the best depends on the firm's resources and capabilities, the industry's entry barriers, the importance of speed, and the relative costs. 

Then, the diversification by acquisition of an existing business have advantages and disadvantage :

 Next, the strategy options for a firm that is already diversified are : 

1. stick with the existing business lineup
2. broaden the diversification base with new acquisitions
3. divest and retrench to a narrower diversification base
4. restructure through divestitures and acquisitions 

That's all from me, and see in other post...

Study Case : The Digital Age : Shall I Tag Along?

Assalamualaikum...

Week 8

On this week I have learnt about SWOT and TOWS analysis for the study case  The Digital Age : Shall I Tag Along? It is an in from our interesting learning from our tutor Madam Huda. I was very glad and appreciate for her kind deed in leading us about SWOT and TOWS analysis.

                     The journal below is the study case about  The Digital Age : Shall I Tag Along?
                                                                             

Then, below is the SWOT and TOWS analysis 

This is the picture of my friends that are busy 'joting down the notes'. It's easier this way right?hehe.. 

See you next time..wassalamualaikum..

STRATEGIES FOR COMPETING IN INTERNATIONAL MARKETS

Chapter 7

Assalamualaikum...

During week eight, Dr. Ummi had taught us about Strategies For Competing In International Market. In this chapter I learn about political risks stem from instability or weaknesses in national governments and hostility to foreign business. Although, economic risks stem from the stability of a country's monetary system, economic and regulatory policies, the lack of property rights protections.
The risks of adverse exchange rate shifts are:

• Exporters experience a rising demand foe their goods whenever their currency grows weaker relative to the importing country's currency.
• Exporters experience a falling demand for their goods whenever their currency grows stronger relative to the importing country's currency. 

Furtermore, a greenfield venture is a subsidiary business that is established by setting up the entire operation from the ground up. The greenfield strategies are:

• Advantage - high level of control over venture, "learning by doing" in the local market and direct transfer of the firm's technology, skills, business practice, and culture.
• Disadvantage - capital costs of initial development, risks of loss due to political instability or lack of legal protection of ownership, and slowest from of entry due to extended time required to construct facility.

 In additinon, an international strategy is a strategy for competing in two or more or more countries simultaneously. Then, a multidomestic strategy is one in which a firm varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preference and market condition. It is a think-local, act-local type of international strategy, facilitated by decision making decentralized  to the local level. Next, a global strategy is one which a company employs the same basic competitive approach in all countries where it operates, sell much the same products everywhere, strives to build global brands, and coordinates its actions worldwide with strong headquarters control. It represents a think-global, act-global approach. Beside that, a transnational strategy is a think-global, act-local approach that incorporates elements of both multidomestic and global strategies.

Furthermore, profit sanctuaries are country markets that provide a firm with substantial profits because of a strong or protected market position. Lastly, cross-market subsidization is supporting competitive offensives in one market with resources and profits diverted from operations in another market, can be a powerful competitive weapon. 

That's all from me...

STRENGTHENING A COMPANY’S COMPETITIVE POSITION

Chapter 6

Assalamualaikum everyone...for the next chapter I learn about Strengthening A Company's Competitive Position: Strategic Movie,Timing, And Scope Of Operations. 

Firstly, the strategic option  to improve a market position is strategic offensive principle. Strategic offensive principle is display a strong bias for swift, decisive, and overwhelming actions to overpower rivals.

Secondly is Blue-Ocean strategy, offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand, which is divided into:

i. An existingAn existing market with boundaries and rules in which rival firms compete for advantag market with boundaries and rules in which rival firms compete for advantage.

ii. A “blue ocean” market space, where the industry has not yet taken shape, with no rivals and wide-open long-term growth and profit potential for a firm that can create demand for new types of products. 

e.g: 

Thirdly, horizontal scope is the range of product and service segments that a firm serves within its focal market. For horizontal scope have two:

i. Merger

+

 

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ii.Special Purpose Acquisition Company (SPAC)

In addition, vertical scope is the extent to which a firm’s internal activities encompass one, some, many, or all of the activities that make up an industry’s entire value chain system, ranging from raw-material production to final sales and service activities. Beside that, it is divided into two:

i. Backward integration : entry into activities previously performed by suppliers or other enterprises positioned along earlier stages of the industry value chain system

ii. Forward integration : entry into value chain system activities closer to the end user

Next, Outsourcing is contracting out certain value chain activities to outside vendors. Beside that, is about strategic alliance is a formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective. Lastly,  joint venture is a partnership involving the establishment of an independent corporate entity that the partners own and control jointly, sharing in its revenues and expenses.

                                                                   

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                         Wassalamualaikum...

THE FIVE GENERIC COMPETITIVE STRATEGIES: WHICH ONE TO EMPLOY?

Assalamualaikum...

For the chapter five, I learn about The Five Generic Competitive Strategic : Which One To Employ? 

Among topic in this topic about the five generic competitive strategies, that are:

• low- cost provider 
•  broad differentiation 
•  focused low-cost 
• focused differentiation 
• best-cost provider 

A low-cost provider's basis for competitive advantage is lower overall costs than competitors. 

Successful low-cost leaders, who have the lowest industry costs, are exceptionally good at finding 

ways to exceptionally good at finding ways to drive costs out of their businesses and still provide a product or service that buyers find acceptable.

A cost driver is a factor that has a strong influence on a firm's costs. Then, a cost driver is a factor

that has a strong influence on a company's costs. 

Cost Drivers: The Keys To Driving Down Company Costs

Otherwise, the essence of a broad differentiation strategy is to offer unique product attributes that a wide range of buyers find appealing and worth paying for.

Other then, a uniqueness driver is a factor that can have a strong differentiating effect.

Uniqueness Drives : The Keys to Creating A differentiation Advantage

Besides that, best-cost provider strategies are a hybrid of low-cost provider and differentiation 

strategies that aim at providing desired quality at providing desired quality/features/performance/service attributes while beating rivals on price.

EVALUATING A COMPANY’S RESOURCES, CAPABILITIES, AND COMPETITIVENESS

Fourth Lecture

Assalamualaikum warahmatullahi wabarakatuh...

For the fourth lecture, I learn about "Evaluating a Company's Resources, Capabilities and Competitiveness". Firstly, I learn about how well is the firm's  present strategy working. They used specific indicators, that are:

• best indicators of a well-conceived, well-executed strategy
• growth in firms's sales and market share
• acquisition and retention of customers
• strengthening image and reputation with customers
• increasing profit margins, net profits and ROI 
• growing financial strength and credit rating 
• leadership in factors relevant to market/industry success
• continuing improvement in key measures of operating performance

Within, I learn about a company resources, and it is divided into two main categories :

• tangible 
• intagible 

For the organizational capabilitties are more complex entities than resources, which is:

Next, the tool are used for conducting the examination about whether the company is in a position to pursue 

attractive market opportunities and defend against external threats to its future well-being is using SWOT analysis. 

Then, value chain is the primary activities that create and deliver customer value and the requisite related support activities.

Lastly, benchmarking is a potent tool for improving a company's own internal activities 

that is based on learning how other companies perform them and borrowing their "best practices".

EVALUATING A COMPANY’S EXTERNAL ENVIRONMENT

Third lecture

Alhamdulillah we were study for chapter three about Evaluating a Company's External Envioronment. We learn about PESTEL analysis. It's focuses on the six principal components of strategic significance in the macroenvironment, that are:

• Political factors
• Economic conditions (local to world wide)
• Sociocultural forces
• Technological factors
• Environmental factors (the natural environment)
• Legal or regulatory conditions

Then, the industry have five competitive forces:

• competition from rival sellers 
• competition from potential new entrants
• competition from producers of substitute products
• supplier bargaining power
• customer bargaining power

Next, we learn about strategic group mapping,which is a valuable tool for understanding the similarities, differences, strengths and weaknesses inherent in the market positions of rival companies. The lesson of strategic group mapping is that some positions on the map are more favorable than other. 

         Otherwise, for the industry's key success factors (KFS) are the strategy elements, product and service attributes, operational approaches, resources, and competitive capabilities that are necessary for are necessary for competitive success by any and all firms in an industry. Other then, vary from industry to industry, and over time within the same industry, and in importance as drivers of chance and competitive change.