1. INTERNATIONAL STRATEGIC
MANAGEMENT
PROFESSOR: TATIANA VELEZ ANGEL

2. TYPES OF
STRATEGIES

3. TYPES OF STRATEGIES
Forward
Integration
Vertical
Integration
Strategies
Backward
Integration

4. FORWARD INTEGRATION
Control of the direct distribution of its products

5. BACKWARD
INTEGRATION
Control of the suppliers

6. TYPES OF STRATEGIES
Market
Penetration
Intensive Market
Strategies Development
Product
Development

7. MARKET
PENETRATION
“Deals with enhancing the share of
market by effective and innovative
strategies in order to make the present
product more effective and attractive.”

8. MARKET
DEVELOPMENT
“Deals with adding products in different
geographic areas.”

9. PRODUCT DEVELOPMENT
“Deals with increasing the sales as well as
revenues by enhancing the quality of existing
products.”
“The quality of existing products can be easily
enhanced by adding different flavors in it .”

10. TYPES OF STRATEGIES
Concentric
Diversification
Diversification Conglomerate
Strategies Diversification
Horizontal
Diversification

11. DIVERSIFICATION STRATEGIES
• Why Firms Diversify:
– To grow
– To more fully utilize existing resources and
capabilities.
– To escape from undesirable or unattractive
industry environments.
– To make use of surplus cash flows.

12. CONCENTRIC
“A company acquires or develops new products
or services (closely related to its core business
or technology) to enter one or more new
markets.”

13. HORIZONTAL
“Adding related or similar product/service lines
to existing core business, either through
acquisition of competitors or through internal
development of new products/services.”

14. CONGLOMERATE
Firms pursue this strategy for several reasons:
• Continue to grow after a core business has matured or
started to decline.
• To reduce cyclical fluctuations in sales revenues and
cash flows.

15. CRUCIAL ROLE OF
MANAGERS
• Successful diversification strategies result from the ability of
managers to develop skill and competency at MANAGING
diversification.
• Managers must develop two important types of mental
models:
– Must have well-developed understandings of their firm’s
diversity and relatedness that define their companies.
– Must also have well-developed beliefs about how
diversification should be managed in order to achieve
synergies.

16. CRUCIAL ROLE OF
MANAGERS
• The “Learning Hypothesis”
– Managers learn from trial and error.
• They evaluate success of past strategic decisions.
• These acquired beliefs become embedded in an
organization’s routine operating procedures.
– Usually difficult for rivals to imitate.
– By engaging in a number of acquisitions over time,
managers can come to develop an expertise about
how the acquisition process should be managed.

17. CRUCIAL ROLE OF
MANAGERS
• Those firms with management teams that have more
experience at managing diversification will enjoy higher
performance than those firms that do not have that
experience.
– Evidence suggests that firm’s stock market performance is
directly related to diversification experience (see exhibit on
following slide).

18. TYPES OF STRATEGIES
Retrenchment
Defensive Divestiture
Strategies
Liquidation

19. RETRENCHMENT
• A corporate-level strategy.
• Seeks to reduce the size or diversity of an
organization's operations.
• Reduction of expenditures in order to become
financially stable.
• Retrenchment is a pullback or a withdrawal
from offering some current products or
serving some markets.

20. DIVESTITURE
• Selling a division or part of an organization.
• Used to raise capital for further strategic
acquisitions or investments.
• When firms try to focus on their core
strengths, lessening their level of
diversification.

21. LIQUIDATION
Selling all of a company’s assets, in parts, for
their tangible worth
Recognition of defeat.
Cease operating than to continue losing large
sums of money

22. SOURCES
All of the information which is on these slides was taken from:
http://www.businessdictionary.com/definition/concentric-diversification.html#ixzz1lYJM
www2.gsu.edu/~wwwsmg/BA8993week10.ppt
http://www.mba-tutorials.com/strategy/1112-intensive-strategies.html
http://www.investopedia.com/terms/f/forwardintegration.asp#ixzz1lYfXLCay