2000 CHP 13 Strategy
2000 CHP 13 Strategy
What Is Strategy?
A firms strategy refers to the actions that managers take to attain the goals of the firm Firms need to pursue strategies that increase profitability and profit growth
Profitability is the rate of return the firm makes on its invested capital Profit growth is the percentage increase in net profits over time
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What Is Strategy?
To increase profitability and profit growth, firms can
add value lower costs sell more in existing markets expand internationally
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What Is Strategy?
Determinants of Enterprise Value
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All of these activities must be managed effectively and be consistent with firm strategy
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2. Support activities
information systems logistics human resources
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Core competencies allow firms to reduce the costs of value creation and/or to create perceived value so that premium pricing is possible
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Localization may give a firm a competitive edge, but if the firm is simultaneously facing aggressive competitors, the company will also have to reduce its cost structures
would require a shift toward a transnational strategy
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