Corporate Strategies: Integrative Growth Strategies The Boston Consulting Group The Generic Model Global Strategies

CORPORATE STRATEGIES
INTEGRATIVE GROWTH STRATEGIES

THE BOSTON CONSULTING GROUP
THE GENERIC MODEL
GLOBAL STRATEGIES
AXL JAY ALVENDIA

VEL ELLAMIL
AILA MARIE ELLORAZA
JOBERT GARCE
KENNETH NAVARRO
KATHLEEN MAE MARTINEZ
CEDRICK YLARDE
Integrative Growth Strategies - which are essentially external growth strategies, involve investing
there organization in another company or business to achieve growth goals.
The merits of integrative growth strategy are as under:
(i) It facilitates acquisition of existing manufacturing units. There are no problems of promotion of
starting a new enterprise.
(ii) Business growth is quick because running units are acquired.
(iii) The business takes over sources fo raw materials. Some son of self-sufficiency is achieved as
far as raw materials are concerned.
(iv) Acquisition of established market channels facilitate the marketability of the products.
The limitation of integrative growth strategy are as under:
(i) Integrative growth strategy can be implemented only if huge capital is available with
the business firm.
(ii) Competent and professional executives are needed to handle the affairs of new
units. The exsting staff of the acquired units may not be able to adjust with the new
management.
(iii) There is a need of overall revision of the organization structure to meet new
challenges. If its is not done, there will be problem of coordination in the working of
acquired units.
Types of Integrative Growth Strategies
Horizontal Integration - strategy where the organization

acquires another competing business.
Example:
Vertical Integration - is the process of consolidating into an
organization other companies involves in all aspect of a product’s
or a service process from raw materials to distribution.
Backward Integration - is another
integrative acquisition growth
strategy where organization buys
one of its suppliers.
Forward Integration - is carried

out when the organization buys
organization buys distribution
companies that are part of its
distribution cost.
BOSTON CONSULTING GROUP MODEL
The Boston Consulting Group (BCG) model was developed by

Bruce Henderson of the Boston Consultant Group. This model
classifies the products or business units of an organization in
terms of two parameters, namely, market share and market
growth, in relation to the marketing leader.
Market share is the relative sales
percentage of a company in relation to the
total sales percentage of the market in
consideration. This metric value gives a
general idea of how the company stands
with respect to the market and its
competitors.
Market growth refers to an increase in

demand over time. It may be high or low.
BCG Model illustrates four broad categories in relation to
market share (low, high) and market growth (low, high).
· A high market share in a high market growth defines

stars. They are the market leaders and if the market
continues to grow, they are likely to become cash cows.
· A high market share in a low market growth defines cash

cows. Since they are the market leaders in a mature
market growth, establishing a competitive advantage can
generate a lot of cash flow and bring about high profit
margins.
· A low market share in a high market growth
defines question marks. These essentially
new products need promotional strategies.
· A low market share in a low market growth

defines dogs. They should essentially be
minimized, if not avoided. They can be
expensive to the company.
THE GENERAL ELECTRIC MODEL
In 1970s, General Electric was managing a huge and

complex portfolio of unrelated products and was unsatisfied
about the returns from its investments in the products.GE
consulted the McKinsey & Company and as a result the nine-
box framework was designed. The nine-box matrix plots the
BUs on its 9 cells that indicate whether the company should
invest in a product, harvest/divest it or do a further research on
the product and invest in it if there’re still some resources left.
The BUs are evaluated on two axes: industry attractiveness
and a competitive strength of a unit.
WHAT IS GENERAL ELECTRIC MODEL OR GE-MCKINSEY nine-box
matrix?
GE-McKinsey nine-box matrix is a strategy tool that offers a

systematic approach for the multi business corporation to prioritize its
investments among its business units
WHAT IS THE PURPOSE OF GE-MCKINSEY nine box matrix?
To become a framework that evaluates business portfolio, provides

further strategic implications and helps to prioritize the investment
needed for each business unit (BU).
Strategic Business Unit: A mid-
sized business or a division of a
corporation that has different
strategies and objectives than its
parent company.
MARKET ATTRACTIVENESS
HIGH Leader Growth Improve

(1) (2) (4)
MEDIUM Try harder Proceed with care Phased withdrawal

(3) (5) (7)
LOW Cash generation Phased Withdrawal Withdrawal

(6) (8) (9)
Strong Average Weak
BUSINESS STRENGTH
Industry Attractiveness
- It indicates how hard or easy it will be for a company to

compete in the market and earn profits. The more profitable
the industry is the more attractive it becomes.
Competitive strength of a business unit or a product
- Along the X axis, the matrix measures how strong, in terms of

competition, a particular business unit is against its rivals.
Difference between GE McKinsey and BCG matrices
Visual difference. BCG is only a four cell matrix, while GE

McKinsey is a nine cell matrix. Nine cells provide better visual
portrait of where business units stand in the matrix. It also
separates the invest/grow cells from harvest/divest cells that
are much closer to each other in the BCG matrix and may
confuse others of what investment decisions to make.
Comprehensiveness. The reason why the GE McKinsey

framework was developed is that BCG portfolio tool wasn’t
sophisticated enough for the guys from General Electric. In
BCG matrix, competitive strength of a business unit is equal to
relative market share, which assumes that the larger the
market share a business has the better it is positioned to
compete in the market.
There are different investment implications
you should follow, depending on which
boxes your business units have been
plotted. There are 3 groups of boxes:
investment/grow, selectivity/earnings and
harvest/divest boxes. Each group of boxes
indicates what you should do with your
investments.
*Invest/Grow box. Companies should invest into the business
units that fall into these boxes as they promise the highest
returns in the future.
*Selectivity/Earnings box. You should invest into these BUs

only if you have the money left over the investments in
invest/grow business units group and if you believe that BUs
will generate cash in the future.
*Harvest/Divest box. The business units that are operating in

unattractive industries, don’t have sustainable competitive
advantages or are incapable of achieving it and are performing
relatively poorly fall into harvest/divest boxes.
High Attractiveness Strong Competitive Position High Attractiveness Average Competitive Position High Attractiveness Weak Competitive Position
The strategy advice for this cell is to invest for growth. Consider The strategy advice for this cell is to invest for growth. Consider The strategy advice for this cell is to opportunistically invest for
the following strategies: the following strategies: earnings. However, if you cannot strengthen your enterprise you
• Provide maximum investment should exit the market. Consider the following strategies:
• Diversify • Build selectively on strength
• Consolidate your position to focus your resources • Define the implications of challenging for market leadership • Ride with the market growth
• Accept moderate near-term profits to build share • Fill weaknesses to avoid vulnerability • Seek niches or specialization
• Seek an opportunity to increase strength through acquisition
Medium Attractiveness Strong Competitive Position Medium Attractiveness Average Competitive Position Medium Attractiveness Weak Competitive Position
The strategy advice for this cell is selectively invest for growth. The strategy advice for this cell is to selectively invest for the The strategy for this cell is to preserve for harvest. consider the
Consider the following strategies: earnings. Consider the following strategies: following strategies:
• Invest heavily in selected segments • Segment the market to find a more attractive position • Act to preserve or boost cash flow as you exit the business
• Establish a ceiling for the market share you wish to achieve • Make contingency plans to protect your vulnerable position • Seek an opportunistic sale
• Seek attractive new segments to apply strengths • Seek a way to increase your strengths
Low Attractiveness Strong Competitive Position Low Attractiveness Average Competitive Position Low Attractiveness Weak Competitive Position
The strategy advice for this cell is to selectively invest for The strategy advice for this cell is to restucture, harvest, or divest. • The advice for this cell is to harvest or divest. You should exit the
earnings. Consider the following strategies: Consider the following strategies: market or prune the product line.
• Defend strengths • Make only essential commitments

• Shift resources to attractive segments • Prepare to divest
• Examine ways to revitalize the industry • Shift resources to a more attractive segment
• Time your exit by monitoring for harvest or divestment timing
GLOBAL STRATEGIES
A global strategy is one that a company takes when it

wants to compete and expand in the global market. In
other words, it is a strategy businesses pursue when
they wish to expand internationally. A global strategy
refers to the plans an organization has developed to
target growth beyond its borders. Specifically, it aims to
increase the sales of goods or services abroad.
In some instances, organizations pursue global strategies for external business expansion. Global
strategies cover three main areas: international, multinational, and global.
International Strategies - companies who might want to sell their excess products outside their
home markets pursue international strategies. A company is said to be doing international
business although its focus is the home market.
Multinational Strategies - companies can engage in multinational strategies when it is involved in

a number of markets outside the home country. The challenge in undertaking multinational
strategies is to sell competitive and distinct products and services that are suited to the customer
demands of different countries. Thus, the strategy in one country may vary in another, depending
on customer expectations.
Global Strategies - the company treats or considers the world as a whole, one market and one
source of supply with slight variations.
Benefits of GLOBAL Strategies
1. Larger sales and earnings - By taking your business global, you get
access to a much larger base of customers. If your product or service
is a success, you can enjoy increased revenues from these new
customers even if you have saturated your markets domestically.
2. Help more people - The solutions your business offers undoubtedly

have the potential to help your customers improve their lives in some
way.
3. Greater access to talent - Another excellent benefit of taking your
business global is that you get access to a new pool of potential employees
with unique skills and mindsets.
4. Exposure to foreign investment opportunities - When you go global, you

can more easily learn about these investment opportunities and how
beneficial they can be for your company.

Corporate Strategies: Integrative Growth Strategies The Boston Consulting Group The Generic Model Global Strategies

Uploaded by

Copyright:

Available Formats

Corporate Strategies: Integrative Growth Strategies The Boston Consulting Group The Generic Model Global Strategies

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Strategies: Integrative Growth Strategies The Boston Consulting Group The Generic Model Global Strategies

Uploaded by

Copyright:

Available Formats

CORPORATE STRATEGIES

INTEGRATIVE GROWTH STRATEGIES

AXL JAY ALVENDIA

The merits of integrative growth strategy are as under:

(ii) Business growth is quick because running units are acquired.

Horizontal Integration - strategy where the organization

Forward Integration - is carried

The Boston Consulting Group (BCG) model was developed by

Market growth refers to an increase in

· A high market share in a high market growth defines

· A high market share in a low market growth defines cash

· A low market share in a low market growth

In 1970s, General Electric was managing a huge and

GE-McKinsey nine-box matrix is a strategy tool that offers a

WHAT IS THE PURPOSE OF GE-MCKINSEY nine box matrix?

To become a framework that evaluates business portfolio, provides

HIGH Leader Growth Improve

MEDIUM Try harder Proceed with care Phased withdrawal

LOW Cash generation Phased Withdrawal Withdrawal

Strong Average Weak

- It indicates how hard or easy it will be for a company to

Competitive strength of a business unit or a product

- Along the X axis, the matrix measures how strong, in terms of

Visual difference. BCG is only a four cell matrix, while GE

Comprehensiveness. The reason why the GE McKinsey

*Selectivity/Earnings box. You should invest into these BUs

*Harvest/Divest box. The business units that are operating in

• Defend strengths • Make only essential commitments

A global strategy is one that a company takes when it

Multinational Strategies - companies can engage in multinational strategies when it is involved in

2. Help more people - The solutions your business offers undoubtedly

4. Exposure to foreign investment opportunities - When you go global, you

You might also like