Documentos de Académico
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Sociocultural
Global
SWOT Analysis
Strengths Weaknesses Opportunities Threats
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Barriers to Entry
Switching Costs
Access to Distribution Channels Cost Disadvantages Independent of Scale Government Policy
Expected Retaliation
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Supplier industry is dominated by a few firms Suppliers products have few substitutes Buyer is not an important customer to supplier Suppliers product is an important input to buyers product
Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases
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Staging advertising battles Increasing consumer warranties or service Making new product introductions
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The auto manufacturing industry is considered to be highly capital and labor intensive. The major costs for producing and selling automobiles include: 1. Labor 2. Materials 3. Advertising 4. Original Equipment Manufacturers (OEMs) 5. Replacement Parts Production and Distribution 6. Rubber Fabrication
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Key Players In North America, the automobile production market is dominated by what's known as the Big Three:
1.General Motors - Produces Chevrolet, Pontiac, Buick and Cadillac, among others. 2.Chrysler - Chrysler, Jeep and Dodge. 3.Ford Motor Co - Ford, Lincoln and Volvo.
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2. Power of Suppliers
The automobile supply business is quite fragmented (there are many firms). Many suppliers rely on one or two automakers to buy a majority of their products. If an automaker decided to switch suppliers, it could be devastating to the previous supplier's business. As a result, suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power.
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3.Power of Buyers.
Historically, the bargaining power of automakers went unchallenged. The American consumer, however, became disenchanted with many of the products being offered by certain automakers and began looking for alternatives, namely foreign cars. On the other hand, while consumers are very price sensitive, they don't have much buying power as they never purchase huge volumes of cars.
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4.Availability of Substitutes.
Be careful and thorough when analyzing this factor: we are not just talking about the threat of someone buying a different car. You need to also look at the likelihood of people taking the bus, train or airplane to their destination. The higher the cost of operating a vehicle, the more likely people will seek alternative transportation options
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5.Competitive Rivalry.
Highly competitive industries generally earn low returns because the cost of competition is high. The auto industry is considered to be an oligopoly, which helps to minimize the effects of price-based competition. The automakers understand that pricebased competition does not necessarily lead to increases in the size of the marketplace; historically they have tried to avoid price-based competition, but more recently the competition has intensified rebates, preferred financing and long-term warranties have helped to lure in customers, but they also put pressure on the profit margins for vehicle sales.
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BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970s. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.
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INTRODUCTION
MARKET SHARE
Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms.
The higher your market share, the higher proportion of the market you control.
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Market growth is used as a measure of a markets attractiveness. MGR = Individual sales - individual sales this year last year Individual sales last year Markets experiencing high growth are ones where the total market share available is expanding, and theres plenty of opportunity for everyone to make money.
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It is based on the combination of market growth and market share relative to the next best competitor.
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STARS
High growth, High market share
Stars are leaders in business. They also require heavy investment, to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share otherwise the star will become a CASH COW.
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CASH COWS
Low growth , High market share
They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining.
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DOGS
Low growth, Low market share
Dogs are the cash traps. Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.
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QUESTION MARKS
High growth , Low market share
Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low). Why question marks? Question marks have potential to become star and eventually cash cow but can also become a dog. Investments should be high for question marks.
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BENEFITS
BCG MATRIX is simple and easy to understand. It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them. It is used to identify how corporate cash resources can best be used to maximize a companys future growth and profitability.
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LIMITATIONS
BCG MATRIX uses only two dimensions, Relative market share and market growth rate. Problems of getting data on market share and market growth. High market share does not mean profits all the time. Business with low market share can be profitable too.
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Snack Foods
Beverage s
Foods
Snack Foods
Funyuns Sunchips Cracker Jack Chesters popcorn Grandmas cookies Munchos Smartfood Baken-ets fried pork skins Oberto meat snacks
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Snack Foods
Frito-Lay International
Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks
Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickies potato chips Gamesa cookies Dippas Sonrics sweet snacks
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Snack Foods
Frito-Lay International
Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks
Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickies potato chips Gamesa cookies Dippas Sonrics sweet snacks
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Beverage s
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Beverage s
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Beverage s
Loza juices and nectars Copella juices FruiVita juices Tropicana 100 juices
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Foods
Quaker Oats Capn Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mothers cereal
Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits
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Foods
How are we going to compete and gain a competitive advantage in each of our businesses?
Quaker Oats Capn Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mothers cereal
Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits
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Snack Foods
Beverage s
Foods
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Learning Outline
Understand organizational strengths and weaknesses Understand the relationship between organizational resources, organizational capabilities, core competencies, and distinctive organizational capabilities Understand the Value Chain
Outsourcing
SWOT Analysis
Threats
Weaknesses
Organization
Strengths
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Opportunities
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Core Competencies
Organizational Capabilities
Core Competencies
Organizational Capabilities
Resources Tangible Intangible
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developing core competencies Organizational processes and routines to get the work done
Organizational Capabilities
Core Competencies
Organizational Capabilities
Fundamental building block for developing core competencies Organizational processes and routines to get the work done
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Core Competencies
Fundamental skills and capabilities Exploitable by organization Major value-creating capabilities Not a source of competitive advantage
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Organizational Capabilities
Core Competencies
Core Competencies
Not a source of competitive advantage Fundamental skills and capabilities Exploitable by organization Major value-creating capabilities
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Company
Honda
Motor cycles
Gillette
USA
Shaving products
Advertising effectiveness
Other toiletries, e.g. deodorants Extension of opening hours to include breakfast; product innovation (fish, pizza, salads)
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McDonald's
USA
Hamburger restaurants
United does offer more space in its Economy Plus seats. But only travelers who pay full fare or who are elite members of the miles program can get them. Its regular economyclass seats measure in at 31 inches of seat pitch.
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Firm Infrastructure Human Resource Management Technological Development Procurement Marketing and Sales Inbound Logistics
Outbound Logistics
Operations
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Primary Activities
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Service
Sustainable competitive advantage can be created by 1.Managing value chain activities better than rivals and/or
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Appeal of Outsourcing
Outsourcing non-critical activities allows a firm to concentrate its energies and resources on those value-chain activities where it
Can create unique value Can be best in the industry
Advantages to outsourcing
Decrease internal bureaucracies Flatten organization structure Provide firm with heightened strategic focus
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Step 2
Step 3
Step 4
Step 5
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PRACTICAL USE
MAHINDRA & MAHINDRA HLL IES
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BCG MATRIX
scorpio
Jeep
balero
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CONCLUSION
Though BCG MATRIX has its limitations it is one of the most FAMOUS AND SIMPLE portfolio planning matrix ,used by large companies having multiproducts.
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Section 5
Corporate Level Strategy: Creating Value through Diversification
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Vertical Integration
Forward or backwards
Full integration Taper integration
Benefits
Barrier to entry Specialized assets Protecting product quality Improved scheduling
Risks
Costs Rapid technological changes Demand predictability
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Outsourcing
Cost reduction and differentiation Hold-ups, scheduling and hallowing out
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Snack Foods
Beverages
Foods
Snack Foods
Frito-Lay North America Lays Ruffles Doritos Santitas Fritos Cheetos Rold Gold
Funyuns Sunchips Cracker Jack Chesters popcorn Grandmas cookies Munchos Smartfood Baken-ets fried pork skins Oberto meat snacks
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Snack Foods
Frito-Lay International Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickies potato chips Gamesa cookies Dippas Sonrics sweet snacks
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Snack Foods
Frito-Lay International Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickies potato chips Gamesa cookies Dippas Sonrics sweet snacks
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Beverages
Pepsi-Cola North America Pepsi-Cola Mountain Dew Slice Mug Sierra Mist FruitWorks Lipton Dole Aquafina Frappuccino SoBe AMP
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Beverages
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Beverages
PepsiCo Beverages International Loza juices and nectars Copella juices FruiVita juices Tropicana 100 juices
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Foods
Quaker North America Quaker Oats Capn Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mothers cereal Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits
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Foods
How are we going to compete and gain a competitive advantage in each of our businesses?
Quaker North America Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits
Quaker Oats Capn Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mothers cereal
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Snack Foods
Beverages
Foods
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How to Diversify?
1) Internal Development - corporate entrepreneurship
able to appropriate a larger portion of wealth avoids complexities of multiple partners time consuming and requires diversity of organizational capabilities
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How to Diversify?
2) Strategic Alliances and Joint Ventures
entering a new market via the combination of complementary resources - do more together cost reduction development/diffusion of technology
Problems with
appropriate partners - skills and compatibility trust and commitment communication
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How to Diversify?
3) Merger & Acquisition - acquisition of assets and capabilities of another company
high tech & technology intensive access to products consolidation access to segments
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Acquisitions
Reasons of Acquisitions Increase Market Power
Avoid Competition
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Acquisitions
Reasons of Acquisitions Increase Market Power Overcome Entry Barriers Increased Speed Lower Risk Avoid Competition Problems with Acquisitions Integration of two firms Overpayment/Debt Overestimation of Synergy Overdiversification Managerial energy absorption Become too large Substitute for innovation
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Acquisitions
Reasons of Acquisitions Increase Market Power Overcome Entry Barriers Increased Speed Lower Risk Avoid Competition Problems with Acquisitions Integration of two firms Overpayment/Debt Overestimation of Synergy Overdiversification Managerial energy absorption Become too large Substitute for innovation Results
Poor Performance
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Failures of Acquisitions
30 - 40% average acquisition premium Acquiring firms value drops 4% in the 3 months following acquisitions 30 - 50% of acquisitions are later divested Acquirers underperform S&P by 14%, peers by 4% 3 month performance before and after
30% substantial losses, 20% some losses, 33% marginal returns, 17% substantial returns Ch2-109
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Levels of Diversification
Single Business Unit - vast majority of sales comes from a single business Less ambiguity Ear to the ground re: industry and competition Eggs in one basket
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Vertical Integration
Benefits can not be held hostage reduces buyer/supplier power greater control over operations access to new business/technologies reduce procurement and sales efforts Risks increased overhead, capital and administrative costs loss of flexibility unbalanced capacities reaction of competitors
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Tyco Electronics Tyco Telecommunications Tyco Fire and Security Tyco Safety Products Tyco Healthcare Tyco Plastics Tyco Adhesives Tyco Flow Control Tyco Electrical and Metal Products Tyco Fire and Building Products Tyco Infrastructure Services
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Tyco
Limits itself to businesses that can be held strictly accountable for a few key financial measures Mature, stable, low-tech industries which face certain environments and little R&D investments
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Unrelated/Conglomerate Diversification
Attempts to create value through the management of vertical relationships among the businesses Approve plans and budgets, competent legal, financial, accounting, HR or other support function Effective control systems Restructuring - buy low, sell high spinoffs turnaround
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When/Why to Diversify?
To create shareholder value Porters Three Point Test 1) Attractiveness Test 2) Cost of Entry Test 3) Better off Test Should pass all 3
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Portfolio analysis
BCG Growth-Share Matrix question marks, dogs, cash cows, stars
GE- Nine Cell Matrix
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Stars
Growth Rate
Cash Cows
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Taco Bell
Pizza Hut Frito Lay KFC
Low
Soft Drinks
High
1.0
Low
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Taco Bell
Low
Soft Drinks
High
.75
Low
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GE 9 Cell Matrix
High
Competitive Strengths
Low
High
Invest Grow
Attractiveness
Hold
Harvest Divest
Low Ch2-128
Competitive Strengths
Low
Attractiveness
Soft Drinks
Low Ch2-129
GM provides health care for 1.1 million workers and retirees, which adds about $1,500 to the average cost of every vehicle it sells in the U.S. For 2005, GM has forecast $5.6 billion in healthcare costs, up about $1 billion from 2004. It has blamed its recent fall in profit on the rising cost of providing medical care for workers and retirees.
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United does offer more space in its Economy Plus seats. But only travelers who pay full fare or who are elite members of the miles program can get them. Its regular economy-class seats measure in at 31 inches of seat pitch.
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Board of Directors
Governance mechanism of owners to oversee, evaluate and ratify the actions of management
setting corporate strategy, direction, mission, values hire/fire CEO/TMT control, monitor, supervise TMT review/approve resource allocations protect shareholders interests
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Board of Directors
Sam Nunn- ex-Senator from Georgia sits on Cokes and Dells Board Nancy Reagan sat on Revlons board Hank Aaron sat on Cokes board Sally Ride sat on three boards Martha Stewart and Kim Alexis sat on Drugstore.com Al Haig and Colin Powell sat on AOLs board
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Board Involvement
Mostly little or no involvement Boards tend to be dominated by management Keys to board power
CEO/Chairman duality insiders vs. outsiders
outsiders often weak, unknowledgeable
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Trends in Governance
Institutional investors becoming increasingly powerful Special interests groups and social institutional owners Internationalization of board composition Presiding and Lead Directors 1/3 of S&P 500 Presiding run meetings sans CEOs, Leads are actively involved
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78.1M
-34.6
-27.3% -27.7 -75.4%
David Cote, 68.5M Honeywell John Chamber, Cisco 54.8M Pat Russo, Lucent 38.2M
31.7M
-74.7%
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Executive Compensation
Aligning the interests of shareholders and managers by rewarding them for pursuing their interests Peter Drucker - There are only bad and worse executive compensation packages. Most encourage the top management to milk the company Warren Buffett - ...mediocre CEOs are getting incredibly overpaid Top execs make over 200 times the average worker, up from 44 only 30 years ago.
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Executive Compensation
Bonuses, incentives and stock ownership difficulty in evaluating decision making financial objectives used lengthy feedback period beyond managerial control managerial manipulation Stock Options riding the stock market wave strike period is too long growth, not cost-cutting, should be rewarded require holding the stock after exercise make exercise conditional on certain criteria
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