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MindMap Gallery 2023CPA Strategy 03 Strategic Choices
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2023CPA Strategy 03 Strategic Choices
Test situation analysis: This chapter is a key chapter, with scores ranging from 30 to 35 points over the years, and even higher in some years. The examination question types are relatively comprehensive, especially short answer questions and comprehensive questions, and the scores are also higher. The knowledge content is complex and requires a large amount of memory. It is recommended to allocate enough time for solid review. Main test points (difficulties or key points): Type of overall strategy (corporate-level strategy) (especially development strategy) Main ways to develop strategy (mergers and acquisitions, strategic alliances) Business Unit Strategy (Three Basic Competitive Strategies, Strategy Clock) Competitive strategy for small and medium-sized enterprises Blue ocean strategy functional strategy Motives for international business operations of enterprises (4 pursuits) The main methods of international business International operations of enterprises in global value chains Types of international business strategies Strategic choices for local companies in emerging markets
Edited at 2023-08-05 10:47:47
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2023CPA Strategy 03 Strategic Choices
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
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- Outline
03Strategic Choice
overall strategy
type
development strategy
integrated strategy
vertical integration strategy
forward integration strategy
backward integration strategy
horizontal integration strategy
recite
"Product-Market Strategic Portfolio" Matrix
intensive strategy
Market Penetration: Existing Products × Existing Markets
Market development: existing products × new markets
Product development: new product × existing market
Recite "Applicable Conditions"
Diversification Strategy
Reasons for adoption
Goals cannot be achieved by continuing operations in existing products or markets
Capital retained from previous successful operations in an existing product or market Exceeds its financial needs for expansion in existing products or markets
A diversification strategy means higher profits than expansion in existing products or markets
recite
type
related diversification
Concentric Diversity
Conducive to obtaining integration advantages; economies of scope
unrelated diversification
centrifugal diversification
Balance cash flow or obtain new profit growth points
advantage
① Diversify risks. When existing products and markets fail, new products or new markets may provide protection for companies; ② Can more easily obtain financing from the capital market; ③ When companies cannot grow in the original industry, find new growth points; ④ Utilize underutilized resources; ⑤ Use surplus funds; ⑥ Obtain funds or other financial benefits, such as accumulated tax losses; ⑦ Use the company's image and reputation in a certain industry or a certain market to enter another industry or market, and to be successful in another industry or market, corporate image and reputation are crucial.
risk
Risks from original operating industries; overall market risks; industry entry risks; industry exit risks; internal business integration risks
stabilization strategy
advantage
Can make full use of various resources in the original production and operation fields
Avoid the huge capital investments and development risks necessary to develop new products and markets
Avoid the cost of resource reconfiguration and combination
Prevent imbalances caused by too fast or too hasty development
risk
Once a company's external environment undergoes major changes, the balance among the company's strategic goals, external environment, and company strength will be lost, putting the company in trouble. The stabilization strategy can also easily make enterprises weaken their risk awareness, and even form a corporate culture of fearing and avoiding risks, reducing the sensitivity and adaptability of enterprises to risks.
contraction strategy (retreat strategy)
reason
initiative
Meet the needs of corporate strategic reorganization
passive
External environmental reasons
Internal environmental reasons
type
austerity and concentration strategies
Tends to focus on short-term benefits, primarily involving remedial measures to halt profit declines
Mechanism change
Finance and Financial Strategy
cost cutting strategy
Turn to strategy
Involving changes in the business direction or business strategy of the enterprise
Reposition or adapt existing products and services
Adjust marketing strategy
abandon strategy
Sell, transfer or cease operations of one or several departments of the enterprise
Franchise, subcontracting, outright sale, MBO, divestiture into shares/spin-off
difficulty
exit barriers
Degree of specificity of fixed assets
exit cost
Including labor agreements, relocation costs, spare parts repair capabilities, etc.
internal strategic connections
The internal interconnections between a business unit within an enterprise and other business units within the enterprise in terms of market image, marketing capabilities, use of financial markets and facility sharing, etc.
emotional disorder
Government and Social Constraints
The government comes forward to oppose or dissuade
Main approaches to development strategy
External development (mergers and acquisitions)
type
According to the industry in which both parties are located
horizontal merger
Vertical mergers and acquisitions: forward, backward
Diversified M&A
According to the attitude of the acquired party
Friendly mergers and acquisitions
hostile takeover
According to the identity of the acquirer
Industrial capital mergers and acquisitions: the purpose is to obtain industrial profits
Financial capital mergers and acquisitions: the purpose is to obtain investment profits
According to the source of acquisition funds
Leveraged buyout: ≥70% of the funds come from external liabilities
non-leveraged buyout
motivation
Avoid entry barriers, enter quickly, and seize market opportunities
Obtain synergy effects: unified deployment of the same resources, complementary advantageous resources, internal transfers to digest innovation
Overcome negative externalities of enterprises, reduce competition, and enhance control over the market
Reason for failure
poor decision making
Main manifestations: ① Before the merger and acquisition, the potential costs and benefits of the target enterprise were not carefully analyzed, and the merger and acquisition was too hasty, resulting in the inability to reasonably manage the acquired enterprise; ② Overestimation of the attractiveness of the industry where the merger target is located and one's own feelings about the acquired enterprise. The management ability of enterprises, thereby overestimating the potential economic benefits brought by mergers and acquisitions. (Subjective questions)
After merger and acquisition, enterprise integration cannot be carried out well.
Strategy, organization, system, business, culture, etc.
Paying exorbitant M&A fees
Cross-border mergers and acquisitions face political risks
Internal development (new construction)
motivation
① The process of developing new products enables companies to deeply understand the market and products; ② There is no suitable acquisition target; ③Maintain a unified management style and corporate culture; ④ Provide career development opportunities for managers; ⑤ The consideration is lower because there is no need to pay additional amounts for goodwill when acquiring the assets; ⑥Mergers and acquisitions often produce hidden or unpredictable losses, while internal development is unlikely to produce this situation; ⑦This may be the only reasonable way to achieve true technological innovation; ⑧ It can be carried out in a planned manner, it is easy to obtain financial support from corporate resources, and the cost can be spread over time; ⑨The risk is low. In an acquisition, the buyer may also have to bear the consequences of previous decisions made by the acquiree; ⑩The cost of internal development increases slowly.
shortcoming
① Compared with the existing enterprises in the purchasing market, there are more competitors in the market, which may intensify competition in a certain market; ② Enterprises cannot have access to the knowledge and systems of other enterprises; ③Lack of economies of scale or experience curve effects from the beginning; ④When the market develops very fast, internal development appears too slow; ⑤Entering new markets may face very high barriers.
Application conditions
①The industry is in an imbalanced situation and structural barriers have not yet been fully established.
②The behavioral barriers of existing companies in the industry are easily restricted
③The enterprise has the ability to overcome structural and behavioral obstacles, or the cost for the enterprise to overcome the obstacles is less than the income after the enterprise enters
Corporate strategic alliance
Basic Features
From the perspective of economic organization form
An "intermediate organization" between enterprises and the market
From the perspective of corporate relations
equal partnership
From the perspective of corporate behavior
strategic cooperative behavior
formation motivation
Main types
Equity participation
Joint venture
Reflect strategic intentions and emphasize equity equality
Mutual shareholding investment
Small holdings
contractual bond
functional protocol
Technology Exchange Agreement
Cooperative research and development agreement
Production Marketing Agreement
Industrial Coordination Agreement
The main difference between the two
Classification of cooperation content at different stages
research and development stage
manufacturing stage
sales stage
Comprehensiveness
Control
Enter into an agreement
① Strictly define the goals of the alliance; ② Design the alliance structure carefully; ③Accurately evaluate the invested assets; ④Stipulate liability for breach of contract and dissolution clauses.
Establish an alliance of cooperation and trust
business unit strategy
basic competitive strategy
Basic Competitive Strategy Theory Michael Porter
Cost leadership strategy
Advantage
① Form entry barriers; ② Enhance bargaining power; ③Reduce the threat of substitutes; ④ Maintain a leading competitive position.
Understanding the five forces model
Implementation conditions
market outlook (F)
① The product has high price elasticity, and there are a large number of price-sensitive users (price) in the market; ②The products of all enterprises in the industry are standardized, and it is difficult to achieve product differentiation (product); ③Buyers don’t pay much attention to brands (buyers); ④Price competition is the main means of market competition (competition); ⑤Consumers’ switching costs are low (consumers).
resources and capabilities (internal conditions)
① Equip corresponding production facilities in industries with significant economies of scale to achieve economies of scale; ② Reduce the costs of various factors; ③Improve productivity; ④Improve product process design; ⑤ Improve the utilization of production capacity; ⑥Choose an appropriate trading organization form; ⑦ Centralized allocation of resources.
risk
① Changes in technology may wipe out past investments and accumulated experience used to reduce costs (technology); ② New entrants or followers in the industry achieve the same or even lower product costs (competition) by imitating or using facilities with a higher technical level; ③Market demand has shifted from focusing on price to focusing on the brand image of products, turning the company's original advantages into disadvantages (demand).
Differentiation Strategy
Advantage
① Form entry barriers; ② Reduce customers’ price sensitivity; ③Enhance bargaining power; ④Resist the threat of substitutes.
Implementation conditions
market outlook (F)
① The product can be fully differentiated and recognized by customers; ②Customer needs are diverse; ③The technology of the industry in which the enterprise is located changes rapidly, and innovation has become the focus of competition.
resources and capabilities (internal conditions)
①Have strong R&D capabilities and product design capabilities; ②Have strong marketing capabilities; ③ Have an incentive system, management system and a good creative culture that can ensure the stimulation of employee creativity; ④ Have the ability to improve the quality of a certain business as a whole, establish product image, maintain advanced technology and establish and improve distribution channels.
risk
① The cost for enterprises to differentiate their products is too high (cost); ②Changes in market demand (demand); ③Competitors' imitation and attack narrow the established differences or even turn them (competition).
centralization strategy
meaning
A strategy that uses cost leadership or product differentiation to gain competitive advantage for a specific buying group, product segment or regional market; generally a strategy adopted by small and medium-sized enterprises.
Advantage
① The advantages of cost leadership and differentiation strategies in resisting the five industrial forces can also be reflected in the concentration strategy; ② Since the concentration strategy avoids direct competition with competitors on a large scale, for some small and medium-sized enterprises that are not strong enough to compete with powerful large companies, the implementation of the concentration strategy can enhance their relative strength. Competitive Advantage; ③ For large enterprises, adopting a centralized strategy can avoid direct conflicts with competitors and put the enterprise in a competitive buffer zone.
Implementation conditions
① There are differences in demand among buyer groups; ②The target market is relatively attractive in terms of market capacity, growth rate, profitability, competition intensity, etc.; ③No other competitor adopts similar strategies in the target market; ④ Enterprise resources and capabilities are limited, making it difficult to achieve cost leadership or differentiation in the entire industry, and can only select individual market segments.
risk
①High costs (market) caused by a narrow target market; ② The difference in demand between buyer groups becomes smaller (demand); ③The entry and competition of competitors (competition).
Comprehensive analysis of basic strategies—— "Strategy Clock" Cliff Bowman
1 Low price and low value (concentrated cost leadership)
2Low price (cost leadership)
3Hybrid Strategy
①Companies that provide high-quality products will increase market share, which in turn will reduce average costs due to economies of scale. As a result, the company can achieve both high-quality and low-cost positioning in the industry. ② Experience in producing high-quality products is accumulated and costs are reduced faster than producing low-quality products. That is, workers must pay more attention to the production of products, which in turn reduces average costs due to the experience curve. ③ Focusing on improving production efficiency can reduce costs in the production process of high-quality products.
4 high value (differentiation)
5 High price and high value (focused differentiation)
Competitive Strategies for Small and Medium Enterprises
Scattered industries
Reasons for industry fragmentation
Low barriers to entry or existing barriers to exit
Diverse market demands lead to high product differentiation
Economies of scale do not exist or are difficult to achieve
Others: Government policies and local regulations, no companies in emerging industries have mastered enough skills and capabilities to occupy an important market share
Strategic choices for fragmented industries
Overcome fragmentation – gain cost advantage
① Chain operation or franchise operation; ②Technological innovation to create economies of scale; ③Discover industry trends as early as possible.
Increase added value - improve product differentiation
Specialization - Goal agglomeration
product, customer, region
Beware of potential strategic pitfalls
Avoid seeking dominance
"Be ambitious but not ambitious"
Maintain strict strategic constraints
"Strategic focus"
Avoid over-centralization
“Energetic and quick to respond”
Understand competitors' strategic goals and overhead costs
"Know yourself and know the enemy"
Avoid overreacting to new products
"Develop with caution"
Emerging industry
Common features of internal structure
technological uncertainty
strategic uncertainty
Rapid changes in costs
Budding businesses and start-ups
first time buyer
Development barriers and opportunities
obstacle
Difficulties in selecting, acquiring and applying proprietary technology
Inadequacy of raw materials, parts, capital and other supplies
Customer confusion and wait-and-see
Reactions to substituted products
Lack of courage and ability to take risks
opportunity
Low barriers to entry and no competitive structure established
Strategic Choice
Shape industrial structure
Correctly Treat the Externalities of Industrial Development
Pay attention to changes in industry opportunities and obstacles, and take the initiative in industrial development and changes
Choose the right time and field to enter
blue ocean strategy
connotation
in principle
Laws for Reconstructing Market Boundaries
Path 1: Examine alternative industries
Path Two: Crossing Strategic Groups
Path 3: Redefine the industry’s buyer groups
Buyers, users, influencers
Path 4: Look at complementary products or services
Path 5: Reset customers’ functional or emotional appeals
Path 6: Across time, participate in shaping external trends
functional strategy
marketing strategy
Determine target market STP
market segmentation Market Segmentation
consumer market segmentation
Variables: Geographic, Demographic, Psychological, Behavioral
Industrial market segmentation
Variables: User’s industry type, size, geographical location, purchasing behavior factors
Target market selection Market Targeting
undifferentiated marketing
the whole market
differentiated marketing
two or more
centralized marketing
One or a few submarkets of similar nature
Market positioning Market Positioning
Strategies to seize or fill market gaps
Market positioning strategies to coexist and confront competitors
Market positioning strategies to replace competitors
Marketing Mix 4Ps
Product StrategyProducts
product mix strategy
Width (product category), length (product item), depth (color/variety/specification), relevance (product category)
Expansion, reduction, product extension (upward, downward, two-way)
brand strategy
Single brand name, different brand names for each product (Procter & Gamble), private label (Made in Beijing)
product development
Price strategyPrice
Basic pricing method
Cost-oriented pricing methods: cost-plus pricing, break-even pricing, target profit pricing and variable cost pricing
Demand-oriented pricing method: high pricing strategy, low pricing strategy
Competition-oriented pricing methods: prevailing price pricing, sealed bid pricing
Main pricing strategies
Psychological pricing strategy, product portfolio pricing strategy, discount and discount strategy, geographical price difference strategy
New product pricing strategy
penetration pricing, skimming pricing, satisfaction pricing
Distribution StrategyPlace
Tradition: direct, indirect (exclusive, selective, intensive)
Internet: online, offline
Promotion strategy Promotion
Promotional mix elements: advertising promotion, business promotion, public relations, personal selling
Promotional mix strategy: push, pull, push-pull combination
research and development strategy
type
Product research - new product development
Process study – the process of producing a product or providing a service
Source of motivation for R&D
demand pull
technology push
The strategic role of R&D
basic competitive strategy
Porter's value chain
Ansoff matrix
Product Lifecycle
R&D positioning
Become a company that introduces new technology products to the market
Become an innovative imitator of successful products
Become a low-cost producer of successful products
Become an imitator of low-cost producers of successful products
Production and Operations Strategy
Main factors and stages
batch
Large scale – low cost Small scale – high cost
type
Many varieties – high cost Less variety – low cost
need
Fluctuating demand – low capacity utilization – high costs Stable demand - high capacity utilization - low cost
visibility
High visibility - service industry - high employee skill requirements - high unit costs Low visibility - production-oriented industries - low employee skill requirements - low unit costs
content
Product and service selection, homemade or outsourced selection, production and operation mode selection
(slightly)
Supply chain and distribution network selection: Depending on product inventory location and delivery method
Manufacturer's inventory plus direct shipping
Manufacturer's inventory, direct shipping and in-transit consolidation
Distributor inventory plus carrier delivery
Distributor inventory added to door delivery
Manufacturer or distributor inventory plus customer pickup
Retailer inventory plus customer pickup
Competitive focus/factors affecting competitiveness TQCF
Delivery time
Fast delivery, on-time delivery
QualityQuality
The product itself and the production process
CostCost
Production cost, manufacturing cost, circulation cost and usage cost, etc.
Manufacturing Flexibility
Respond to market needs quickly and cost-effectively
Production process and capacity planning
Types of capacity planning
Leading Strategy (Offensive): Anticipation
Lagging strategy (conservative): full production
Matching strategy (robust type): small increase
Ways to balance capacity with demand
Resource-to-order production
Order→Resource→Production
architecture
Order production
Resources→Order→Production
FOOD
Inventory production
Resources→Production→Order
manufacture
Procurement strategy
Supply strategy
Few or single source strategy
Multi-source, low-volume strategy
Balanced supply strategy
Trading straregy
market trading strategies
One shot deal
short term cooperation strategy
short term cooperation
functional alliance strategy
Such as food & packaging
Innovative alliance strategies
Start with the proposal of a new product concept
Procurement model
Traditional procurement model
refill supplies
Material Requirement Planning Material Requirements Planning
production oriented
Just In Time Just-in-time procurement
The right supply comes at the right time and place
Vendor Managed Inventory Vendor Managed Inventory
HUB
Digitizing
HR strategy
planning
step
Collect information - establish a system - make scientific predictions - formulate plans
supply and demand balancing strategy
Supply = demand, supply > demand, supply < demand
Obtain
Training & Development
When adopting a cost leadership/differentiation/focus strategy
Grade
When adopting a cost leadership/differentiation/focus strategy
salary incentives
composition of salary
basic salary
wages
variable pay
performance
indirect compensation
Welfare
fairness principle
external fairness
Different companies, similar positions, basically the same
internal fairness
In the same company and in different positions, salary is directly proportional to contribution
individual fairness
In the same company and in similar positions, remuneration is directly proportional to ability and contribution.
pay level strategy Reflect external competitiveness and salary costs
leading strategy
Salary level is higher than market average
matching strategy
Salary level is in line with the market average
procrastination strategy
Salary level is lower than market average
hybrid strategy
Different strategies for different positions
corporate competitive strategy and compensation strategy
financial strategy
concept
Fundraising strategy (narrow sense)
Capital structure decisions, financing source decisions, dividend distribution decisions, etc.
money management strategy
Sure
Financing channels and methods
internal financing
Equity financing
Debt financing: loans, leases
Asset Sales Financing
Financing costs
individual cost of capital
Equity financing cost Long-term debt capital cost
Weighted average cost of capital WACC
optimal capital structure
The weighted average cost of capital is the lowest and the enterprise value is the largest
dividend distribution strategy
Fixed dividend policy, fixed dividend payout rate policy, zero dividend policy and residual dividend policy
choose
Matching financial risks and operational risks
business risk
shareholder
Size is determined by specific business strategy
Traditional/high-tech business, operational stability, life cycle stage
Financial risk
creditor
Size is determined by capital structure
debt ratio
Double high, double low
Based on different stages of product life cycle
Based on value creation or growth rate
financial strategy matrix
Quadrant 1: Shortage of value-added cash
Quadrant II: Value-added cash surplus
Quadrant 3: Impaired cash surplus
Quadrant 4: Impairment Cash Shortage
international business strategy
motivation
seek market
seeking efficiency
Production costs (especially labor costs)
seek resources
natural resources, raw materials
Seek ready assets
obtained from developed countries
Main way
Export trade
Target market selection
Target market regional path
Traditional way/continuous way
New method/discontinuous method
Choosing Distribution Channels and Export Marketing
Export trade pricing
Foreign Direct Investment
Wholly owned subsidiary
joint venture
non-equity arrangements
Contract manufacturing (OEM/ODM), service outsourcing, order farming, franchising, licensing, management contracts
in global value chains Enterprise international operation
global value chain
Enterprise international operation and building global value chains
in the global value chain Corporate role positioning
Leading companies
core, leading
first grade supplier
Technical capabilities and cost advantages
Other tier suppliers
weak comparative advantage
contract manufacturer
certain technical ability
global value chain division of labor model
Global value chain and development Upgrading of Chinese state-owned enterprises
From easy to difficult
Process upgrade
product upgrade
Function upgrade
Value chain upgrade
type
International strategy: The brain is in the home country; poor adaptability and high operating costs Multi-country localization strategy: high degree of decentralization; good adaptability and high operating costs Globalization strategy: distributed production; poor adaptability and low operating costs Transnational strategy: comprehensive "multiple" and "all"; good adaptability and low operating costs
Corporate strategy for emerging markets
Strategic choices for local companies
Defender: Use local advantages to defend
Expanders: Extend local advantages overseas
Dodgers: Avoiding the impact of multinational competitors
Counterbalancers: Confrontation on a Global Scale