Wondershare EdrawMind
MindMap Gallery Chapter 3 Strategic Choice
- 14
Chapter 3 Strategic Choice
CPA-Strategy-Chapter 3-Strategic Choice: Classified by the industry in which both parties are engaged, the attitude of the acquired party, the identity of the acquiring party, and the source of acquisition funds.
Edited at 2022-06-29 09:30:44
- 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
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
Chapter 3 Strategic Choice
- 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
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
- Recommended to you
- Outline
Chapter 3 Strategic Choice
Overall strategy/company level strategy
development strategy
integrated strategy
vertical integration strategy
A company's strategy to extend and expand its existing business forward or backward along the product or business chain
Advantages vs Disadvantages
advantage
Helps save transaction costs
control scarce resources
Ensure the quality of key inputs
Get new customers
shortcoming
Will increase the company's internal management costs
forward integration strategy
backward integration strategy
horizontal integration strategy
Applicable conditions and risks
intensive strategy
Applicable conditions
Diversification Strategy
Related Diversity/Concentric Diversity
Unrelated diversification/centrifugal diversification
Advantages Disadvantages
Main approaches to development strategy
External development [Mergers and Acquisitions]
Enterprise organizational form replaces market organizational form
type
Classification by industry where both parties to the merger and acquisition are located
horizontal merger
vertical merger
Forward M&A
backward merger
Diversified M&A
Classification by attitude of acquired parties
Friendly mergers and acquisitions
hostile takeover
Classification by status of acquirer
Industrial capital mergers and acquisitions
non-financial enterprise
Financial capital mergers and acquisitions
Finance companies
Classification by source of acquisition funds
LBO
The main source of funds is external liabilities
non-leveraged buyout
The main source of funds is its own funds
motivation
Avoid entry barriers, enter quickly, seize market opportunities, and avoid various risks
The other party’s market position and share
Gain synergy
[Resource complementarity, achieved through technology transfer or sharing of business activities]
The other party’s assets, technology, and capabilities
Overcome negative externalities of enterprises, reduce competition, and enhance control over enterprises
[Individual rationality leads to collective irrationality]
The other party’s market position and share
risk
Beforehand – poor decision-making
In progress - Enterprise integration cannot be carried out well after mergers and acquisitions
[Strategy, organization, system, business, corporate culture]
After the fact – overpaying for acquisitions
Cross-border mergers and acquisitions face political risks
specific measure
Strengthen the assessment of political risks in host countries and improve dynamic monitoring and early warning systems
Adopt flexible international investment strategies to build a solid foundation for risk control
Implement enterprise localization policies to reduce conflicts and frictions with host countries
Internal Development [New Construction]
Market organization form replaces enterprise organization form
motivation
shortcoming
Application conditions
The industry is in an imbalanced situation and structural barriers have not yet been fully established.
The behavioral barriers of existing companies in the industry are easily restricted
Businesses have the ability to overcome structural and behavioral barriers
Ability to overcome barriers to entry
The assets, skills, and distribution channels of the company's existing business have a strong correlation with the new business field.
After enterprises enter new fields, they have the unique ability to influence the industry structure and make it serve them.
After an enterprise enters a new field, it is conducive to developing the existing business content of the enterprise.
Strategic Alliance
Basic Features
form of economic organization
"Intermediate organizations" - blurring the boundaries between enterprises and markets
corporate relations
equality of dealings
The long-term nature of the partnership
complementarity of overall interests
Openness of organizational form
corporate behavior
strategic cooperative behavior
motivation
Avoid or reduce competition
Promote technological innovation
Open up new markets
Reduce coordination costs
Avoid business risks
Realize resource complementation
Main types
Joint venture
Mutual shareholding investment
Equity strategic alliance
It is conducive to expanding the financial strength of the enterprise, enhancing the trust and responsibility of both parties, and is more conducive to long-term cooperation.
Disadvantages: Less flexible approach
functional protocol
contractual strategic alliance
It emphasizes more on the coordination and tacit understanding of enterprises and has the essence of strategic alliance.
Has better flexibility - has greater advantages in terms of operational flexibility, autonomy and economic benefits.
Enterprises have poor control over alliances, loose organizations lack stability and long-term interests, insufficient communication among members within the alliance, and low organizational efficiency
Control
Enter into an agreement
Strictly define the goals of the alliance
Carefully design alliance structure
Accurately assess invested assets
Specify liability for breach of contract and dissolution clauses
Establish an alliance of cooperation and trust
stabilization strategy
Concentrate resources on original experience scope and products to increase its competitive advantage
contraction strategy
reason
active cause
Meet the needs of corporate strategic reorganization
passive cause
External causes
Macroeconomic situation, industrial cycle, technology, policy, social values, fashion
internal reasons
Internal operating mechanism is not smooth
Decision making mistakes
poor management
Way
austerity and concentration strategies
Mechanism change
Adjust the management leadership structure; formulate new policies; establish a new management control system; improve the incentive mechanism and restraint system
Finance and Financial Strategy
Establish effective financial control systems;
cost cutting strategy
Reduce labor, materials, and overhead expenses; reduce assets; reduce the size of divisions and functional departments
Turn to strategy
Reposition or adapt existing products and services
Adjust marketing strategy
Launch new measures in price, promotion, channels, etc.
abandon strategy
Franchise
Subcontract
sell out
management leveraged buyout
Split into shares/split
difficulty
Judgment of enterprise or business conditions
exit barriers
Degree of specificity of fixed assets
exit cost
Labor agreements, cost of relocation, spare parts repair capabilities
internal strategic connections
emotional disorder
Layoffs and salary cuts [employee resistance]
Government and social constraints [If the government plays a coordination role, it does not constitute government and social constraints]
Strategic Choice
Business Unit Strategy/Competitive Strategy
basic competitive strategy
Cost leadership strategy
Differentiation Strategy
centralization strategy
Comprehensive analysis - strategic clock
Cost leadership strategy
Concentrated cost leadership strategy - low price and low value strategy
Companies focus on market segments that are very price sensitive
It is a very viable strategy
Cost leadership strategy - low price strategy
Differentiation Strategy
Differentiation strategy – high value strategy
Focus on differentiation strategy – high price and high value strategy
mixed strategy
low price high value strategy
Advantage
economies of scale
experience curve
total quality management
failed strategy
Competitive Strategies for Small and Medium Enterprises
Competitive strategies in fragmented 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
Strategic Choice
Overcome fragmentation – gain cost advantage
Franchise or franchise
Technological innovation to create economies of scale
Discover industry advantages as early as possible
Increase added value - improve product differentiation
Specialization - Goal agglomeration
Product type or product segment specialization
Customer Type Specialization
Geographic area specialization
Beware of potential strategic pitfalls
Avoid seeking dominance
Maintain strict strategic constraints
Avoid over-centralization
Understand competitors’ strategic goals and overhead costs
Avoid overreacting to new products
Competitive strategies in emerging industries
Common characteristics of the internal structure of emerging industries
technical uncertainty
strategic uncertainty
Costs have to change rapidly
Budding businesses and start-ups
first time buyer
Obstacles and opportunities for the development of emerging industries
Difficulties in selecting, acquiring and applying proprietary technologies
Insufficient supply of raw materials, parts, funds and other supplies
Customers have to be confused and wait and see
Reaction to the substituted product
Lack of courage and ability to take risks
Strategic choices for emerging industries
Shape the industrial structure and 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
Early entry is appropriate
The image and reputation of a company are crucial to customers, and companies can develop and enhance their reputation because of pioneers
The learning curve in an enterprise is important. Experience is difficult to imitate. Early entry allows you to start earlier.
Customer loyalty is very important, and companies that sell to customers first will earn higher profits
Early partnerships with raw material suppliers and distribution channels are crucial to industry development
Inappropriate early entry
The market segments that enter early are different from the situation after the industry matures. After the companies that enter early have established a competitive foundation, they face excessive switching costs.
In order to shape the industrial structure, a high price needs to be paid for opening up the market, including customer education, regulatory approval, technology development, etc. However, the benefits of opening up the market cannot be exclusive to enterprises.
Technological changes render early investments obsolete and allow late entrants to benefit from having the latest products and processes
blue ocean strategy
"Value Innovation"
feature
Avoid competition and expand non-competitive space
Create and capture new needs
Break the law of interchange between value and cost and pursue differentiation and costization at the same time
Principles of Strategy Formulation
Rebuilding market boundaries
Fundamental rules for reconstructing market boundaries
Examine alternative industries
Across strategic groups
Redefining industry buyer groups
Look at complementary products and services
Reset customer functional or emotional appeals
across time
Focus on the big picture rather than the numbers
Go beyond existing needs
Follow a sound strategic sequence
Strategy Execution Principles
Overcome key organizational barriers
Make execution part of the strategy
Strategic Choice
functional strategy
marketing strategy
market segmentation
consumer market segmentation
Geographic segmentation
Based on geographical location and geographical variables
[Urban and rural areas, terrain and climate, transportation]
population segmentation
According to demographic variables
[Age, gender, income, occupation, education level, family size, family life cycle stage, religion, race, nationality]
psychographic segmentation
According to consumers’ lifestyle, personality and other psychological variables
behavioral segmentation
[The timing when consumers purchase or use a certain product, the benefits that consumers pursue, user profile, product usage rate, loyalty to the brand, consumer’s stage of purchase, and attitude towards the product]
Industrial market segmentation
User's industry category
Enterprises should use different marketing mixes accordingly for different end users - cater to their preferences
User scale
Large, medium, and small [User sizes are different, and their purchasing power, purchase batches, frequency, purchase behavior, methods, and service levels required from suppliers are different]
User's geographical location
Concentrate the target market in areas where users are concentrated to save marketing and transportation costs
buying behavior factors
Benefits pursued by users, frequency of use, brand loyalty, user status, purchasing methods
Target market selection
undifferentiated marketing strategy
Treat the entire market as your target market and only consider the commonalities of market needs without considering their differences.
advantage
Single variety, suitable for mass production enterprises, giving full play to economies of scale, reducing costs and reducing expenses
shortcoming
Poor adaptability. Once market demand changes, it is difficult to adjust production and marketing strategies. Competition methods are single and the risk is high.
Differentiated marketing strategy
According to the demand characteristics of different market segments, we produce and design different products and formulate different marketing strategies to meet the needs of customers in different market segments.
advantage
It is conducive to expanding sales and enhancing competitiveness. The enterprise is highly adaptable and does not rely on one market or one product.
shortcoming
Enterprises are required to have a high level of operation and management, which may lead to higher costs and lower economic benefits.
centralized marketing strategy
Limited by resources and other conditions, one or several sub-markets with similar properties are used as target markets, trying to occupy a larger market share in fewer sub-markets.
advantage
Concentrate the use of limited resources to implement specialized production, save marketing costs, and increase the visibility of the company and products.
shortcoming
There is too much reliance on a single and narrow target market. Once the market changes, there is little room for maneuver and high risks; at the same time, when competitors enter the target market, the company will be seriously affected.
Considerations
market similarity
Market demand similarity
High - undifferentiated marketing strategy
Low - differentiated marketing strategy, centralized marketing strategy
product homogeneity
homogeneous products
undifferentiated marketing strategy
Highly differentiated products
Differentiated marketing strategy, centralized marketing strategy
Enterprise strength
powerful
Undifferentiated marketing strategy, differentiated marketing strategy
limited
centralized marketing strategy
Product life cycle stages
Product in the introduction period
undifferentiated marketing strategy
The product enters the growth and maturity stages
Differentiated marketing strategy
competitor strategy
Competitors implement an undifferentiated competition strategy
Enterprises adopt differentiated marketing strategies to compete with
Competitors implement differentiated competition strategies
Enterprises can consider adopting differentiated marketing strategies or centralized marketing strategies based on further segmentation
Market positioning
position
initial positioning
After determining the target market, new products are launched into the market
re-locate
Market conditions have changed and products still need innovative positioning
Companies need to reposition their products under the following circumstances:
Strong competitors appear near the company's product positioning, resulting in a decline in the company's product sales and market share.
Customers’ consumption concepts and preferences change
The company's products have gradually entered the decline phase of the product life cycle in the target market.
Product market positioning strategy
1. Strategies to seize or fill market vacancies
[Positioning corporate products in gaps in the target market]
2. Market positioning strategies to coexist and confront competitors
premise
1. The market still has huge unmet needs
2. The products launched by the company have their own characteristics and are comparable to competitive products.
benefit
1. You can imitate competitors’ products and sell your own brand products to the market.
2. Since competitors have already developed this product, a lot of research and development costs can be saved.
3. Competitors have already promoted the product, which can save promotion costs and reduce the risk of unmarketability.
3. Market positioning strategy to replace competitors
It must have obvious advantages over competitors, provide more distinctive products, do a lot of promotion, improve the company's image and popularity, and dilute customers' impression and favor of competitors' products.
Design marketing mix
Product Strategy
product mix strategy
Product portfolio width, length, depth and relevance
Product mix strategy types
Expand product portfolio
Expand the width and length of the product portfolio and enhance the depth of the product portfolio
Reduce product portfolio
Eliminate product categories or product items that make little or even a loss
product extension
Change the market positioning of the company's original products in whole or in part
Extend downward
Produce high-end products and increase low-end products
Extend upward
Produce low-end products and increase high-end products
Two-way extension
Produce mid-range, increase high-end and low-end
Brand and Trademark Strategy
single brand name
Businesses use the same goal for all products
Each product has a different brand name
The product is clearly positioned differently in the market or the market is highly segmented
private label
Build customer loyalty to the retailer rather than the product manufacturer
product development strategy
Continuous product updates are the only way to prevent product obsolescence
Price Strategy
Basic pricing methods
cost oriented pricing
cost plus pricing
break-even pricing
target profit pricing
variable cost pricing
demand-based pricing
high pricing strategy
Competitor’s products are not on the market
There are quite a lot of people willing to pay a high price to buy
There is little risk that even high prices will induce competitors to enter the market
low pricing strategy
The market is highly sensitive to price. If the price is lowered, the demand will increase significantly.
Price can be rejected by existing or potential competitors
Unit market cost and sales cost can be reduced due to mass production and sales
Competition Oriented Pricing
prevailing price pricing
sealed bid pricing
Main pricing strategies
psychological pricing strategies
Pricing strategies adapted to consumers’ purchasing psychology
Mantissa pricing, integer pricing, prestige pricing, solicitation pricing
Product portfolio pricing strategy
Series product pricing, by-product pricing, related product pricing, bundled pricing
Discounts and discount strategies
Cash discounts, quantity discounts, transaction discounts, seasonal discounts, promotional discounts
Geographical Spread Strategy
Origin price, delivery price at destination, unified delivery price, zone shipping price, and subsidy freight pricing
New product pricing strategy
penetration pricing
Setting a very low price when new products are launched - a strategy of sacrificing short-term profits for long-term profits
skimming pricing
Set a higher price when new products are launched and gradually lower the price as production capacity increases - aiming to obtain higher unit profits in the initial stage of the product life cycle
Satisfied with pricing strategy
A moderate pricing strategy between the above two-at the same time, the product price can be accepted by customers and the company can make a certain profit.
Distribution strategy
traditional marketing theory
direct distribution
indirect distribution
Distribution system through middlemen
Three distribution strategies to determine the number of middlemen
exclusive distribution
Market its products through only one intermediary in a given region
selective distribution
Promote products through several most suitable intermediaries in a certain area
intensive distribution
Manufacturers sell their products or services through as many intermediaries as possible
In the Internet environment
online channels
Offline channels
promotion strategy
Promotional mix elements
advertising promotion
Media advertising [consider the location, time, frequency, and form of advertising]
Business promotion
Non-media promotion methods: trial products, discounts, gifts, value-added services
public relations
Establish a good public image
personal selling
Direct contact with customers: speeches, press conferences
Promotional mix strategy
push strategy
"Push" products to final consumers through marketing channels [mainly personal selling and transaction promotion]
pull strategy
Relying on marketing activities carried out directly by manufacturers to target end consumers and motivate them to purchase products [mainly advertising and consumer promotion]
push-pull strategy
While vigorously promoting to middlemen, stimulate market demand through advertising
research and development strategy
Type of R&D
Product Research - New Product Development
process research
Focus on the process of producing products or providing services, aiming to establish effective processes to save money and time, thereby increasing productivity
Source of motivation for R&D
demand pull
New market demands drive innovation to meet demand
technology push
Innovation comes from the application of inventions
The strategic role of R&D
basic competitive strategy
Product innovation – differentiation strategy
Process innovation – cost leadership strategy or differentiation strategy
Value Chain
Value chain supporting activities
Ansoff matrix
R&D supports four strategic quadrants
Product Lifecycle
R&D will accelerate the decline of existing products, and R&D is needed to provide companies with alternatives.
R&D positioning
Become a company that introduces new technology products to the market
Riskier
Become an innovative imitator of successful products
Start-up risks and costs are minimal; companies are required to have excellent R&D personnel and excellent marketing departments
Become a low-cost producer of successful products
Requires companies to make continuous investments in factories and equipment, but requires lower R&D expenses than the first two strategies
Become an imitator of low-cost producers of successful products
It will bring significant efficiency and cost advantages; it also requires enterprises to make continuous investment in factories and equipment, but it can obtain higher output with lower investment
R&D policy
Policies - 7 [P195]
Policies to encourage innovative ideas - 7 [P196]
Production operations strategy
Main factors and stages involved in production operations strategy
Horizontal inspection
batch
Larger quantities per batch produced, low unit cost
The quantity produced in each batch is small and the unit cost is high
type
There are many types, which can flexibly meet the individual needs of customers, but the work will be complicated and the unit cost will be high.
There are many types and it is difficult to meet the individual needs of customers, but the work will be simple and the unit cost will be low
demand changes
Stable demand, high capacity utilization, and low unit costs
Fluctuating demand, low capacity utilization, and high unit costs
visibility
Low visibility and low unit cost
High visibility, high unit cost
Longitudinal investigation
Determine production and operation goals
Translate a business strategy or marketing strategy into a production operations strategy, which determines how work is to be accomplished.
Evaluate a company's current operating performance by comparing it to competitors' performance
Develop strategies based on gap analysis
Execute strategy and continually review, improve and refine it by responding to changes in the environment
Contents of production operations strategy
Product (service) selection
Considerations
market conditions
Internal production and operation conditions of the enterprise
financial conditions
Differences in work goals among various departments of the enterprise
Make or buy options
Enterprise self-made
Completely homemade
Self-made in the assembly stage: outsourcing, self-made
Enterprise outsourcing
Establish a distribution company to provide consumers with corresponding services
Production and operation mode selection
High volume, low cost
Suitable for the provision of products or services with large demand and small differences
Multiple varieties, small batches
Products or services suitable for consumers’ diverse and personalized needs
Computer integrated manufacturing, mass customization
Supply chain and distribution network selection
supply chain
Efficient supply chain
Suitable for small varieties, high output, and predictable market environments
Pursue “reducing physical costs”
Suitable for products with common needs
Agile supply chain
Suitable for market environments with many varieties, low output and difficult to meet
Pursuing “reducing market coordination costs”
Products suitable for personalized needs
Distribution network
Depending on product inventory location and delivery method
Manufacturer's inventory plus direct shipping
Products are sent directly from the manufacturer to the end customer, bypassing the retailer
Suitable for goods with high value, low demand, and unpredictable demand
advantage
Inventory is concentrated at the manufacturer, providing a high level of product availability at lower inventory costs
shortcoming
Transportation costs are too high and it takes a long time to respond to customer needs
Manufacturer's inventory, direct shipping and in-transit consolidation
Combine orders from different locations so customers only have to accept one delivery
Distributor inventory plus carrier delivery
Distributors store in intermediate warehouses and parcel carriers transport products from the warehouse to the end customer
Distributor inventory added to door delivery
Distributor delivers product to customer’s doorstep
Manufacturer or distributor inventory plus customer pickup
Inventory is stored in the manufacturer's or distributor's warehouse. Customers place orders online or by phone and then pick up the goods at a designated pick-up point.
Retailer inventory plus customer pickup
Inventory is stored in retail stores, and customers walk into the store to purchase goods or place orders online or over the phone, and then pick up the goods at the store.
Competitive Focus of Production Operations Strategy
Delivery time
Respond to customer needs faster than competitors, reflected in product launch, delivery time, etc.
Specific performance
Fast delivery
The ability to quickly provide enterprise products to the market - is of great significance to enterprises in obtaining orders.
Delivery as promised
The ability to deliver goods on time as stipulated in the contract - has an important impact on customer satisfaction
Influencing factors
Procurement and supply, manufacturing flexibility, process and equipment management
QualityQuality
Product quality and reliability are mainly reflected by customer satisfaction
total quality
The quality of the product itself
Aim to meet customer needs, establish appropriate product quality standards, and design products with the quality level expected by market consumers
quality of production process
Aiming at zero-defect product quality, ensuring product reliability and improving customer satisfaction
Influencing factors
Good material procurement and supply control, convenience of packaging, transportation and use, after-sales service
CostCost
Production cost, manufacturing cost, circulation cost, use cost
Reducing costs is of great significance to improving the competitiveness of enterprise products, enhancing production operations, adapting to the market, and resisting risks.
specific measure
Optimize product design and process design
Reduce material and energy consumption per unit product
Reduce equipment failure rate
Improve quality and shorten production operation cycle
Improve capacity utilization and reduce inventory
Manufacturing Flexibility
When an enterprise faces market opportunities, it is reflected in its organization and production's rapid and low-cost adaptation to market demand, which reflects the ability of the enterprise's production and operation system to respond to the external environment.
The trend of diversified market demand requires multiple varieties and small batch production methods. Enhanced manufacturing flexibility has become the main factor for enterprises to form competitive advantages.
Key flexible content
Product output flexibility, new product development and production flexibility, and product portfolio flexibility
Equipment flexibility, personnel flexibility and capacity flexibility of production operation system
Put forward flexible requirements for suppliers
Production process planning and capacity planning
Ways to increase productivity
Introducing new technologies, equipment and materials
Increase the number of employees or machines
Increase the number of shifts or add additional production equipment
Types of capacity planning
Ways to balance capacity with demand
Resource-to-order production
Receive orders - purchase materials - go to production
【Construction companies】
Order production
Purchase materials - take orders - go to production
【Catering Company】
Inventory production
Purchase materials - go to production - take orders
【Toy manufacturer】
Strategic Choice
functional strategy
HR strategy
planning
Planning content
Human resources master plan
HR Business Plan
planning steps
1. Investigate and collect various information
2. Determine the deadline, scope, and nature of human resources planning, and establish a human resources information system
3. Forecast the company’s future supply and demand of human resources
4. Develop a master plan and various business plans to balance the supply and demand of human resources
Human resources supply and demand balancing strategy
1. Measures that should be taken when the total supply and demand are balanced but the structure does not match
2. Measures that should be taken when supply exceeds demand
3. Measures to be taken when supply is less than demand
Human resources acquisition
Recruitment channels and methods
Sources and methods of internal recruitment
source
Persons in junior positions - promotion
Personnel in positions at the same level - job transfer or rotation
Person in a superior position - Demotion
method
Job Announcement Act
Archival Recording Act
Sources and methods of external recruitment
source
Schools, competitors, other companies, the unemployed, senior citizens, veterans, freelancers
method
Advertising recruitment, out-of-town recruitment, recruitment through employment agencies, and recommendation recruitment
Selection and recruitment
Selection tools
Interviews, assessment centres, psychological tests, work samples, knowledge tests
Human resource acquisition strategies that match corporate competitive strategies
Cost leadership strategy
Pay more attention to recruitment costs, especially for general and auxiliary employees, who are highly replaceable
Most of them are external recruitment and human resources outsourcing.
Differentiation Strategy
Adopt a stricter strategy for employee selection
centralization strategy
More emphasis on speed of recruitment efforts
Cognitive ability tests and personality tests are often used to quickly identify employees who are qualified for the job.
Human resources training and development
Training and Development Process
Employee training process
Training needs analysis
Training plan design
Training implementation
Training effectiveness evaluation
reaction layer
learning layer
behavioral layer
result layer
Training and Development Types
Divided by training objects
New employee training
On-the-job employee training
Divided by employee level
Grassroots employee training
Mid-level employee training
Senior staff training
Divided by training form
On the job training
Off-the-job training
According to the nature of training
impartial training
transformative training
Divided by training content
knowledge training
skills training
developmental training
Human resource development and training that matches competitive strategies
Adopting a cost leadership strategy – limited knowledge
Adopt a differentiation strategy – broad knowledge
Adopt a centralized strategy – specialized knowledge
HR performance evaluation
performance plan
content
tool
key performance indicator approach
Establish an evaluation index system
Set evaluation criteria
Review key performance indicators
balanced scorecard
management by objectives
performance monitoring
formal communication
Written reports, meetings, formal interviews
informal communication
Walk-around management, open offices, communication during breaks, informal meetings
performance appraisal
Assessment objects
organization, department, employee
Examination content
Work ability, work performance, work attitude
Assessment subject
Superiors, colleagues, subordinates, employees themselves, customers
Assessment methods
Comparative method, scale method, descriptive method
performance feedback
Superiors conduct performance appraisal interviews with employees
Performance management must match the company’s basic competitive strategy
Adopt a cost leadership strategy
Adopt a differentiation strategy
Adopt a centralized strategy
Human resources salary incentives
Remuneration composition and fairness principles
composition
basic salary
A relatively stable economic income paid based on the work undertaken by employees and the skills they possess.
variable pay
Variable economic income paid based on the performance of employees, departments, teams, and the organization itself
indirect compensation
Various benefits provided to employees
fairness
external fairness
Salaries for similar positions or employees in different companies should be basically the same
internal fairness
In the same enterprise, the remuneration of different positions or employees should be proportional to their respective contributions to the enterprise.
individual fairness
In the same enterprise, the remuneration of employees in the same or similar positions should be proportional to their abilities and contributions.
pay level strategy
leading strategy
Strategies that pay above the market average
matching strategy
Salary levels are consistent with market averages
procrastination strategy
The salary level should be significantly lower than the market average
hybrid strategy
Use different strategies for different positions within the company
Key Positions - Adopting a Leading Strategy
Supportive positions – using a matching strategy
Compensation composition strategy
Corporate competitive strategy and compensation strategy
Strategic Choice
functional strategy
financial strategy
Financial strategy must be established
Financing channels and methods
Financing
Limitations on corporate financing capabilities
Difficulties faced by debt financing
Difficulties faced by dividend payments
Calculation of financing costs
Estimating the cost of equity capital using the capital asset pricing model
Estimating the cost of equity capital using the risk-free rate
long term debt cost of capital
weighted average cost of capital
optimal capital structure
dividend distribution strategy
Factors that determine dividend distribution
Dividend policy in practice
fixed dividend policy
Fixed dividend payout rate policy
zero dividend policy
residual dividend policy
Financial strategy choices
Financial strategy selection based on product life cycle
Matching financial risks and operational risks
Financial strategy choices based on value creation or growth rate
Main factors affecting value creation
Enterprise's market value added
Factors affecting enterprise market added value
return on invested capital
capital cost
growth rate
Sales growth rate, financing needs and value creation
cash shortage
When sales growth rate exceeds sustainable growth rate
cash surplus
When sales growth rate is lower than sustainable growth rate
cash balance
When sales growth rate equals sustainable growth rate
Value creation and growth rate matrix
Procurement strategy
Supply strategy
Factors affecting supply strategy
Number of suppliers in the market
Supplier’s scale and strength, operating conditions, reputation, product or service prices, transaction conditions, etc.
The enterprise's requirements or attitude towards the price, quality, quantity, delivery time, related services, etc. of supplies
Comparison of bargaining power between enterprises and suppliers
Suppliers have strong bargaining power
Multi-source, low-volume strategy
Suppliers’ bargaining power is weak
Few or single source strategy
Supply strategy
Trading straregy
market trading strategies
Applicable conditions
The technical content of the supplies is low or the production technology is relatively mature.
Supplies are not important in the production and sale of the enterprise's products
Enterprises do not need suppliers to provide after-sales services
The market where the supplier is located is relatively mature
Large number of suppliers
Competition is fierce
Enterprises do not need to establish long-term and stable cooperative relationships with suppliers. They can obtain supplies with qualified quality and low prices through market bidding.
short term cooperation strategy
Applicable conditions
Enterprise products often face rapidly changing market opportunities and flexible customer needs.
The supply of supplies is highly adaptable
Some supplies have high technical content and have an important impact on the design, production and sales of enterprise products.
In order to cope with certain market demand, the cooperation will end after the market demand is satisfied or disappears.
functional alliance strategy
Applicable conditions
Supplies play an important role in the production and operation of enterprise products
Enterprises have relatively large demand for supplies
The production technology of the supplies is mature and highly substitutable.
Suppliers have strong production capabilities and the ability to achieve economies of scale
1. Form an alliance by entering into an agreement 2. Establishing a long-term and stable cooperative relationship will help avoid risks and reduce the production and operation risks of both parties. 3. Suppliers generate economies of scale, reduce the price of supplies, and reduce the company’s own procurement costs.
Innovative alliance strategies
A strategy to form alliances with suppliers for the purpose of product and business innovation and long-term competitive advantage
Both parties need to carry out close and lasting cooperation, including the mutual coordination of the development strategies of both parties and the coordinated use of important resources such as funds and personnel. If necessary, the two parties can also establish mutual funds, joint ventures or engage in equity cooperation.
Procurement model
Traditional procurement model
At the end of each month or quarter, the purchasing department formulates the purchasing plan for the next month or quarter based on the inventory situation.
Management is simple and extensive, and procurement costs remain high
MRP procurement model
Enterprises are production-oriented and derive purchasing plans based on production plans.
Production planning and purchasing planning are very detailed
The calculation and preparation of procurement plans are very complicated
JIT procurement model - just-in-time procurement
Enterprises place orders with suppliers based on their own production needs and require suppliers to deliver them to the right place at the right time.
Can reduce inventory to a minimum and achieve zero inventory
The purchase quantity is small, but the delivery cost is high
VMI Procurement Model
The enterprise and the supplier sign an agreement, stipulating that the supplier manages the inventory and determines the optimal inventory amount
Establish long-term and stable cooperative relationships with suppliers
Greatly saves supply costs
Share benefits and risks with suppliers [share management costs]
Digital procurement model
Realize intelligent management of the entire procurement process through artificial intelligence, Internet of Things, cloud collaboration and other technologies
Strategic Choice
international business strategy
motivation
seek market
The location advantage in terms of market demand and the distribution of competitors determine the countries and regions where companies choose to invest directly abroad to seek greater market opportunities.
Broad market expansion also includes the expansion of market diversification
seeking efficiency
Go abroad to find places with the lowest cost of production factors for direct investment to gain efficiency advantages
seek resources
Find natural resources
Seek ready assets
Actively acquire the monopoly advantages of enterprises in developed countries, that is, ready-made assets such as brands, advanced technologies, management experience, funds, and economies of scale.
Main way
Export trade
Target market selection
Target market regional path
Traditional way/continuous way
High-tech products
Developed countries - developed countries - developing countries
developing countries - developing countries - developed countries
Junior/low-end products
Developing countries - developed countries
New method/discontinuous method
High-tech products
Developed or developed - developed countries - developing countries
Select target customers
The basis for selection is market segmentation
Choosing Distribution Channels and Export Marketing
International distribution channels are more complex than domestic distribution channels and involve more intermediate links
International distribution channels generally cost more than domestic distribution channels
Exporters sometimes have to sell to overseas markets through different distribution channels than the domestic market
International distribution channels often provide companies with overseas market information, including how well products are selling in the market and why.
Export trade pricing
Pricing is on the high side
Expect to obtain returns greater than those in the domestic market
Establish prices that are close to the income levels of overseas markets and domestic markets
Believes that there is little difference between overseas markets and domestic markets
Pricing is low in the short term, even if profits are low or even losses are incurred
Consider overseas markets as promising markets
Increase profits after offsetting variable costs, and price products at a price that exceeds domestic market demand.
Treating overseas markets as a dumping ground to solve excess production capacity and bring short-term profits is not considered a true export market pioneer.
Foreign Direct Investment
Wholly owned subsidiary/sole proprietorship
advantage
1. Can completely control the daily operations of the seed company
2. Can avoid conflicts of inconsistent interests and goals
defect
1. Spend a lot of money
2. Difficulty in obtaining policy and resource support
joint venture
Target
advantage
Reduce capital investment in international operations
Helps make up for the shortcomings of lack of experience in cross-border operations
Conducive to attracting and utilizing the resources of host country joint venture partners
shortcoming
Multiple parties participate in investment, and coordination costs are too high
Differences in objectives of the joint venture parties
Cultural differences between the parties to the joint venture [Cultural differences are not necessarily solely due to different nationalities]
non-equity form
Contract manufacturing, service outsourcing, contract farming, franchising, licensing, management contracts
The non-equity form is a middle way between foreign direct investment and trade.
The primary core competitiveness of an enterprise's international operations is the ability to coordinate various activities in the global value chain.
Enterprises can carry out various business activities internally (internalization)
It can also be entrusted to other companies (externalization)
International operations of enterprises in global value chains
Theory and Concepts
International division of labor within products
Product production is broken down into multiple processes
The production process is carried out in two or more countries or regions
At least one country or region uses imported products to produce and exports products that use the imported products.
Global production network
The basic unit is the value chain of a multinational enterprise. The interaction between the value chains of different multinational enterprises forms a global production network. Therefore, the global production network has obvious geographical dispersion characteristics.
global value chain
Emphasizes the related activities and games between value chain links in global business activities of enterprises from different countries or regions.
Enterprise international operations and global value chain construction
role positioning
Leading companies
first grade supplier
Other tier suppliers
contract manufacturer
Division of labor model
Bureaucratic value chain
market value chain
Captive value chain
Modular value chain
Relevance value chain
Global value chain and enterprise upgrading in developing countries
Types of enterprise upgrades
Process upgrade
Upgrades achieved through improvements in production technology and improvements in production organization and management efficiency
product upgrade
Upgrading by improving product design to provide product competitiveness
Function upgrade
Upgrading by occupying higher value-added links in the value chain
Value chain upgrade
Upgrading by entering a value chain with higher technical or capital barriers or acquiring a higher position in the value chain to improve profitability and competitiveness
Global value chain division of labor model and enterprise upgrading
Types of strategies for international operations
Corporate strategy for emerging markets
Allocate resources according to industry characteristics
Understand the different pressures faced by different industries
Assess the company's own advantageous resources
Strategic choices for local companies