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MindMap Gallery Chapter 3 Strategic Choice
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Chapter 3 Strategic Choice
Strategic learning requires logic and hierarchical thinking. This map was compiled based on the lecture notes of the 2020 Certified Public Accountant Key and Difficult Special Class. I organized the mind map while studying. It quickly helped me pass the strategy in 15 days and passed with a low score of 60.25 points.
Edited at 2021-05-04 22:13:24
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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.
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- Outline
Chapter 3 Strategic Choice
overall strategy
development strategy
integrated strategy
definition
For products or businesses with advantages and growth potential, enterprises extend the depth and breadth of their businesses vertically or horizontally along their business chains, expand their business scale, and achieve corporate growth.
Classification
forward integration
definition
Strategies to gain ownership of or increase control over distributors or retailers
advantage
market
Conducive to controlling or mastering the market
consumer
Increase sensitivity to changes in consumer demand
compete
Improve the market adaptability and competitiveness of enterprise products
Applicable conditions
Internal Advantage-S
Have the funds and human resources required for forward integration
External Opportunities-O
The industry has great growth potential
Higher profit margins in sales
External Threat-T
Existing sellers have high sales costs or poor reliability and are unable to meet the company's sales needs.
backward integration
definition
Strategies to gain ownership of or increase control over suppliers
advantage
Control the cost, quality and supply reliability of inputs such as key raw materials
Ensure the steady progress of enterprise production and operation activities
Applicable conditions
Internal Advantage-S
Have the funds and human resources required for backward integration
External Opportunities-O
The industry has great growth potential
Suppliers have higher profit margins
External Threat-T
Existing suppliers have high costs or poor reliability and are unable to meet the company's needs for raw materials, parts, etc.
Few suppliers and many demand-side competitors
The stability of product prices is very critical to enterprises
horizontal integration
definition
The strategy of a company to expand towards the same stage of the value chain
advantage
economies of scale
Applicable conditions
Internal Advantage-S
Have the funds and human resources required for horizontal integration
Comply with anti-monopoly regulations and be able to obtain a certain monopoly position in local areas
External Opportunities-O
The industry has great growth potential
External Threat-T
Competition in the industry in which the company is located is fierce
Economies of scale in the industry in which the enterprise is located are relatively significant
Advantages and Disadvantages
advantage
Save transaction costs
Because suppliers or vendors are merged into one department
shortcoming
Increase management costs
intensive strategy
market penetration
Existing market Existing products
In a single market, relying on a single product aims to significantly increase market share.
Applicable conditions
Internal Advantage-S
Enterprises are determined to limit their interests to existing products or market areas
The company has a strong market position and is able to leverage experience and capabilities to gain a strong and unique competitive advantage
External Opportunities-O
The overall market is growing
Other companies left the market for various reasons
Market penetration strategies correspond to lower risks, relatively less investment, and higher involvement of senior managers.
Market Development
New market Existing product
Market existing products into new regions or other market segments
Change sales and advertising methods
Applicable conditions
Internal Advantage-S
The company is very successful in its current business area
The enterprise has the capital and human resources needed to expand its operations
Enterprises have excess production capacity
External Opportunities-O
There is an untapped or undersaturated market
Access to new, economical, reliable and high-quality sales channels
The main business of the company belongs to an industry that is rapidly globalizing
product development
Existing market new products
Launch new products in existing markets and extend product life cycle
Applicable conditions
Internal Advantage-S
The company has strong R&D capabilities
Enterprise products have high market credibility and customer satisfaction
External Opportunities-O
The industry in which the enterprise is located is a high-tech industry with rapid development that is suitable for innovation.
and is in a stage of rapid growth
External Threat-W
Major competitors offer higher quality products at similar prices
Diversification
new markets new products
Related diversification in terms of new technologies or markets
Unrelated diversification not related to existing products or markets
Diversification Strategy
definition
Enterprises enter areas that are different from existing products and markets
Classification
Related diversification (concentric diversification)
Enter related industries based on existing business or market
Purpose
Gain the benefits of integration
Unrelated diversification (centrifugal diversification)
Fields that are not relevant to current industries and markets
Purpose
balance cash flow
Obtain new profit growth points
Avoid industry or market development risks
advantage
Original business
Use surplus funds
Leveraging underutilized resources
Use the company's image and reputation in a certain industry or market to enter another market
new business
Find new growth points when the business cannot grow
Easier access to capital markets
Between individuals (combination)
spread risk
Receive funds or other financial benefits
The new business may suffer losses, and the merger can be deducted from corporate income tax
risk
Original business
Risks from original operating industries
new business
Industry entry risk
Industry exit risk
Between individuals (combination)
Internal business integration risks
Main approaches to development strategy
External development (mergers and acquisitions)
Classification
According to the identity of the acquiring party
Industrial capital mergers and acquisitions (non-financial enterprises)
Financial capital mergers and acquisitions (seeking capital gains)
According to the source of acquisition funds
LBO
The main funds are borrowed
non-leveraged buyout
The main funds are self-owned
Classification by industry where both parties to the merger and acquisition are located
horizontal merger
Enterprises in the same industry
vertical merger
At different stages of production and marketing
Diversified M&A
According to the attitude of the acquired party
Friendly mergers and acquisitions
Many consultations
hostile takeover
Disagreed or not negotiated
motivation
Avoid entry barriers, enter quickly, seize market opportunities, and avoid various risks
Company B is in Japan and there are market barriers. A enters by merging Company B.
Gain synergy
First level focus effect
After the merger, the time and space of the two companies' forces are arranged and optimized to achieve a focusing effect.
The second level changes the whole
After the merger, the different internal forces of the two companies are transferred, diffused and complementary, changing the overall functions.
The third level of nature and power
After the merger, the internal forces of the two companies will be coupled, feedback, and complementary, changing the nature and strength of the forces.
Overcome negative externalities of enterprises, reduce competition, and enhance control over the market
There is company BCDE in the original market, but A acquires B. There are still 4 companies in the market.
If A builds its own business, there will be 5 companies competing in the market
risk
beforehand
poor decision making
Failure to conduct due diligence
in progress
Paying exorbitant M&A fees
Only by comparison can we draw conclusions
afterwards
After merger and acquisition, enterprise integration cannot be carried out well.
special
Political risks of cross-border mergers and acquisitions
Political risk assessment
Strengthen the political risk assessment of the host country and improve the dynamic monitoring and early warning system
Flexible investment strategies
Adopt flexible international investment strategies to build a solid foundation for risk control
localization strategy
Implement corporate localization strategies to reduce conflicts and frictions with host countries
Case
A merges with B, but B itself violates the rules
It is an improper decision-making and not a political risk.
The government of country B specifically picks out problems of A
a political risk
Internal development (self-built)
The process of developing new products enables companies to gain a deep understanding of the market and products
No suitable acquisition target exists
Maintain a unified management style and corporate culture
Provide career development opportunities for managers
The consideration is lower because no additional amount is paid for goodwill when acquiring the asset
Mergers and acquisitions often create hidden or unpredictable losses, whereas internal developments are less likely to create this
This may be the only reasonable way to achieve true technological innovation that can be planned, financial support can be easily obtained from corporate resources, and the cost can be spread over time
The risk is low. In an acquisition, the buyer may also have to bear the consequences of the acquired company's previous decisions.
Internal development costs increase more slowly
Strategic Alliance
feature
Look at corporate relations
equality of dealings
Alliance members are all independent legal entities, follow the principle of voluntary mutual benefit, and are driven by each other's complementary advantages and cooperative interests.
Long-term partnership
The goal of enterprises participating in alliances is not to obtain short-term benefits, but to enhance their competitive advantages through continued cooperation and maximize long-term benefits.
complementarity of overall interests
The alliance relationship is not a market transaction relationship between enterprises, but a complementary interest relationship between members.
Openness of organizational form
Strategic alliance itself is a dynamic and open system and a loose form of integrated organization between companies.
corporate behavior
Long-term planning focused on optimizing the future competitive environment
motivation
Avoid or reduce competition
Replace competition with cooperation and reduce the high cost of dealing with fierce competition
A B C D E changed from 4 to 5
Promote technological innovation
The development costs of high-tech products are increasing day by day, and it is difficult for a single enterprise to pay independently. It must be shared by establishing strategic alliances.
Open up new markets
Enterprises can quickly diversify their business scope and expand their business areas by establishing extensive strategic alliances
Reduce coordination costs
Avoid business risks
Reduce the risks of resource waste, market development and technological innovation by establishing strategic alliances and expanding the density and speed of information transmission.
Realize resource complementation
Summary: Arena, become a crazy (wind) child (capital)
Main types
Equity strategic alliance
form
Joint venture
Compared with ordinary joint ventures, it reflects more strategic intentions.
mutual shareholding
Hold small shares in each other and maintain their independence
advantage
It is conducive to expanding financial strength, enhancing the sense of trust and responsibility of both parties, and conducive to long-term cooperation.
shortcoming
Poor flexibility
contractual strategic alliance
form
functional protocol
Asset-free investment, determined by contract to cooperate in certain aspects
Common protocols
Technology Exchange Agreement
Cooperative research and development agreement
Production Marketing Agreement
Industrial Coordination Agreement
advantage
There will be better flexibility (more of a strategic alliance nature)
shortcoming
The enterprise has poor control over the alliance, the loose organization lacks stability and long-term development, inadequate communication and low efficiency.
stabilization strategy
Strategy-Organization-Environment Coordination
How to do
Concentrate resources on original business scope and products to increase its competitive advantage
Applicable conditions
It is used for companies whose forecasts of the environment during the strategic period will not change much but whose operations were quite successful in the early stages.
risk
Changes in the external environment
contraction strategy
definition
Strategy to reduce original business scope and scale
Reasons for implementation
active cause
Big business
Strategic restructuring needs
small business
short term behavior
passive cause
External causes
Environmental changes lead to corporate crises
internal reasons
Internal business decision-making problems cause the enterprise (or a certain business of the enterprise) to lose its competitive advantage
Way
preferred improvements
Tightening and Concentration Strategies (Throttling)
manage
Mechanism change
Adjust the management leadership team
Re-formulate new policies and management control systems to improve incentive mechanisms and restraint mechanisms, etc.
business
cost cutting
Such as reducing labor costs, material costs, administrative expenses and assets, etc.
Reduce the size of divisions and functions
finance
Finance and Financial Strategy
Introduce and establish effective financial control systems
Negotiate with key creditors and re-sign repayment agreements, etc.
Moving to Strategy (Open Source)
Reposition or adapt existing products and services
Adjust marketing strategy
Otherwise retreat
Abandon strategy (more radically)
Franchise
Refers to an enterprise selling limited rights to a franchised enterprise and charging a one-time payment. The franchised enterprise can use the franchised enterprise's trademark and brand, but must strictly abide by the licensor's operating regulations.
Subcontract
It refers to a company using bidding to let other companies produce certain products of the company or operate certain businesses of the company. The difference from the franchise method is that the seller sells a part of its business and requires the buyer to provide a certain amount of products or services to the seller at a certain price within a specific period of time.
sell out
It means that the parent company sells its business unit to other enterprises, thus severing all relations with the business unit and realizing the complete transfer of property rights.
Management and leveraged buyouts
That is, a company sells most of its business to its management or another consortium, and the parent company can retain the equity in the short or medium term. For the buyer, this amounts to a delayed payment.
Split into shares/split
Refers to the split of a part of the parent company into a strategic legal entity, forming the ownership of the subsidiary in the form of diversified shareholdings. The parent company still largely controls this part of the business. A subsidiary that is separated from its parent company can be viewed as a quasi-independent entity.
Asset swaps and strategic trade
Refers to the transfer of ownership through the exchange of assets between enterprises. This requires a match between two companies, where the selling company and the buying company need to be able to accept each other's assets.
difficulty
Judgment of enterprise or business (beforehand)
No test
exit barriers
The principle is from inside to outside, from direct to indirect
Fixed asset specificity
exit cost
emotional disorder
internal strategic connections
Government and Social Constraints
business unit strategy
basic competitive strategy
Strategic objectives
Whole industry scope
cost leadership
Low cost advantage
Differentiation
Uniqueness perceived by customers
specific market segments
Concentrated cost leadership
Focus on differentiation
Cost leadership strategy
Advantage
Create barriers to entry (low cost - low price)
Enhanced bargaining power (buyers and sellers)
Resist the threat of substitutes
Reduce the threat of substitutes (high cost performance)
Maintain leading competitive position (price advantage)
Implementation conditions (4 7)
External (market conditions)
price elasticity
The product has high price elasticity and there are a large number of price-sensitive users in the market.
price competition
Price competition is the main means of market competition, and consumers’ switching costs are low
product standardization
The products of all companies in the industry are standardized products, and it is difficult to differentiate products.
brand
Buyers pay less attention to brands and most buyers use products in the same way
formula
bounce bid items
Internal (resources and capabilities)
Building production facilities to achieve economies of scale in industries where economies of scale are significant
Choose the appropriate trading organization form
Reduce various factor costs
Improve product process design
Improve productivity
Improve production capacity utilization
Focus on gathering
Tip: Regular formation can increase productivity
risk
Technological changes wipe out past cost-reducing investments and experience gains
Market demand shifts from focusing on price to focusing on product brand
Consumers have changed their minds
New entrants or followers in the industry imitate or invest in high-tech facilities and learn at a lower cost
Differentiation Strategy
Advantage
Create barriers to entry (product features)
Enhanced bargaining power (buyers and sellers)
Resist the threat of substitutes
Reduce the threat of substitutes (high cost performance)
Reduce customer sensitivity
Competitive isolation
Implementation conditions (3 4)
External (market conditions)
product
Products can be fully differentiated and recognized by customers
consumer
Customer needs are diverse
compete
The industry in which the company operates is experiencing rapid technological changes, and innovation has become the focus of competition.
Internal (resources and capabilities)
R&D
Have strong R&D capabilities and product design capabilities, and have strong R&D managers
Sale
Have strong marketing capabilities and management personnel
manage
Have an incentive system, management system and a good creative culture that can inspire employees' creativity
Strategic Decision
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
producer
The cost of differentiation for enterprises is too high
consumer
Market demand changes
compete
Competitors' imitation and attacks narrow the differences or even turn them around
centralization strategy
definition
A strategy that uses cost leadership or product differentiation to gain competitive advantage for a specific buying group, product segment, or regional market. Centralization strategy is generally a strategy adopted by small and medium-sized enterprises
Classification
Focused cost leadership strategy
Focus on differentiation strategy
Implementation conditions
External (market conditions)
Differences in needs among buyer groups
The target market is relatively attractive in terms of market capacity, profitability, growth rate, competition intensity, etc.
No other competitor in the target market adopts a similar strategy
Internal (resources and capabilities)
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
producer
Risks caused by narrow markets
Leading to the failure of both cost leadership and differentiation
consumer
The difference in demand among buying groups becomes smaller
compete
Entry and competition of competitors
strategic clock
definition
More sophisticated analysis of basic competitive strategies
Classification
Cost leadership strategy
Low price (cost leadership)
A typical approach used by companies seeking a cost leadership strategy is to lower prices while trying to maintain the quality of their products or services.
Low price and low value (concentrated cost leadership)
A very viable strategy that focuses on very price-sensitive market segments
Differentiation Strategy
High value (differentiation)
Provide customers with customer-recognized value that is higher than competitors at the same or slightly higher prices
High price and high value (focused differentiation)
Provide customers with higher recognition at particularly high prices (high-end shopping malls, hotels, restaurants, etc.)
mixed strategy
low price high value
Companies that provide high-quality products increase market share and reduce costs due to economies of scale
The accumulation of experience in high-quality products reduces costs faster
Focusing on improving production efficiency can reduce costs in the production of high-quality products
SME strategy
Scattered industries
feature
Industrial concentration is very low
No company has a significant market share
No company has had a significant impact on the development of the entire industry
Reasons for industry fragmentation
Easy to enter, hard to exit
Low barriers to entry or high barriers to exit
Buyer's perspective
Diversified market demand leads to high product differentiation
Seller's perspective
Economies of scale do not exist or are difficult to achieve
Strategic Choice
cost leadership
Overcome fragmentation
Franchise or franchise
FOOD
Technological innovation to create economies of scale
Walmart satellite sells eggs
Discover industry trends early
on-line
Differentiation
Increase added value
Deeper connotation beyond product functions (culture and other functions are acceptable)
centralization
Specialization
Differentiation by product type or product segment
Customer Type Specialization
Geographic area specialization
Beware of potential strategic pitfalls
Avoid over-centralization
Avoid seeking dominance
Avoid overreacting to new products
Maintain strict strategic constraints
Understand competitors' strategic goals and overhead costs
Emerging industry
Common characteristics of the internal environment (formation period)
seller
technological uncertainty
strategic uncertainty
Rapid changes in costs
Germinating enterprises (newly established enterprises) and separate businesses
buyer
First-time buyers wait until the product matures before purchasing
Development barriers and opportunities
factors of production
Inadequacy of raw materials, parts, capital and other supplies
product
Reactions to substituted products
R&D
Difficulties in selecting, acquiring and applying proprietary technology
manage
Lack of courage and ability to take risks
marketing
Customer confusion and wait-and-see
blue ocean strategy
connotation
value innovation
Increase customer and corporate value
Not focusing on competition
Open up a new, non-competitive market space
Blue oceans can be pursued in a systematic and replicable way
feature
Blue Ocean Strategy (Value)
avoid competition
Expand non-competitive market space
The target market is the same as other companies. I don’t take the usual path.
Create and capture new needs
Strategic goals to meet consumer needs
Breaking the Law of Interchangeability between Value and Cost
At the same time, pursue differentiation and low cost, and integrate corporate behavior into a system
Action, low cost, high value
Characteristics and Red Sea Strategy Comparison
Red Ocean Strategy (Competition)
Compete within an already existing market
compete
Capture existing needs
Follow the law of interchange between value and cost
Integrate corporate behavior into a system based on strategic choices of differentiation or cost leadership
Fundamental rules for reconstructing market boundaries
Examine alternative industries
alternatives
Different form, but same function
Pen and paper
calculator
He chooses products
Different functional forms but the same purpose
Watch American TV series
Watch NBA
Look at complementary products or services
Redefine buyer groups
channel
Manufacturers of drugs do not sell drugs directly to patients, but through doctors
Reset the functional and emotional orientation of the industry
haircut
Feature
care
Emotional
Across different strategic groups within the industry
Participate in shaping external trends across time
path analysis
A product (service) and B product (service) are combined (A B model)
A B→Compared with competitors' products, it has become his product of choice: his product selection examines his industry choice
A B → Entering a new strategic group: across different groups within the industry
If A and B are complementary goods (need to judge): look at complementary products or services
One of the emotional appeals of A and B is related (judgment required): Reset the customer’s functional or emotional needs
Redefine buyer groups
Possible expansion into channel changes
Middlemen → direct sales
Participate in shaping external trends across time
Trends – changes brought about by time
Comparison with Red Ocean Strategy
Focus on competitors within the industry
Focus on competitive position within strategic groups
Focus on better serving buyer groups
Focus on maximizing the value of products or services within industry boundaries
Focus on the established functions of the industry - improvement of cost performance
Focus on and adapt to external trends
international business strategy
motivation
developed country
combination of international factors of production
product life cycle theory
Dimension: Production and R&D
eclectic theory of international production
Ownership Advantages
Technology Transfer
Ownership advantages Internalization advantages
exit
Ownership advantages Internalization advantages Location advantages
Foreign Direct Investment
Concept interpretation
ownership
ownership of technology
internalize
Set up a company
Location Advantage
Regional supporting conditions
monopoly advantage theory
location theory
internalization theory
Market characteristics faced (oligopoly)
Hymer on the oligopolistic reaction behavior of multinational enterprises
Knickerbocker's theory of oligopoly reaction
developing country
seek market
reason
Market attraction and avoid trade barriers
the main form
Intra-regional investment
information Technology
Location of key customers leads to investment within developing countries
seek resources
reason
Developing countries have large populations and scarce resources.
seeking efficiency
reason
Rising economic costs for the mother body
Pressure from low-cost rivals
Seek ready assets
reason
Asset expansion strategy: invest more in developed countries, seeking brands and technologies, etc.
Advantage
New construction approach to improve host country production capacity
Create jobs (foreign investment is labor-intensive and has higher wages
Technologies and models are similar, and beneficial contact patterns and technology absorption are more likely
enter mode
exit
Target market regional path
level
Regional route of target market (which type of country to choose)
traditional way
continuous mode
developed→developed→developing
Develop → Develop → Develop
However, primary products such as agricultural products and mineral products and labor-intensive low-end products from developing countries mainly go to developed countries.
new way
discontinuous mode
Select target customers (market segmentation per country)
path
Select entry strategy
Choosing Distribution Channels and Export Marketing
Pricing on the export market
Design marketing mix 4P to solve content consistency
external equity investment
Stock investment
Foreign Direct Investment
Wholly owned subsidiary
control over subsidiaries
Full operational control
Conflict between parties
Get rid of conflict between parties
resources invested
Spend a lot of money
risk
High risk
market
politics
Whether it has local support and the ability to avoid political risks
Difficulty in getting local support
Weak ability to avoid political risks
Joint venture
control over subsidiaries
Weak control
High coordination costs
Conflict between parties
Differences in goals and cultural differences between parties
resources invested
Reduce investment
risk
Can reduce political risks
Whether it has local support and the ability to avoid political risks
Get local support
market image
channel
Financing
policy
non-equity arrangements
strategy type
Illustration
globalization
High efficiency and low cost
High degree of global collaboration
Low local adaptability
transnational strategy
Two-way relationship between mother and son
High degree of global collaboration
High local adaptability
international strategy
Start with initial thoughts and actions
Low level of global collaboration
Low local adaptability
Multi-country localization strategy
local consumer demand
Low level of global collaboration
High local adaptability
Nature
How to gain competitive advantage
Corporate strategy for emerging markets
Allocate resources according to industry characteristics (strategic analysis)
internal environment analysis
Assess your strengths
Does the advantage lie in local defense or outward expansion?
external environment analysis
Understand the different pressures faced by different industries
Strategic choices for local companies
Illustration
Dodger
advantage analysis
Internal Advantage-S
The advantage lies in local defense - reshaping business models one by one
External environment-O
Industrial globalization is under great pressure
strategy
Surrender, run away, become friends
Redefine your core business and avoid direct competition with multinational companies
Focus on market segments based on its local advantages and shift business focus to certain links in the value chain
Produce products that complement those of multinational companies or adapt them to suit local tastes
Establish joint ventures and cooperative enterprises with multinational companies
Selling a business to a multinational company
counterbalancer
advantage analysis
Internal Advantage-S
The advantage lies in expanding outwards
External environment-O
Industrial globalization is under great pressure
strategy
Don’t just compete on cost, but measure your strength against the leading companies in the industry.
Improve in aspects other than cost
Find a market that is well positioned and easy to defend
submarket
Find a suitable breakthrough in a global industry
Trends of the times, such as 5G, smart production, information technology, etc.
Learn to obtain resources from developed countries to overcome your own lack of skills and lack of capital
R&D
memory oral judgment
No matter the cost, don’t fall behind
Clear positioning and easy to defend
Global industrial breakthrough
Learn advanced skills and techniques
defender
Leverage the strengths of the domestic market for defense
advantage analysis
Internal Advantage-S
Advantage lies in home defense
External environment-O
Industrial globalization has little pressure
strategy
client
Focus on customers who like domestic products and do not consider those customers who advocate international brands
product and service
Frequently adapt products and services to meet the special or even unique needs of customers
Distribution Network
Strengthen the construction and management of distribution networks to alleviate competitive pressure from foreign competitors
expander
advantage analysis
Internal Advantage-S
The advantage lies in expanding outwards
External environment-O
Industrial globalization pressure is low
strategy
When extending local advantages overseas, you should pay attention to finding markets that are similar to your home market in terms of consumer preferences, geographical relationships, distribution channels or government management to make the most effective use of your own resources.
functional strategy
Procurement strategy
Supply strategy
single source
relations with suppliers
Establish a stronger relationship
information
Facilitate confidentiality of information
Buyer’s bargaining power
If there are no other suppliers, the bargaining power of the supplier will be enhanced
economies of scale
generate economies of scale
quality
Possibility of obtaining high-quality supplies
Out of stock risk
Vulnerable to supply disruptions
other
Suppliers are vulnerable to changes in order volumes
Multiple sources of supply
relations with suppliers
low commitment
information
Ability to acquire greater knowledge and expertise
Buyer’s bargaining power
Conducive to lowering prices for suppliers
economies of scale
Economies of scale ignored
quality
Difficult to obtain high quality
Out of stock risk
Supply disruptions have low impact
The supplier is responsible for delivering a complete subcomponent
relations with suppliers
Designate "first-tier" suppliers to deliver subcomponents rather than dealing with several suppliers
information
Use external experts and external technology
economies of scale
Ability to negotiate economies of scale
other
Can arrange other tasks for internal staff
advantage
Buyer’s bargaining power
First-tier suppliers are in a prominent position
quality
Competitors have access to the same external firms, so the firm is unlikely to gain a competitive advantage in supply.
shortcoming
Procurement mix elements
quality
quantity
price
delivery
Purchasing Manager Responsibilities
Supplier management
production input
management input
Cost Control
Maintain inventory levels
Obtain information on the following matters to use in evaluating various procurement options
price
quality
Availability
Distributors and Suppliers
Production operations strategy
content
batch
multitudinous
capital intensive
small batch
labor intensive
type
More varieties to better meet customer needs, complex production
demand changes
Seasonal fluctuations affect capacity utilization
visibility
High visibility requires better communication skills
higher unit cost
Arrangement of maximum production capacity (capacity planning)
Capacity
client needs
Minimize the gap between the two, thereby improving efficiency
type
lead strategy
Capacity>Demand
Increase production capacity in advance in anticipation of increased demand
matching strategy
Capacity = demand
A small increase in production capacity to cope with changes in demand
hysteresis strategy
Capacity<Demand
Increase production capacity at full load or overload
Ways to balance capacity with demand
Resource-to-order production
Purchase resources after placing an order
construction industry
shipbuilding industry
Order production
Start production after placing an order
Catering
Inventory production
Start production before order is received
How to arrange production and inventory (just in time production JIT)
Accuracy in time, quality and quantity of each production link→Result: low inventory
Key elements in implementation
keep improving
Eliminate waste
Reduce production preparation time
Involvement of all employees
Good workplace organization
advantage
low inventory
Reduce inventory operating costs
Reduces the likelihood of inventory deterioration, obsolescence or obsolescence
Avoid situations where a large amount of finished goods cannot be sold due to sudden changes in demand
Because JIT focuses on doing the job right the first time, it reduces the time it takes to inspect and rework products produced by others.
shortcoming
There is less room to make up for errors in the production process
Production is highly dependent on suppliers
No spare finished goods to meet unexpected orders. However, JIT is still a method that can respond to production in a timely manner
research and development strategy
definition
Corporate innovation at the organizational level to serve corporate strategy
Classification
product research
New products development
product development
Differentiation Strategy
process research
Focus on the process of producing a product or providing a service
Increase productivity
Cost leadership strategy
improve product quality
Differentiation Strategy
Power source
technology push
Innovation comes from the application of inventions
demand pull
New market demands drive innovation
Coordination of R&D and marketing
R&D positioning
Strong R&D capabilities
Introducing new technologies to the market
high risk
In R&D capacity
Innovative imitators of successful products
Low start-up risk and cost
Excellent R&D personnel and marketing departments are needed
Weak R&D capability
Low-cost producer of successful products
R&D costs are lower
Requires companies to continuously invest in factories and equipment to achieve economies of scale
marketing strategy
Determine target market
market segmentation
individual consumer
Geographic segmentation
Urban and rural areas
Topography and climate
Transportation
psychographic segmentation
consumer lifestyle
personality
population segmentation
Age, gender, income, occupation, education level, family size, nationality, religion
behavioral segmentation
purchase
use
Industrial consumers
end user
In the industrial market, different end users often have different requirements for the marketing mix of the same industrial supplies. (Airplanes, sports cars, and tractors have different tire requirements)
Customer scale
Key accounts are contacted by the company's national account manager
Small customers are contacted by field sales staff
other variables
Many companies actually use not one variable, but several variables or even a series of variables to segment industrial markets.
Target market selection
undifferentiated marketing
Entire market, single strategy
Differential Marketing
Multiple sub-markets, different marketing strategies
centralized marketing
Target one or a few submarkets with similar nature
Market positioning
Find out what these customers need
Design marketing mix
Product Strategy
product mix strategy
Combination content
width
length
brand
depth
Model under the brand
relevance
Combination strategy
Expand product portfolio
Expand the width and length of the product portfolio and enhance the depth of the product portfolio
Reduce product portfolio
Eliminate those product categories or product items that make little profit or even lose money
product extension
extend downward
Originally produced high-end products, but later decided to add low-end products
extend upward
Originally produced low-end products, but later decided to add high-end products
Two-way extension
Originally positioned as a mid-range product, it has been made higher and lower.
Brand and Trademark Strategy
Single business name
own brand, own production
Each product has a different brand name
Procter & Gamble
private label
OEM
Walmart
promotion strategy
advertising promotion
Advertising in the media
Key takeaways: Consider the time, place, frequency and format of your ads
Business promotion
Use non-media promotion methods
gift
Discount
tester
public relations
Usually refers to promoting corporate image (not promoting products)
personal selling
The company's sales representatives have direct contact with prospective customers
Distribution strategy
direct
indirect
exclusive
Dense
on-line
offline
Price Strategy
High quality and high pricing
Follow the pricing strategy of the market leader or market
product differential pricing
Pricing based on market segments
location based pricing
Product-based version pricing
Time-based pricing
dynamic pricing
Air tickets
product launch pricing method
penetration pricing
New products at low prices to seize the market
skimming pricing
New products at high prices, grabbing profits
financial strategy
money management strategy
The acquisition and use of physical assets involved
Fundraising strategy
capital structure decisions
Financing Source Decisions
Dividend distribution decision
fixed dividend policy
fixed dividend payout ratio
zero dividend policy
residual dividend policy
Financial strategy selection based on development stage
business risk
Introduction period
very high
growth period
high
mature stage
middle
Recession
Low
Financial risk
Introduction period
very low
growth period
Low
mature stage
middle
Recession
high
Capital Structure
Introduction period
Equity financing
growth period
Mainly equity capital
mature stage
Equity Debt
Recession
Equity Debt
Sources of funds
Introduction period
venture capital
growth period
Increase in equity investment
mature stage
retained earnings debt
Recession
debt
dividend
Introduction period
Not allocated
growth period
low allocation rate
mature stage
High allocation rate
Recession
allocate
price/earnings multiple
Introduction period
very high
growth period
high
mature stage
middle
Recession
Low
share price
Introduction period
Rapid growth
growth period
grow and fluctuate
mature stage
Stablize
Recession
drop and fluctuate
Financial strategy choices based on value creation or growth rate
Funding-backed assets, asset-backed sales
Sales growth rate>sustainable growth rate
cash shortage
Sales growth rate <sustainable growth rate
cash surplus
Appreciated Cash Remaining
feature
ROI > Cost of Capital
Sales growth rate <sustainable growth rate
Strategic Choice
invest again
buy back shares
Distribute dividends
Impairment Cash Remaining
feature
Return on investment < cost of capital
Sales growth rate <sustainable growth rate
Strategic Choice
Improve ROI
Improve after-tax operating profit margin
Expand scale
increase price
Control costs
Improve operating asset turnover rate and reduce capital occupation such as accounts receivable and inventory
Reduce capital costs
Review the current capital structure policy and make appropriate adjustments if the debt ratio is inappropriate
selling business
Shortage of value-added cash
feature
ROI > Cost of Capital
Sales growth rate>sustainable growth rate
Strategic Choice
Improve operational efficiency
change financial policy
Issue additional shares
Merger Cash Cow
impairment cash shortage
feature
Return on investment < cost of capital
Sales growth rate>sustainable growth rate
Strategic Choice
Reorganization
selling business
HR strategy
internal recruitment
advantage
The method of promoting existing employees can mobilize employees' enthusiasm, cultivate employee loyalty, stimulate employees' enthusiasm for work, and help boost the overall morale of employees;
By using the information and data collected by existing employees for selection, we can more accurately judge whether the candidates are suitable for the job;
Can save a lot of recruitment and selection time and costs;
If training is required after recruitment, employees recruited internally can adapt to the training requirements more quickly.
External recruitment
advantage
External recruiters may bring new ideas and thinking that can benefit the company's development
External recruitment mechanisms are less likely to induce bad habits such as guanxi or pride and complacency.