LECTURE 5 - THE CORPORATE LEVEL STRATEGY

THERE ARE 3 LEVEL OF STRATEGIES:

1. Corporate level strategies
2. Business level strategies
3. Functional level strategies.

CORPORATE LEVEL STRATEGIES:

😄 For the benefit of the whole organization

😄 Top management level

😄 For the welfare of the whole corporation in terms of its future

😄To bring it to a higher position overall in terms of the group's share value, profit of any performance measures.

CORPORATE LEVEL STRATEGIES:

I. Grand Strategies

💜 Growth : to ensure next year's growth rates higher than the previous year.

💜 Stable growth : To target a growth rate similar to that as achieved in the previous year.

💜 Turnaround : The growth rate is positive as compared to the previous year. For example IBM, Holiday Inn, Malaysian Airline System and Proton.

💜 Combination : For a big organization or a holding company, sometimes turnaround can be only done by the combination strategy where some of its components need to be dismantled or pruned off.

II. Secondary Level Strategies

💛 Expand : To increase activities so that the volume of the output is increased in terms of numbers, weight, size, branches and etc. For example, Giant, Tesco, Petronas, Shell, KFC, Secret Recipe, Sugar Bun, London Optical and Aquanano.

💛 Intergrate : To seek control of its operations. Refers to the activities along the supply chain right from the raw material production until the sales of the final product to the ultimate consumer. For example, a furniture manufacturer would buy the sawn timber as its raw material and subject them to a series of processes to finally be assembled into a furniture from which is dining set.

• Backward Integration Strategy : Control the availability of resources/raw material supplies.
• Forward Integration Strategy : Have control of the value-added activities down the line.
• Also known as Vertical Integration Strategy. For example, IOI, Petronas and KFC.
• Horizontal Integration Strategy : Deals with also wanting to control the business operations. For example is banking industries.

💛 Diversify : Is basically increasing the number of outputs produced or services rendered.

• Concentric Diversification Strategy : When a company would want to increase the variety of its manufactured products that are related to its present operations. For example Air Asia and Adabi.
• Conglomerate diversification Strategy : Adding variety in a different or unrelated sector. For example Sime Darby, DRB-HICOM, BERJAYA Group and IOI Group.
• Horizontal Diversification Strategy : Refers to a company having to diversify because of requests by its regular clients.
• Geographical Diversification Strategy : When company goes into a new country for the first time to carry out its current business activities. For example is Maybank.

💛 Turnaround Strategy : Facing some difficulties.

• Retrenchments Strategy : Is the first likely option to cut costs. For example VSS of Mas employees.
• Divestiture Strategy : dividing activities into those that are making profit and those that are not going to give profit. For example, MAS closed the MAS catering. 
• Liquidation Strategy : The most extreme type of turnaround strategy. For example, Kedah Cement and Mint Hotel.

III. Tactical Level Strategies

💙 Organically : Where a company would do it through its own strengths and capabilities without the involvement of any other company with similar interest.

💙 Joint venture : Setting up a new company with equity participation of all the parties involved. For example, Malaysia JV Japan = PERODUA MYVI.

💙 Merger : Establishment of a new entity. For example, Bank Bumiputera + Commercial Bank = Bumiputera Commerce + Southern Bank = CIMB.

💙 Acquisition

💙 Reverse takeover : Involved a listed company.

💙 Strategic alliance : Understanding between 2 or more parties.

💙 Licensing : NIKE and BUM.
💙Franchising : KFC and McDonald's.


INTERNATIONAL CORPORATE LEVEL STRATEGIES

💕 Replication Strategy : Is the first strategy that is adopted in the early stages. For example, CITIBANK.

💕 Global Strategy : Refers to decision made by companies to have a standard product or services across markets in various countries. For example APPLE.

💕 Multi-Domestic Strategy : Adopt to local needs and environment. For example KFC and McDonald's.

💕 Transnational Strategy : Attempts to achieve domestic adaptability and at the same time a global economy of scale. For example TOYOTA.