 Well hello everyone and welcome back to our review of business 501 this week we're gonna be starting unit for corporate strategy if you have any questions as we're going along feel free to put them in the chat if you're watching later you can comment down below and we'll get to that if maybe in the next video and of course if you haven't seen any of the videos in the series there's a link down below to the other videos in this course and of course a link to the course itself but without further ado I'll hand it over to Dr. Laura Portley's and she will take us away here all right thank you Mike hi everybody welcome back and so as Mike said we're going to be talking about unit for today and also next week as well but I did want to pull up the learning objectives just so we can revisit those as we start a new unit and talk a little bit about what you've learned already and and what we're going to be discussing during unit four so if you recall we talked about are we defined strategy and discuss the participants in the strategic management process we've also talked about how you select and apply appropriate strategic management tools we've also talked a lot about competitive advantage and best practices for creating those competitive advantages and for unit four we're going to talk about this next one which has explained the most commonly used corporate strategies and analyze alternatives as to how we create long-term value and these other two apply modern strategic management techniques as well as synthesized strategic management theory I will be talking about a bit in this unit but also in unit five as well so our unit learning objectives specifically for unit four we will talk about commonly used corporate strategies we'll analyze which strategy alternatives will create the most value for organizations and then we're going to come full circle and relate strategy theory back to these specific applications so that will be our focus in in this unit in unit four probably no questions yet I imagine but as as Mike has mentioned if you do have questions feel free to put those in the in the chat as we go along here so let's take a little bit deeper and talk a little bit about what the main topics are going to be in this unit as as you recall we just talked a little bit about commonly used strategies so that's going to be ultimately our focus and organizations use a number of strategies for growth within their company so that's going to be our focus in this unit and growth strategies include horizontal integration vertical integration and diversification also market development new product development restructuring and acquisitions as well so these are all growth strategies that will be addressing throughout the unit I will also talk about the lifecycle model and we'll also talk about the GE McKenzie matrix which is yet another tool as we've been discussing a lot of tools throughout throughout the course how you can determine the best strategy in the best direction to go so let's talk a little bit then about the types different types of integration and this is important because it really speaks to if a company wants to grow how they might be able to grow their operations in in a variety of ways so the first one is a vertical integration and this this means that a company maybe acquires another company for example that does something within the production process that they can benefit from and I do have a graph that I want to show you on the next slide after we go through these definitions and a horizontal integration is a merger with another organization whereas diversification focuses on either developing new products or services or trying to get new customers for your existing products or services so depending on the type of organization the the direction that you want your company to go you may choose one of these or you may choose all of them as part of your growth overall growth strategy so let's let's dig a little bit deeper into these and talk about some some of the different types of integrations so in this example we're looking at vehicles specifically in car manufacturing so you can see here that virtue vertical integration would mean that a car manufacturer perhaps partners with an organization that produces rubber for example for tires for their cars so in that type of integration can be can be important for part of that growth strategy as we discussed horizontal integration is a little bit more focused on different elements within the within the overall strategy specifically looking at different types of businesses that you may try to acquire or purchase that will somehow enhance your operations and gain and ultimately gain more customers any any questions on that any questions so far we don't have any questions so far but again we'll just remind everyone if you do have questions feel free to add them to the chat and over on whichever side of me they're on and and we'll get to them and but I guess you're doing such a good job everyone's following along I guess we can keep go okay all right great thank you thank you so we'll just we'll just keep going here I'm the other thing that's important as we talk about strategy is the idea of the growth model or life cycle model and this is ultimately used to really track the growth of your organization and the benefits at each stage of the life cycle that your product or your service is bringing so when we look at the life cycle model the first stage is concept and development so you're coming up with this new product or maybe a product that you've always sold but maybe there are new enhancements to that product so that would be the concept and development stage the next stage would be commercialization so this stage refers to how are you actually going to go about marketing that product selling that product questions like who are your target customers what what are the benefits of your product that type of thing will come in the commercialization phase and hopefully if all of those things are done right then you enter into the growth phase where then you're able to see higher profits and the product or service is selling selling well and moving forward eventually at some point you'll enter this stability stage where you may not see really high growth but sales for that particular product or service have stabilized over time sometimes we call this a cash cow when we have a very successful product or service and sales are pretty stable over time and we know that we can count on those those specific sales as part of our business portfolio so another thing that organizations do when they're looking at trying to grow is they may decide that they want to cooperate with other businesses and there are a few different ways to do that and the first is through licensing and a variety of different types of partnerships we see this happen a lot when a company has decided to go global and I maybe sell their product in a country that they're not familiar with that's when a partnership or a licensing agreement can be a really good idea because what it does is it allows the organization ultimately to partner with someone that's already has operations in that particular country and because of that they know the laws and the rules and how best to market to people in that country so a lot of times we see organizations ultimately partner with local companies that maybe do similar things simply to get those benefits through through the partnership licensing is a little bit different in that licensing is essentially allowing someone to use your brand name or use an element of your business so you're giving them permission to do that so you may not be very involved in their operations but you've given them permission to utilize a part of your operations or maybe your trademark or something along those lines so when we look at licensing and we look at partnerships one licensing isn't really that involved whereas partnerships there's a lot of involvement in that where you're you're really working with another organization to try to gain ultimately mutual benefit and enhance your competitive advantage core competencies that type of thing as we've been talking about throughout the course so many organizations especially in the world that we live in today with that technology being so incredibly important we also can look at growth in an organization by innovating so by changing up our product or service coming up with new ideas spending time and money on research and development so innovation can be a really important part of organizational growth and to definitions that I want us to talk about in terms of in terms of this is the idea of sustaining technologies and as sustaining technology is essentially an innovation that improves upon something that is already in existence so for example if you buy a new cell phone that would be a sustaining technology because the cell phone is already in existence but there are probably new features the cameras probably better that type of thing so many organizations use this as a very important growth strategy and that they try to consistently enhance their product or service in order to make it better and make it more attractive to customers now this is very different from the idea of a disruptive technology which is something completely brand new and you know before for example before cell phones came out when they did come out that was a disruptive technology because it was something that none of us had ever experienced before so most organizations when they're looking at growth through innovation they'll focus on those sustaining ones those incremental improvements to their product or service but some organizations try to come up with something brand new and different which would be disruptive and we call it that because ultimately it changes it changes the entire landscape of the marketplace through those disruptive technologies because it's something brand new one important thing to remember if we do use innovation for growth and we do decide that we want to create a brand new product or service a lot of time and money goes into this and into ultimately informing the customer of why the product is important why it is useful those types of things when you think about I wanted to give a service example to us we talked a lot about products a service example might be when the rideshare apps first came about and that was a disruptive technology that was something brand new that no one had experienced before now the rideshare apps tend to leverage sustaining technologies where they're making these small enhancements but when those first came out that was definitely disruptive it changed the entire landscape of not just rideshare but taxi cabs and really the way people the way people get around so when I guess in in summary when we're talking about innovation I innovation can be a really really important pathway to us growing our organization and growing our business but it does take a lot of time and money and needs to be focused on the efforts of the organization and efforts to grow as part of your strategy so a couple of things that when we look at the variety of growth strategies that we've talked about already some of the things that you want to consider here would be when when an organization is looking at a growth strategy such as innovation they need to make sure that the organizational structure aligns with the strategy that they want to have so if you think about a company that really wants to be innovative and come up with all of these new ideas and new products and new services the structure should not be very rigid within the organization because you want flexibility for people to be able to create these new ideas so we always want to make sure that our organizational structure is in alignment with what we're trying to accomplish and the direction of the strategy that that we intend upon going we also want to think about when we look at developing growth strategies the marketing component the financing component and the HR or the human resource component so we need to make sure that our marketing marketing efforts support the growth strategy that we've selected we need to make sure that we have the money in order to support that particular strategy and we also need to make sure that we have the people that support that strategy and that's where a lot of organizations go wrong they may have great marketing great financing but they may not have the right number of people they may not have the people with the right mix of skills in order to enhance and implement the strategy so definitely big considerations you know we've talked a lot throughout the course about the importance of strategy and the importance of having a strategy but personally speaking I would say these three elements are equally as important to make sure that they align with your strategy the idea of marketing financing and especially the human resource aspect too and the final problem that our readings talks about is the dependence on third parties or partners so a little bit ago we talked about organizations and having these partnerships and that type of thing which is great and can be a great way to move forward with your growth strategy but also the downside to that is that then you're dependent upon them as well maybe for your marketing for your operations for your raw materials and your supplies this dependence can can sometimes create challenges so that's where when we look at choosing our partners as part of a growth strategy we just want to make sure that we have all of that written down and in a really solid contract with that with those partners I'd like to pause for a moment and see if you have any questions okay we'll give everyone a minute or two here to check and see if we have any questions in chat let everything catch up and we'll be back in a minute well it looks like we don't have any questions right now but I'll keep an eye on the chat if anyone has any and we'll just keep on moving along here all right perfect thank you very much so sometimes organizations may find that instead of growing they actually want to get smaller and there could be a number of reasons for this and it could be maybe that one business unit is not being very profitable and it could be that if the economy isn't going well maybe sales are down so I think it's really important you know we think about growth and we think about organizations you know always growing and always making more profit but sometimes we may find ourselves in a situation where we do need to get smaller so the idea of reach trenchment is when is what we're talking about basically we take one or more business units and we shrink that down so it may be that we decide that a product that we sell isn't selling very well anymore and we want to get rid of that product line that would be retrenchment and what this does is it allows us to then put resources to those things maybe that are a little bit more successful so when we think about strategy again we think we tend to think about grow grow grow get bigger but it's a this can be a very viable strategy to really take a step back and look at the organization and look at what's doing well especially if you have a number of different types of products or product lines determine what's doing well and then ultimately shrinking those so that you can then use the resources elsewhere so that could be one strategy for getting smaller another strategy is called divestment and this is when an organization sells off part of their operations so let's suppose they have three product lines and one there doesn't match anymore with what they want to be doing in terms of strategy so perhaps they sell off that product line to to an organization we see this quite a bit where in an organization just they decide maybe they want to go a different direction with their strategy and no longer want to do exactly what they were doing before so sometimes it makes sense for them to then sell off part of their operations so when we think about getting smaller and strategies for that I don't want you to think about it as a negative thing because oftentimes it can be positive because it allows the company ultimately to take a step back and determine what what they are doing well and what do we want to focus on because we're doing that so well so think about strategies for getting smaller as not necessarily a bad thing oftentimes it's really what an organization needs to take that step back so another thing that organizations may do at times is restructure their operations and this this can be anything from a small scale like for example changing the organizational chart and the reporting structure to really really big changes within the organization which are listed here so you may have heard the term before a turnaround strategy a turnaround strategy is when an organization finds that they're not being very successful and what they're doing so they completely change their operations in order to try to remain viable and and in business a turnaround strategy can be really really difficult to do because oftentimes when an organization has gone downhill it's oftentimes too late for a turnaround to happen not that it's impossible but sometimes it's pretty late when they realize that but you'll see sometimes organizations will bring in a new CEO for example that's an expert in turning things around so not saying that it doesn't work but sometimes sometimes it can definitely be be a challenge for organizations once they actually identify that that they need that type of strategy. We talked we talked about divestor a little bit that's the sale of a division or part of an organization that can be a restructuring strategy because when that occurs once you sell off that part of the business you need to really look at okay what do we have left and how are we going to manage these these resources so that would be considered a restructure because you need to restructure your organization if you sell off part of your business. Unfortunately some organizations for whatever reason they're just not able to make it and in that case they may engage in liquidation which is the termination of the business they decide they're not going to be in business anymore and they sell all of their assets like buildings, equipment, land, that type of thing. Obviously this type of strategy is a last-ditch effort if organizations have tried a lot of other things to turn their business around that hasn't worked so obviously you wouldn't jump right to liquidation you would try some other things first before you had to before you have to make that decision. A bankruptcy is a procedure where in organization they're not doing well and essentially they can't pay their bills so bankruptcy is happens in a port where then there's possession taken of any assets like equipment, land, buildings those items are then sold in order to pay off the debt of the organization. Again not not really a great thing but sometimes organizations find that they need to do this in order to pay their bills if they're not doing well and I think the last point that I wanted to make here is liquidation is definitely the least attractive here we probably would want to try some of these other strategies first before we decide just to terminate the business and sell all of the assets. So I want us to talk a little bit about the McKenzie matrix and this is one way to for us to look at our business operations and determine what what products maybe are doing well what we need to focus our resource. I'm going to stop you real quick because we do have a question before we move on to this just so it's connected to we had a question down in the check here can outsourcing be considered as an example of divestment? Yes I think so we don't normally see those terms associated with each other but I think absolutely and a lot of companies you probably noted will do that for like their accounting for various parts of their operation even their human resource management piece like payroll and they'll outsource that because it it makes more sense to do that with an outside company as opposed to trying to do it themselves so so yes that's a great question and and I would consider that definitely definitely part of it. Okay thanks a bunch I hope that answered your question you can let us know in the chat and if anyone has any other questions we'll we'll get but we can we can keep on going with the matrix here. All right perfect thank you thank you so so in this matrix what we're looking at here is on the left hand side we have industry attractiveness and on the bottom we have our own business strength. So if you look at the dots here those could be a particular product line that we may have in our organization and ultimately ultimately we're looking at how well are we doing with that particular product and also how attractive is the industry. So this can be important especially if we have multiple different types of products to determine okay what products do we want to keep maybe what what do we need to to change about the ones that are doing only so so and maybe what products do we need to get rid of entirely. So in a situation where you might get rid of a product or product line would be on there on the bottom left where the industry attractiveness is really low and also our business strength is really low. In that case an organization is spending a lot of time and money on promoting and marketing this particular product but they don't do it very well and the industry isn't very attractive. So oftentimes we'll find that organizations when they have both of these things going on they'll decide to get rid of that particular product, divest, sell it or just simply stop producing it and offering it. Now I want us to look at the opposite corner which would be the top right corner. So in this situation the industry attractiveness is high but also our business we're really good at it. So when we look at how we want to invest our resources in terms of strategy these are the types of products that we want to invest in. The market looks really good and also we're really really good at it. So with this type of thing we just want to consider where things sit, make sure that we have a fairly wide breadth of portfolio but we don't want to spend time and money on products and services that aren't doing very well for us. The other thing that I think is important to note here if you look at the bottom right where it says high in this situation the industry attractiveness is low but even though it's low we do a pretty good job in that. So those are the types of products or services that we may want to question and still since we do it well we may want to continue spending money in that arena in order to market and produce the product but we may ask ourselves questions like how can we make this industry more attractive? How can we change up the product? How can we innovate the product to make some changes that maybe would push it up to a higher industry attractiveness? So ultimately this tool is just used to look at and have a conversation with our colleagues about what does the industry look like and how well do we do in that particular industry? So at this point I would like to stop on unit four and I'd like to address any questions that you may have. So far what we talked about or anything in unit four and then next week we'll pick back up with unit four. All right yeah um I anyone I'll give people a little bit of time while I just ramble a little bit and remind everyone that yeah this is the first part of unit four we'll be doing part two the same time next week. A little heads up the week after that for unit five we will be on Tuesday but I'll make we'll make sure that that's we make a big deal about that next week. And of course if you're just finding these now of course there's links in below to the course and also to previous videos we've done and you can leave a comment but I think we'll just give everyone a minute or two here to see if they have any questions and then we'll come back and do a final wrap. And we're back I do see I do you see your question down there I we have a question in the chat about the slides I did see your comment from over the weekend but I just saw it this morning and I'm setting this up but I will check into that they should open up but I'll check and make sure that all of them are working and we'll make sure we have the slides in unit three later today. If that was the one you were worried about. But yeah so if there are no other questions I think we'll we'll see everyone the same time next week thank you everyone for joining us. Thank you Dr. Fortalees for taking us through all of this and I hope that everyone has a nice Monday.