Strategy Selection

1. Strategy Selection

2. Choosing SBU Strategic Thrust • Determine position in the market by evaluating industry attractiveness or maturity (exhibit 9.3) and one’s competitive position in the market (exhibit 9.4). Then use guide (exhibit 9.5) to choose strategic thrust.

3. Strategic Thrust Options • Start Up - introduce new product or service with clear, significant technology breakthrough to develop a new industry. • Grow with Industry - only undertake efforts necessary to maintain market share to free resources to correct weaknesses in market, product, management or production. • Grow Fast - aggressively pursue large share and/or stronger position relative to competition to grow share and volume more quickly than competition and faster than the general industry growth rate.

4. Strategic Thrust Options (continued) • Cost Leadership - achieve lowest delivered cost relative to competition with acceptable quality levels to increase freedom to defend against powerful entries, strong competitors or potential substitute products. • Differentiate - differentiate product/quality/service with acceptable costs to protect from switching, substitution, price competition. • Focus - serve a particular segment of the market more narrow in scope than competing firms to serve the segment more efficiently and profitably than competitors.

5. Strategic Thrust Options (continued) • Renew - restore a product line’s competitiveness to take advantage of anticipated future industry demand. • Defend Position - make sure relative competitive position is stable to create barriers that make it difficult for competitors or new entries to erode your market share, profitability or growth. • Harvest - turn market share or competitive position into higher returns by trading, leasing, or selling technology, distribution rights, patents, brands, production capacity, locations, or exclusive sources to competitors.

6. Strategic Thrust Options (continued) • Find Niche - find a small defensible portion of the market that is too small for large competitors to find attractive enough to dislodge you. • Hold Niche - protect a niche by creating barriers that make it unattractive to large competitors. • Catch Up - use aggressive product/market activities to make up for a poor or late entry into an industry.

7. Strategic Thrust Options (continued) • Hang In - hold on in hopes of a favorable change in the environment such as another company’s patent expiration, management change, government action, technology breakthrough or socioeconomic shift. • Turn Around - overcome severe performance weaknesses in a limited time to prevent further declines, bring about stability or even show some improvement in position. • Retrench - reduce level of risk and exposure to losses by cutting back investment in the business to stop unacceptable losses or prepare for divestment or withdrawal.

8. Strategic Thrust Options (continued) • Divest - eliminate some or all of SBU’s assets by selling the product line, brands, distribution facilities, or production capacity to recover earlier losses, free up funds for other investments or abandon the business to competition. • Withdraw - remove the business from competition to recoup whatever corporate assets can be recovered via shutdown, sale, auction or scrapping of operations.