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smaller the capital requirements, and the less the competitive intensity, the more
attractive an industry will be. Other determinants of an organization’s competitive
position in an industry (besides market share) include technological know-how, prod-
uct quality, service network, price competitiveness, and operating costs. In general,
businesses with large market share, technological know-how, high product quality, a
quality service network, competitive prices, and low operating costs are in a favorable
competitive position.
Think of the GE Business Screen as a way of applying SWOT analysis to the imple-
mentation and management of a diversification strategy. The determinants of industry
attractiveness are similar to the environmental opportunities and threats in SWOT anal-
ysis, and the determinants of competitive position are similar to organizational strengths
and weaknesses. By conducting this type of SWOT analysis across several businesses, a
diversified organization can decide how to invest its resources to maximize corporate
performance. In general, organizations should invest in winners and question marks
(where industry attractiveness and competitive position are both favorable), should
maintain the market position of average businesses and profit producers (where industry
attractiveness and competitive position are average), and should sell losers. For example,
Unilever recently assessed its business portfolio using a similar framework and, as a
result, decided to sell off several specialty chemical units that were not contributing to
the firm’s profitability as much as other businesses. The firm then used the revenues
from these divestitures and bought more related businesses such as Ben & Jerry’s Home-
made and Slim-Fast.
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During the recent economic recession, many diversified busi-
nesses took an especially aggressive approach to selling or closing underperforming
businesses. For instance, Japan’s Pioneer electronics business sold its television business,
Home Depot shut down its Expo home-design stores, and Textron closed a business unit
that financed real estate deals.
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TACTICAL PLANNING
As we noted earlier, tactical plans are developed to implement specific parts of a strategic
plan. You have probably heard the saying about winning the battle but losing the war.
Tactical plans
are to battles what strategy is to a war: an organized sequence of steps
designed to execute strategic plans. Strategy focuses on resources, environment, and mis-
sion, whereas tactics focus primarily on people and action.
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