MANAGEMENT CONTROL

SYSTEMS

UNDERSTANDING
STRATEGIES
Goal
The concept of strategy
Corporate level strategy
Business unit strategy

UNDERSTANDING
STRATEGIES
Strategies are plans to achieve organization goals.

To
implement

Strategie
s

Goals
Management
control system

UNDERSTANDING
STRATEGIES
GOAL
Satisfactor
y profit

Founder

Goal

Board
of
Director

ROI
Revenue
Company
size

Profit

Risk

Shareholder
s value

THE CONCEPT OF
STRATEGY
Strategy

describes the general

direction in which an organization
plans to move to attain its goals.
Two levels of strategy :

Corporate strategy ,
Business unit strategy.

THE CONCEPT OF
STRATEGY
Strategy formulation
Environmental
analysis

Internal Analysis
Technology
Manufacturing
Marketing
Distribution
Logistic

Competitor
Customer
Supplier
Regulatory
Social/political
Opportunities and
threat
Identify
opportunities

Fix internal
competencies with
external
opportunities
Firms strategies

Strengths &
weakness
Identify core
competencies

CORPORATE LEVEL
STRATEGY
Corporate strategy is concerned with the

question of where to compete than with how

to compete in a particular industry.
The issues of corporate level are :
The definition of businesses in which the firm

will participate,
The deployment of resources among those
businesses.

CORPORATE LEVEL
STRATEGY
In terms of corporate level strategy, companies

can be classified into three categories :

1.
2.
3.

Single industry, firm operate in one line of business,

Firm operate in several industries and
the business
unit benefit from a common set of core competencies,
Unrelated diversified, firm operates in businesses that
are
not related to one another.

Research has shown that on average, related

diversified firms perform the best, single

industry firms perform next best, and unrelated
diversified firms do not perform well over the
long term.

CORPORATE LEVEL
STRATEGY
Corporate level strategies
High
. Single industry (Exxon Mobil, Mc Donald )

Degree of
Relatedness

. Related diversification (Procter & Gamble)

. Unrelated diversification

(Textron)
Low

Extent of Diversification

High

BUSINESS UNIT
STRATEGIES
Business Unit strategies deal with how to create

and maintain competitive advantage

industries in which a company has
participate.

in
each
chosen to

The strategy of business unit depends on two

interrelated aspects :

Its mission (what are its overall objectives)

Its competitive advantage ( how should the business unit
compete in its industry to accomplish its mission)

BUSINESS UNIT
STRATEGIES
Mission

. BCG Model
.GE Planning
model

Business unit
strategies

Competitive
advantage

. Porters Five
Forces Model
. Value chain
analysis

BCG MODEL
Low

Cash source

High

High

High
StaStar

Market
growth
Cash
rate
use

Hold

Question mark
Build

Cash cow
Harvest

Dog
Divest

Low

Low

High

Relative Market Share

Low

GE PLANNING MODEL
The Portfolio Matrix
High

Industry
Attractiveness
Average

Low

Winners

Winners

Question
marks

Winners

Average business

Losers

Profit
producers

Losers

Losers

Strong

Average

Weak

Business Strength

GE PLANNING MODEL
Recommended Business Strategies
High

Industry
Attractiveness
Average

Low

Invest/grow
Strongly
(build)

Invest/grow
Selectively
(build)

Dominate/
Delay/
divest

Invest/grow
Selectively
(build)

Earn/
Protect
(hold)

Harvest/
divest

Earn/protect
(hold)
Strong

Harvest/
divest
Average

Harvest/
Weak divest

Business Strength

PORTERS FIVE
FORCES MODEL
New
Entrants

Suppliers

Industry
Competitors

Substitute
s

Customer
s

VALUE CHAIN
ANALYSIS
Value analysis

Raw
materia
l

Product
development

Manufacturing

&

Marketing
sales

Support activities : Finance, Human Resources,

Information technology

High quality

Lower Cost

Service/
Logistics

Thank you