Page 171 -

CHAPTER 5 • STRATEGIES IN ACTION 137

TABLE 5-4 Alternative Strategies Defined and Exemplified
Strategy Definition 2009 Examples
Forward Gaining ownership or increased control over PepsiCo launched a hostile takeover of Pepsi
Integration distributors or retailers Bottling Group after its $4.2 billion offer
was rejected
Backward Seeking ownership or increased control of a firm’s Chinese carmaker Geely Automobile
Integration suppliers Holdings Ltd. purchased Australian car-parts
maker Drivetrain Systems International
Pty. Ltd.
Horizontal Seeking ownership or increased control over Pfizer acquires Wyeth; both are huge drug
Integration competitors companies
Market Seeking increased market share for present products Coke spending millions on its new slogan
Penetration or services in present markets through greater “Open Happiness”
marketing efforts
Market Introducing present products or services into new Time Warner purchased 31 percent of Central
Development geographic area European Media Enterprises Ltd. in order to
expand into Romania, Czech Republic,
Ukraine, and Bulgaria
Product Seeking increased sales by improving present News Corp.’s book publisher HarperCollins
Development products or services or developing new ones began producing audio books for download,
such as Jeff Jarvis’s “What Would
Google Do?”
Related Adding new but related products or services Sprint Nextel Corp. diversified from the cell phone
Diversification business by partnering with Garmin Ltd. to
deliver wireless Internet services into GPS
machines
Unrelated Adding new, unrelated products or services Cisco Systems Inc. entered the camcorder
Diversification business by acquiring Pure Digital
Technology
Retrenchment Regrouping through cost and asset reduction to The world’s largest steelmaker, ArcelorMittal,
reverse declining sales and profit shut down half of its plants and laid off
thousands of employees even amid worker
protests worldwide
Divestiture Selling a division or part of an organization The British airport firm BAA Ltd. divested three
UK airports
Liquidation Selling all of a company’s assets, in parts, for their Michigan newspapers such as the Ann Arbor
tangible worth News, Detroit Free Press, and Detroit News
liquidated hard-copy operations

integration, horizontal integration, market penetration, market development, product
development, related diversification, unrelated diversification, retrenchment, divestiture,
and liquidation. Each alternative strategy has countless variations. For example, market
penetration can include adding salespersons, increasing advertising expenditures,
couponing, and using similar actions to increase market share in a given geographic
area.
Many, if not most, organizations simultaneously pursue a combination of two or more
strategies, but a combination strategy can be exceptionally risky if carried too far. No orga-
nization can afford to pursue all the strategies that might benefit the firm. Difficult
decisions must be made. Priority must be established. Organizations, like individuals, have
limited resources. Both organizations and individuals must choose among alternative
strategies and avoid excessive indebtedness.
Hansen and Smith explain that strategic planning involves “choices that risk
resources” and “trade-offs that sacrifice opportunity.” In other words, if you have a strategy
to go north, then you must buy snowshoes and warm jackets (spend resources) and forgo
the opportunity of “faster population growth in southern states.” You cannot have a