Strategic Management VIII PDF

Strategic management VIII ★ 1. It continues to serve the customers in CORPORATE-LEVEL STRATEGY the same product or service, market, and...

Strategic management VIII ★ 1. It continues to serve the customers in CORPORATE-LEVEL STRATEGY the same product or service, market, and function sectors as defined in its business A corporate-level strategy can be instrumental in definition, or in very similar sectors. outlining your company's goal for the following ★ 2. Its main strategic decisions focus on year. You need to break down all steps that make incremental improvement of functional it clear for your employees the path they're performance.employees. supposed to take. The type of corporate-level strategy you select can be an indicator of the An organization adopts the stability strategy company's financial success and the method they when it aims at an incremental improvement of take to generate profits. its functional performance but marginal changes A corporate-level strategy is a multi-tiered to one or more of its businesses in terms of their company plan that leaders use to define, outline respective customer groups, customer functions and achieve specific business goals. A or alternative technologies are required. Its focus corporate-level strategy can be used by a small is confined to improving functional efficiencies in business to increase its profits over the next an increment way, through better deployment fiscal year, whereas a large corporation might be and utilization of resources. overseeing the operations of multiple businesses to achieve more complex goals like selling the Some more sub-strategies are formed for company or entering a new market. stability strategies are: ★ i. Incremental Growth Strategy: In this Types of corporate-level strategy: strategy, the firm usually concentrates on one product or service line and grows ★ 1. Stability strategy ★ 2.Expansion strategy slowly and incrementally by entering new ★ 3.Retrenchment strategy territories, taking up new product lines ★ 4.Combination strategy etc. ★ ii. Profit Strategy: This strategy is Stability Strategy followed when the objective of the firm is to generate cash immediately for itself or Jauch and Glueck observe, ‘a stability strategy is for stockholders, profit strategies are a strategy that a firm pursues when: 1  Strategic management VIII followed. The profit strategy is usually markets or penetrate markets to build called the end game strategy. share. Expansion is usually thought of as the ★ iii. Pause Strategy: If any enterprise feels way to improve performance. that higher growth becomes both inefficient and unmanageable, or when a firm requires breathing spells to stabilize A company can adopt expansion strategy itself before taking up a new mission, it in the following five ways: may restrict its growth at a certain ★ 1.Concentration balanced level. In doing so, it may ★ 2.Integration concentrate on source utility, better ★ 3. Diversification operations etc. to attain a higher level of efficiency. ★ 4. Cooperation ★ 5.Internationalization Expansion Strategy 1. Concentration involves converging resources in one or ★ Jauch and Glueck defines expansion more of a firm’s businesses in terms of strategy as a strategy that a firm products, markets or functions in such a pursues when: manner that it results in expansion. ★ 1. It serves the public in additional Concentration strategies are variously product or service sectors or adds known as intensification, focus or markets or functions to its definition. Specialization. Concentration strategies ★ 2. It focuses its strategic decisions on involve investment of resources in a product major increases in the pace of line for an identified market with the help of activity within its present business proven technology. definition. Expansion strategy is often considered as an “entrepreneurial” strategy where firms develop and introduce new products and 2  Strategic management VIII This may be done following through the 4. Cooperative Expansion: below strategies: Corporate strategies could consider the ★ Market penetration possibility of competition co-existing with ★ Market development cooperation. The term ‘co-opetition’ ★ Product development explains the idea of simultaneous competition with cooperation among rival 2. Integration firms for mutual benefit. refers to combining activities related to the 5. Internationalization: present activities of a firm, on the basis of International strategies are a kind of the value chain. Recall that a value chain is expansion strategies that need firms to a set of interrelated activities an market their products or services beyond organization performs right from the the domestic market. For this purpose, a procurement of basic raw materials to the firm would have to assess the international marketing of finished products to the environment, evaluate its own capabilities, ultimate consumers. and devise strategies to enter foreign 3. Diversification markets. is a much-used and talked about strategy. Diversification means identifying Retrenchment Strategy directions of development that take the organization away from both its current Retrenchment is a corporate level strategy products and markets at the same time. that seeks to reduce the size or diversity of In reality, it is not a single strategy but a set organization operations. Retrenchment of strategies that involve all the dimensions strategies reduced the scope of of strategic alternatives such as internal or diversification to a smaller number of external, related or unrelated, horizontal or businesses. It occurs when an organization vertical and active or passive diversification. regroups through cost and asset reduction 3  Strategic management VIII to reverse declining sales and profits. This Combination Strategy strategy is designed to fortify an organization’s basic distinctive Combination strategies are a mix of competence. expansion, stability or retrenchment The situations which warrant the deployment of strategies applied either at the same time such strategy are: in different businesses or at different times in the same business. No organization has ★ Current level of performance is far below grown and survived by following a single the past performances, i.e., a decline in strategy. performance. The management aims to wipe-out a previous year’s deficit. PRODUCT MARKET ★ Its aim is to provide certain MARKET EXPAND EXISTING PENETRATION products/services to the public by MARKET EXISTING NEW retrenching some other products or DEVELOPMENT services. PRODUCT NEW EXISTING DEVELOPMENT ★ It is statutorily banned from producing certain products/services due to administrative reasons (such as causing environmental pollution, against the law of the land etc.) 4