Kinds of Grand Strategies:
* Stability Strategies
* Growth Strategies
* Retrenchment Strategies
* Combination Strategies
The basic approach is ‘maintain present course: steady as it goes.’ In an effective stability strategy, companies will concentrate their resources where the company presently has or can rapidly develop a meaningful competitive advantage in the narrowest possible product-market scope consistent with the firm’s resources and market requirement's Types of Stability Strategies
* No change strategy:
* Firms adopting this strategy maintain the same level of operations * Small business firms desire satisfactory level of operations rather than growth * Pause and proceed strategy:
* Slow growth is more desired rather than maintenance of status quo * A sustainable growth strategy is more optimistic than the zero growth Stability Strategy of Indian Companies
* Many companies in different industries have been forced to adopt stability strategy because of over capacity in the industries concerned. For Example:
Steel Authority of India has adopted stability strategy because of over capacity in steel sector. Instead it has concentrated on increasing operational efficiency of its various plants rather than going for expansion. Others industries are ‘heavy commercial vehicle’, ‘coal industry’.
Apart from over capacity, regulatory restrictions in some industries have forced companies to adopt stability strategy. Cigarette, liquor industries fall in this category because of strict control over capacity expansion. Both these industries require license under the provisions of Industries (Development and regulations) Act, 1951. Growth or expansion Strategies
If we look at the corporate performance in the recent years, we find how the various organizations have grown both in terms of sales and profit as well as assets. For example:
Reliance Industries Limited
Types of Growth / Expansion Strategies
Concentric Expansion Strategy
The first route of growth is to expand the present line of business. It can be aimed at market penetration, market development and / or product development. * Market Penetration: The organization tries to capture market share in the existing product and aims at expanding its business at a rate higher than the industry growth. * Eg. :Reliance has captured substantial market share in textile yarn and intermediaries * Eg. : ITC has captured substantial market share in cigarettes. * Market Development: Attempt is made to increase sales by developing new markets either geography-wise or segment-wise. * For eg. Many companies which find that the urban market is saturated and there is little scope for expansion, opt for developing new market in rural areas. Some of the companies which have made keen attempt to develop rural market are HUL (personal products), Colgate (oral care products), LG (TV), Videocon (Consumer durables), etc. * Product Development: efforts are attempted at to achieve growth through product innovation so as to penetrate in new segment. * For eg. SAMSUNG (TV) may offer slim line TV, Plasma TV, etc. Integration Strategy
* When firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacent businesses, integration takes place. * Integration basically means combining activities related to the present activity of a firm. Types of Integration Strategy
* Vertical Integration
* Horizontal Integration
When an organization starts making new products that serve its own needs, vertical integration takes place.
Any new activity undertaken with the purpose of either supplying inputs (such as raw materials) or serving as a customer for outputs (such as, marketing of firm’s product) is vertical...