STRATEGY A strategy of a corporation forms a comprehensive master plan stating how the corporation will achieve its mission and objectives.“Plan to achieve the mission and objectives.” Strategies answer the question HOW you will attain objectives.
Different Number of Strategies Growth Strategies: Expand the company’s activities. Stability Strategies: Make no change to the company’s current activities. Retrenchment Strategies: Reduce the company’s level activities. Combination of different Strategies.
Growth/Expansion StrategiesThese strategies are designed to achieve growthin sales, assets, profits or some combination. A corporation can grow internally byexpanding its operations both globally anddomestically, it can grow externally throughmergers, acquisitions, and strategic alliances;i.e.•Intersification•Diversification
IntersificationA corporation can grow internally by expanding itsoperations both globally and domestically throughfollowing strategies:•Market Penetration•Market Development•Product Development
Market Penetration: You sell more products to your samecustomers. - you lower the price, add salespersons and outlets and try toincrease use by present customers.Market Development : You distribute goods to new customersthat haven’t traditionally been in your territory or that haven’t beenthe type of customer to whom you market. Often useful when acompany has excess production capacity.Product Development : Change or renew product that isbecoming perceptually, or technically inferior.E.g. Old Tide is New Tide with crystals – In some cases productsare is just perceived as inferior so you change your advertising andcall it a new product.
Old Product New ProductOld Penetration ProductMarket DevelopmentNew Market Conglomerate StrategiesMarket Development
Concentration•Vertical Integration: The degree to which a firm operatesvertically in multiple locations on an industry’s valuechain extracting raw materials to manufacturing toretailing.•Horizontal Integration: by expanding the firm’s productsinto other geographical locations or by increasing therange of products and services offered to current market.
Concentric DiversificationAdding new, but related, products or services.-Complementary and Supplementary.Conglomerate DiversificationAdding new, unrelated products services.E.g. ITC Ltd, which is mainly in TobaccoProducts diversified into paper products, hotelbusiness, agro products etc.