Defensif strategy for management

1. DEFENSIVE
AHIL, SMAILAH
B.
STRATEGY

2. Defensive Strategies
Are only used by market leaders in strategic management.
The Goal of these strategies is to hold onto their position as the market leader,
fighting off competitors who try to take away their market share.
“ “
Defensive Strategy
Who and What for

3. To reinforce existing market position.
Objectives of a Powerful Defender
To maintain the existing market share
and to maximize profitability.
Defensive Strategy
To safeguard the existing levels of
competitive advantage.
To keep up top position in local and
existing markets.
For raising barriers of entry.

4. Principle:
“To make it difficult for the competitors to
acquire the market share and the new
entrants to access the market.”

5. Various Defensive Strategy
01
02
04
Position Defense
Simplest defensive strategy. It simply involves trying to hold
your current position in the market.
Mobile Defense
Involves making constant changes to your business so that it
will be difficult for the competitors to compete with you.
To do this:
 Continue to invest in your current marke
ts
 Attempt to build your brand name and
customer loyalty.
Involves:
 Introduce new products
 Enter new markets
 Making changes to existing products

6. Various Defensive Strategy
03
04
Flanking Defense
It defends its market share by diversifying into new markets
and niche segments.
Counter-Offensive Defense
It is a retaliatory strategy. When competitor attacks your
business, you strike back with your own attack.
05 Contraction Defense
Is the least desirable defense because it involves retreating
from markets.
 If you lose your market share in the existi
ng market you can make up for it in these
new markets.
 Allows you to redeploy your resources i
nto other areas.

7. Fred R. David
Defensive Strategy
Retrenchment
Divestiture
Liquidation
“Organization regroups through
Cost and Asset reduction to reverse
declining Sales and Profits.”
“ also known as Turnaround or
Reorganizational Strategy.”
“Can entail selling off land and buildings to
raise needed cash, pruning product lines,
closing marginal businesses and obsolete
factories, and reducing number of
employees.”
“Selling a division or part of an organization.”
“Often used to raised capital for further
strategic acquisitions or investments.”
“Can be part of the overall Retrenchment
strategy to rid an organization of businesses
that are unprofitable, require too much capital,
or do not fit well with the firm’s other activities.”
“Selling all of a company’s assets, in parts,
for their tangible worth.”
“Recognition of defeat.
However, it may be better to
cease operating than to continue
losing large sums of money.”

8. 1. Organization has a clearly distinctive competence
but has failed consistently to meet its objective
and goals overtime.
2. Organization is one of the weaker competitors in a
given industry.
3. Organization is plagued by inefficiency, low
profitability, poor employee morale, and pressure
from stockholders to improve performance.
4. Organization failed to capitalize on external
opportunities, minimize external threats,
take advantage of internal strengths, and
overcome internal weaknesses overtime.
5. Organization has grown so large so quickly that
major internal reorganization is needed.
Retrenchment
Divestiture
Liquidation
Guidelines for when Strategy may be effective:
1. Pursued retrenchment strategy and failed to
accomplish improvements.
2. Division needs more resources to be competitive.
3. Division is responsible for an organization’s overall
poor performance.
4. Division is a misfit with the rest of the organization.
5. When a large amount of cash is needed quickly
and cannot be obtained reasonably from other
resources.
6. When government antitrust action threatens an
organization.
1. Organization has pursued both retrenchment
strategy and a divestiture strategy and neither
has been successful.
2. Organization’s only alternative is bankruptcy.
3. When the stockholders of a firm can minimize
their losses by selling the organization’s
assets.

9. With defensive strategy there is no room for error.
A new competitor can do incredible damage to your business.
Defensive Strategy is a distinct undertaking.
A competitor that manages to capture even a small
part of your business can do significant damage.
The situation is very different when it comes to
defense.
The stronger your business the more likely
competitors will attack and try to get a piece of it.
A growth initiative might work or might not.
“The best defense is a good offense.”
Importance of Defensive Strategy
Defensive Strategy
3 Reasons Defensive Strategy Matters
“The best defense is a strong defensive strategy.”

10. Thank you
Any Question?