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CORPORATE LEVEL STRATEGY
stability strategy
defined as a business strategy adopted by a business to maintain its market share, current position in the market, and growth and Profit in the present market environment.
stability strategy
This strategy has also been recently used by the Governments around the world such as the Government of the United States of America to retain its dominant position in the world.
stability strategy
example of this strategy is when Indian Steel Companies started focusing on their current products to maintain their market shares in an already saturated market.
stability strategy
means a strategy to maintain stability in an unstable environment
Types of Stability Strategies
No Change
Profit Strategy
Pause/process with caution
No Change
strategy does not demand any changes.
company keeps on going as usual and does not introduce any new products.
The focus of the company is on its current products.
This type of stability strategy is adopted by a company that is extremely confident in its ability to execute the strategy and that is why these companies stick with their usual strategies.
The other reason may be Government regulation.
In a highly regulated industry, it is extremely difficult for new entrants to make any significant dent. So, established players do not try to introduce any new and innovative products
cigarette industry
Great example of no change stability
Profit Strategy
This type of strategy is when a company sets the same growth target as the year before.
This stability strategy is considered a no-risk stability strategy as the company is only focusing on growing the sales of its core product.
The company will also not have to invest in new products or hire new people or exert extra effort from its current employees
Pause/ Proceed with Caution
adopted for different market conditions.
adopted when there is a reduced demand for products and services that the company is producing.
Companies usually adopt this strategy when the economy is going through a recession.
It may also be adopted by a company that has experienced explosive growth in the past years. The explosive growth also brings with it growing pains.
Dell
example of Pause/ Proceed with Caution strategy.
Reasons For Adopting A Stability Strategy
1) The management of the company is satisfied with its current market position.
2) The company is operating in a saturated market with little or no growth.
3) The company is looking to consolidate the market.
4) The macroeconomic conditions of the economy are bad.
5) There is little to no risk of disruption from an incumbent player.
6) There is little demand and the risk is high for new investments to turn sour.
7) The company is waiting and seeing before changing the strategy
Advantage Stability Strategy
1) Low-risk strategy.
2) Maintain the current routine network.
3) No sense of financial trouble due to risky strategies.
Disadvantage Stability Strategy
1) Risk losing market share to more innovative market players.
2) Little or no growth in the company’s revenues or profits.
Expansion Strategy
A business or a company follows the strategy when it wants to achieve a certain high growth level compared to the previous performance.
When a company plans to achieve a certain growth level, it employs methods like increasing its business operations to target a more significant customer market and technological tools.
Expansion Strategy
The goal and reason behind the business strategies may vary from business to business. It could be
✓ increasing the social benefits,
✓ increasing the market share,
✓ achieving economies of scale,
✓ prestige,
✓ higher profit.
5 Types of Expansion Strategy
1. Expansion through Concentration
2. Expansion through Integration
3. Expansion through Diversification
4. Expansion through Cooperation
5. Expansion through Internalization
Concentration
the grand level strategy, and it requires an investment of a plethora of capital and resources in a specific product line. It’s to satisfy the needs of the target market with the specific verified technology.
when a business or a company invests its capital and resources into one or more product lines and businesses, the purpose is to satisfy the needs and wishes of customers
Product Development
launch some new products in the existing market to increase the product line of your business
Market Development
expand your market and attract more customers by using the existing and current product line
Market Penetration Strategy
focus of your business is on the current market by using the existing product line
Benefits of market Development Strategy
improve product quality
acquires new users
up sells current users
Helps to develop new products
Increase Revenue Margins
Helps to lessen production cost per unit
Integration
expansion is when you combine/join various current operations of the company without changing the target customer market.
use a value chain system
value chain
process of related activities that a company performs, from the raw material’s procurement to the finished good
Horizontal Integration.
when a company overpowers the competitor by offering the same products/services and marketing strategy
Vertical Integration.
allows a company to streamline its operations by taking direct ownership of various stages of its production process rather than relying on external contractors or suppliers.
can be risky due to the significant initial capital investment required.
two main types Vertical Integration
Forward Integration
Backward Integration
Backward Integration
when a company goes back to produce its raw material for its finished products/services.
Forward Integration
a company opens up its brand retail stores and directly approaches the final customers and offers them the product/service.
Diversification
expansion is when a company changes its business type by either entering into the new market or launching the new product
companies follow this strategy during the economic recession period.
diversification
The purpose of a this strategy is to recover the company’s losses by making a profit from the other business.
2 Main types of diversification
1.Conglomerate Diversification(Unrelated) 2.Concentric Diversification (Related)
Conglomerate Diversification
When a company expands into other businesses regardless of their relevancy or irrelevancy to its core niche
when a company acquires other business or product/service (relevant or irrelevant) to increase its product/service portfolio.
Concentric Diversification
when a company acquires a product/service closely relevant to its core product/service range
expansion through cooperation
When a company agrees with the competitor brand to perform business operations together and compete with each other simultaneously
Strategic Alliance
when two or more businesses integrate to execute their business operations coactively and work independently to achieve their individual goal.
The purpose is to exploit any of the companies’ human resources, technology, and expertise.
Joint Venture
when two or more companies plan to execute their business operations jointly.
The purpose is to utilize the strengths of the two companies.
Takeover
s when one company buys the other company and becomes responsible for the operations of both.
Merger
when two or more companies integrate where one company buys the other’s assets for cash. Both companies get dissolved and form the new company.
Internalization
when a company goes beyond the country’s national border and market.
The reason for this is when the company has utilized all the opportunities in the domestic market.
Transnational Strategy
company follows the global system and multi-domestic process at the same time. Here the company offers customized and low-cost products/services to the local market by following their environmental conditions
Global Strategy
when a company follows the low-cost approach and offers its product/service to a particular foreign market where lower-cost is available.
Multi-domestic Strategy
when a company provides a customized product/service relevant to the foreign market conditions.
International Strategy
when a company offers its product/service to those markets where they don’t have access to it. It requires strict controls over the operations in the other countries and offering them the same standard product.
C. Expansion strategy
It can also be used if you’re upgrading the level of activity within your business like taking on new clients and hiring more employees. a.Combination strategy
b.Retrenchment strategy
c. Expansion strategy
d.Stability strategy
b. what product markets and businesses the firm should be in
The corporate-level strategy is concerned with _ and how to manage these businesses.
a. whether the firm should invest in global or domestic businesses.
b. what product markets and businesses the firm should be in
c. whether the portfolio of businesses should generate immediate above average returns or should be troubled businesses that will create above average returns only after restructuring.
d. whether to integrate backward or forward.
c. businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.
The ultimate test of the value of a corporate-level strategy is whether the
a. corporation earns a great deal of money.
b. the top management team is satisfied with the corporation’s performance.
c. businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership.
d. businesses in the portfolio increase the firm’s financial returns.
b. 95
Usually, a company is classified as a single business firm when the revenue generated by the dominant business is greater then ___ percent.
a. 99
b. 95
c. 90
d. 70
a. diversification
It means combining activities related to the present activity of a company. It widens the scope for a company as far as market penetration is concerned.
a. diversification
b. concentration on a single business
c. vertical integration
d. integration strategies
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