Final Strategic Pptn

7/31/2019 Final Strategic Pptn

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presented by:

Pranav shree (2011MB0024)

Vinod kumar (2011MB0026)

Mukul Anand (2011MB0027)

Sweta kumari (2011MB0028)


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Corporate-level strategy is an action taken to gain acompetitive advantage through the selection andmanagement of a mix of businesses competing in several

industries or product markets. Corporate strategy is essentially a blueprint for the growth

of the firm.

The corporate strategy sets the overall direction for the

organization to follow. It also spells out the extent, pace and timing of the firms

growth.

Corporate strategy is mainly concerned with the choice of

businesses, products and markets.


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a) Exploiting operational economies and financial economiesof scope.

b) Uncertainty avoidance and efficiency.

c) Possession of management skills that help createcorporate advantage.

d) Overcoming the inefficiency in factor markets.

e) Long term profit potential of a business.


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Stability strategies: make no change to thecompanys current activities

Growth strategies: expand the companysactivities

Retrenchment strategies: reduce thecompanys level of activities

Combination strategies: a combination ofabove strategies


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Stability strategy is a strategy in which theorganization retains its present strategy at the

corporate level and continues focusing on its

present products and markets.

The firm stays with its current business and productmarkets; maintains the existing level of effort; andis satisfied with incremental growth.


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It decides to serve the same markets with the sameproducts.

It continues to pursue the same objectives with a strategicthrust on incremental improvement of functionalperformances.

It concentrates its resources in a narrow product-marketsphere for developing a meaningful competitive advantage.


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Environmental turbulence is minimal and the firm does notforesee any major threat to itself and the industry concernedas a whole.

The organization just finished a period of rapid growth andneeds to consolidate its gains before pursuing more growth.

The firms growth ambitions are very modest and it iscontent with incremental growth.

The industry is in a mature stage with few or no growthprospects and the firm is currently in a comfortable positionin the industry


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Hero Honda is a good example because theydont launch any product but the upgrade

their existing product in the market. Like Hero Honda Splendor.

Upgrade version:"Splendor Plus" ,"Super

Splendor,'SplendorNXG.

Hero hondaPassion.

Upgrade version: Passion Plus, Passion Pro.


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Expansion strategy is an important strategic option, whichenterprises follow to fulfill their long-term growthobjectives.

They pursue it to gain significant growth as opposed toincremental growth envisaged in stability strategy.

Expansion strategy is adopted to accelerate the rate ofgrowth of sales, profits and market share faster by

entering new markets, acquiring new resources,developing new technologies and creating newmanagerial capabilities.

Three ways of expansion-intensification, integration and

diversification.


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When enormous new opportunities are emerging in theenvironment and the firm is ready and willing to expand itsbusiness scope.

When a firm is a leader in its industry and wants to protect itsdominant position.

When the firm has surplus resources, it may find it sensibleto grow by levering on its strengths and resources.

When the environment, especially the regulatory scenario,blocks the growth of the firm in its existing businesses, itmay resort to diversification to meets its growth objectives.


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Intensification involves expansion within the existingline of business.

Market Penetration: The firm seeks to achieve growthwith existing products in their current market segments,aiming to increase its markets share.

Market Development:The firm seeks growth by targetingits existing product to new market segments.

Product Development: The firm develops new productstargeted to its existing market segments.

Diversification: The firm grows by diversifying into newbusinesses by developing new products for new markets.


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Integration strategy involves expanding externally bycombining with other firms by need for survival andalso for growth by building synergies.

Vertical Integration (when a company expends operationseither backward or forward)

Horizontal Combination / Integration (process of acquiringor merging with industrial competitors)

International expansion-Exporting, Licensing, JointVenture, Direct Investment


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Diversification involves moving into new linesof business.

Related diversification (concentric Diversification)-Inthis alternative, a company expands into a relatedindustry.

Example: The primary business of IFFCO is the production

and distribution of fertilizers , its related diversification hastaken into other businesses such as general insurance tooffer insurance risk cover to farmers and agriculturalcommodity trading to enable farmers to gain access toquality testing and warehousing facilities


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Unrelated diversification (Conglomerate diversification)-Company seeks to grow by adding entirely unrelatedproducts and markets to its existing business

Example: The Aditya Birla group is in a variety of unrelatedbusinesses such as aluminum, cement, copper, fertilizers,retail, software telecom and textiles.

The ITC group is diversified in tobacco, FMCG, hotels,paperboards etc.


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Mergers and Acquisitions- A merger is a legal transaction in which two ormore organizations combine operations through an exchange of stock. Anacquisition is a purchase of one organization by another .ex-Lipton & BrookBond(merger), Tata & jguar

Joint Ventures- Two or more organizations form a separate, Independentorganization for strategic purposes. ex-Sony-Ericsson is a joint venture bythe Japanese consumer electronics company Sony Corporation and theSwedish telecommunications company Ericsson

Strategic Alliances- Two or more organizations share resources, capabilities,

or distinctive competencies to pursue some business purpose. ex-Microsoftand Nokia - a software partnership for Nokias Windows Phones

Long-Term Contracts- Two or more organizations enter a legal contract for aspecific business purpose, common between a buyer and a supplier.


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Retrenchment is a short-run renewal strategy designed toovercome organizational weaknesses that are contributingto deteriorating performance.

It is meant to replenish and revitalize the organizationalresources and capabilities so that the organization canregain its competitiveness.

Retrenchment strategies call for two primary actions: costcutting and restructuring.


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Organizational Slack- uncommitted or committed (butunder utilized) resources.

Leadership

Managerial Control

Condition of Moderate Adversity

Condition of High/Severe Adversity


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A turnaround situation exists when a firmencounters multiple years of declining financial

performance subsequent to a period of prosperity.

The strategic causes of performance downturns

include increased competition, raw material

shortages, and decreased profit margins, while

operating problems include strikes and laborproblems, excess plant capacity and depressed price

levels.


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The Turnaround Process begins with a depiction ofexternal and internal factors as causes of a firmsperformance downturn.

Retrenchment is an integral component of turnaroundstrategy. The critical role of retrenchment in providing astable base from which to launch a recovery phase ofthe turnaround process is well established..

The second phase involves a return-to-growth orrecovery stage and the turnaround process shifts awayfrom retrenchment and move towards growth anddevelopment and growth in market share.


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Divestment-Sells a business unit to another firm thatwill continue to operate it. ex-In Maruti Udyog 54% ofthis enterprise was disinvested to Suzuki of Japan.

Spin-Off-Sets up a business unit as a separate businessthrough a distribution of stock or a cash deal.

Restructuring the Business Operations-Restructuringits management team, financial reengineering or overallbusiness reengineering.


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Sometimes a business unit or a whole companybecomes so weak that the owners cannot find an

interested buyer.

A simple shutdown will prevent owners from

throwing good money after bad once it is clear that

there is no future for the business.

Bankruptcy is a last resort when the business fails

financially.


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The three generic strategies can be used incombination, they can be sequenced as:

Growth followed by stability.

Pursued simultaneously in different parts of thebusiness unit.

Example-Company (TISCO) had first consolidated itsposition in the core steel business, then divestedsome of its non-core businesses.


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Final Strategic Pptn