Professional Documents
Culture Documents
- Rutika Saini
Directional Stability
Retrenchment
Growth Strategy
• Expand the company’s activities.
Concentration
Growth
Diversification
Concentration
• If a company’s current product lines have real growth potential, concentration of
resources on those product lines makes sense as a strategy for growth.
Concentration Strategies
• Intensification
• Integration
Intensification
Integration
• Vertical
• Horizontal
This growth can be achieved either internally by expanding current operations or
externally through acquisitions
Vertical Integration continuum
Diversification Strategies
• Related or Concentric
• Unrelated or Conglomerate
Stability Strategy
• The Stability Strategy is adopted when the organization
attempts to maintain its current position and focuses
only on the incremental improvement by merely
changing one or more of its business operations in the
perspective of customer groups, customer functions
and technology alternatives, either individually or
collectively.
Stability Strategy
Proceed with
No- Change
caution/ Pause Harvesting Strategy
strategy Profit Strategy
Strategy
Retrenchment
Strategy
• Companies with multiple product lines or business units must also ask themselves how
these various products and business units should be managed to boost overall
corporate performance:
• How much of our time and money should we spend on our best products and business
units to ensure that they continue to be successful?
• How much of our time and money should we spend developing new costly products,
most of which will never be successful?
BCG Matrix
Clippings
GE Matrix
ADVANTAGES
1. It encourages top management to evaluate each of the corporation’s businesses
individually and to set objectives and allocate resources for each.
2. It stimulates the use of externally oriented data to supplement management’s
judgment.
3. It raises the issue of cash-flow availability for use in expansion and growth.
4. Its graphic depiction facilitates communication.
LIMITATIONS
1. Defining product/market segments is difficult.
2. It suggests the use of standard strategies that can miss opportunities or be
impractical.
3. It provides an illusion of scientific rigor when in reality positions are based on subjective
judgments.
4. Its value-laden terms such as cash cow and dog can lead to self-fulfilling prophecies.
5. It is not always clear what makes an industry attractive or where a product is in its life
cycle.
Corporate Parenting
• What businesses should this company own and why?
• What organizational structure, management processes, and philosophy will foster
superior performance from the company’s business units?
Developing a corporate parenting
Strategy.
1. Examine each business unit (or target firm in the case of acquisition) in terms of its
strategic factors
2. Examine each business unit (or target firm) in terms of areas in which performance
can be improved
3. Analyze how well the parent corporation fits with the business unit (or target firm)