Corporate strategy alternatives

The broad strategy alternatives can be

classified as being concerned with
GROWTH
STABILITY
RETRENCHMENT

GROWTH

Ansoff's Growth vector matrix:

Product
Present

New

Market

Present

New

Market
Penetration

Product
Development

Market
Development Diversification

Market penetration

Same products in same market

By winning a larger share of its markets with
existing products growth is achieved
Unless markets are growing, this involves
taking business away from competitors
Low risk strategy because firm can build on
knowledge of its markets
No new products

Market Development

Go into new markets with existing products

Follow this strategy when existing markets
offer few prospects for growth compared with
new markets
This is a higher risk strategy
May incorrectly anticipate competitor reaction
Need to overcome brand loyalty of established
products

Product Development

Retain present markets but develop new

products for existing markets
Growth will occur if the new products yield
additional sales & market share
Likely to be successful where there is low
brand loyalty of short product lifecycles
Low risk - but slight risk associated with new
products

Diversification

Move away from present markets and present

products
Greatest Risk so far
Related diversification
connection still exists to existing
businesses - related technology or skills
Integration strategies usually considered to be
part of related diversification
Backward integration
Forward integration
Horizontal integration

....... Diversification

Unrelated or conglomerate diversification

Totally new business outside the scope of
its existing operations
Growth strategies can be followed either by
internal (organic) expansion or else by
acquiring or merging with another firm

Stability

The organisation is satisfied with its

performance
There are 2 alternative stability strategies:
holding strategy

Aim is to retain current market share

Growth is not pursued as such but will

occur if the market grows

Resourcing held the same

Harvesting strategy

Where firm has dominant market share

it may take advantage of its position and
generate cash for future business
expansion

Associated with cost cutting and price

increases to generate profits

Retrenchment

Reducing the scale of its operations

Liquidation

Firm withdraws from a declining market

seeks to reinvest resources in new

market
Divestment

Selling off an SBU

If SBU is threatened

If SBU does not fit in portfolio

Shrink back to core business

Turnaround

when business is approaching

bankrupcy

Business Strategy alternatives

Porter

Overall cost leadership

Requires BU to achieve lower costs than
other competitors while maintaining product
or service quality.
Requires aggressive construction of
efficient scale facilities
pursuit of cost reductions, tight cost and
overhead control
avoidance of marginal customer accounts

..Business Strategy alternatives

Differentiation
creating something unique
Achieving industry wide recognition of
different & superior products or services
Focus strategy
a particular buyer group or segment is of the
market is selected as a basis for competition
within the targeted segment the business
may attempt to compete on a low cost or
differentiation basis.