Grand Strategies

 Decisions or choices of long term plans from

available alternatives – master or corporate
strategy.
 It is based on analysis of internal and
external environments.
 Directs the organisation towards achieving
overall long term objectives.
 Involves Expansion, Quality Improvement,
Market Development, Innovation, Liquidition
etc.
 Usually selected by top management.
 Classification :
(i) Stability Strategy – satisfied with status quo or
minimal changes. Serving the same clients, same
product/service, maintaining market share, sustaining
the organisation’s return on investment. Usually
followed by small/medium sized organisations.
Application - Followed at some point of time in product
life cycle. Pioneer in new business, or by creating
operational excellence.
Risk Averse and slow to change.
 Classification – Stability
Application (Contd.) – Firm with strategic
advantage in the present business/market
prefers stability.
Firm has insufficient resources.
Environmental factors/Government
regulations prevent other strategies.
Market share/sales are low, generate as much
profit as possible before retrenching.
 Classification – Stability - Alternative strategies –
Incremental Growth Strategy –
- Achievements are average or lower than industry but
environmental factors are more or less stable.

- Organisation prefers change only if it is necessary.

- Easier to pursue, does not disrupt routine functions.

 Classification – Stability - Alternative
strategies –
Harvesting/End game/Profit Strategies
- Organisation/SBU aims at generating profit
at the cost of market share because
product is not premier
market share/contribution to sales small
product in stable or declining market
 Classification – Stability - Alternative
strategies –
Sustainable Growth Strategy –
- Organisation tries to stay in the business in
spite of adverse conditions created by
resource constraints, government policy,
fierce competition, cheaper imports
 Classification – Stability - Alternative
strategies –
Stability as a pause/proceed with caution –
Intermediate choice between past and future
Consolidation phase after massive changes.
 Classification :
(ii) Growth Strategy – means by which an
organisation plans to achieve increased level
of objective – much higher than the current,
increased profit, sales or market share, reduce
cost of production per unit, increase in
performance objectives.
 Classification :
(ii) Growth Strategy (Contd.)
Application – Growth is necessary for the
very survival of the organisation. An
organisation which does not grow may be
pushed out of business by new entrants
because of high cost, technology/equipment
obsolescence, lower efficiency.
 Classification :
(ii) Growth Strategy (Contd.)
Application – Growth offers many
economic advantages – lower unit cost,
greater specialisation – leading to competitive
advantage.
Workforce Motivation – superior
performance.
 Classification :
(ii) Growth Strategy (Contd.)
Application – (Intangible benefits) –
Increased prestige, employee satisfaction,
social benefits, preferred be investors.
 Classification :
(ii) Growth Strategy – Alternative Strategies
Concentric Expansion Strategy – Investing the
resources in one or more of a firm’s business
so as to expand its present business.
- Doing more what the firm is already doing
and what it is best in doing.
- Market penetration/Market
Development/Product Development
 Classification :
(ii) Growth Strategy – Alternative Strategies
Vertical Integration Growth Strategies
- represents a decision by an organisation to utilise
internal transactions instead of market transactions to
achieve its objectives.
- undertaking activities, in addition to existing ones,
along the value chain from raw materials to production
to distribution of goods to gain greater ownership.
- Forward and Backward Integration.
 Classification :
(ii) Growth Strategy – Alternative Strategies
Diversification Strategy :
- Process of entry into a business which is new to
the organisation.
- Concentric diversification (Related) Market-
wise/Technology-wise/Both
- Conglomerate diversification (Unrelated)
 Classification :
(ii) Growth Strategy – Alternative Strategies
External Strategy –
- Merger
Horizontal/Vertical/Concentric/Conglomerate
- Acquisition – Friendly/Hostile takeover
- Joint venture – different types
- Strategic Alliance –
Technology/Operations/Marketing, Sales
Services, Single or Multi-country.
 Classification :
Retrenchment Strategy – A defensive strategy
through which the firm having declining
performance decides to improve performance
by partial or total withdrawal.
- focusing on functional improvement with
special emphasis on cost reduction.
- Reduction/rationalisation of functions –
reduce product range, market, customers.
 Classification :
Retrenchment Strategy –
Application –
- Liquidation of business as a last resort.
- Combination of all of the above.
- When the organisation is not doing well and
continuation would add to losses. It can focus
on what it does well.
 Classification :
Retrenchment Strategy –
Application –
- If the organisation is not able to meet its
objectives even after following alternative
strategies (Turnaround/Divestment) it may go
for retrenchment strategy.
 Classification :
Retrenchment Strategy – Alternatives
Turnaround Strategy –
Recovery from decline through internal efficiency
by –
- Replace obsolete machinery
- Changing product mix
- Selling NPAs
- Closing down unviable units
- Focus on specific products/customers
 Classification :
Retrenchment Strategy – Alternatives
Divestment Strategy – Getting out of certain
businesses and selling off units/divisions :
- Outright sale of a unit to another company
- A company’s shareholders are bought out by
company’ management.
- Spin off
 Classification :
Retrenchment Strategy – Alternatives
Liquidation Strategy – Complete closing down of business
and selling the tangible and intangible assets including
good will either to reinvest in another business or
distribution to stake holders.
- business cannot be revived, retaining value is less than
selling value.
- Future is gloomy.
- Accumulated losses and debts
- Liquidation value is more than discounted present value of
income flow.
 Classification :
Combination Strategy –
- Stability in some business, growth in others
- Stability in some business, retrenchment in
others.
- Growth in some retrenchment in others.
- Stability, Growth and Retrenchment in
different businesses.
 Classification :
Combination Strategy –
- When different products of the organisation are
in different product life cycle, they require
different types of investment.
- Business cycle may affect the prospects of
various business differently.
- When number of businesses has gone beyond
the optimum number, reduction may be required
to stay profitable in the long run.