CORPORATE &

COMPETITIVE
STRATEGIES

SAYEED HASAN
Lecturer, CIU Business School
CORPORATE STRATEGIES
 A corporate strategy sets long-term direction for the total enterprise.
 The three main types of corporate strategies are growth, stability, and
renewal.
 Growth Strategy: a corporate strategy that’s used when an organization
wants to expand the number of markets served or products offered, either
through its current business(es) or through new business(es).
 Stability Strategy: a corporate strategy in which an organization
maintains or slightly improves what it is currently doing.
 Renewal Strategy: a corporate strategy designed to address declining
performance.
 Retrenchment: A strategy adopted to strengthen or protect the
amount of business an SBU is currently generating.
 Divestiture: A strategy adopted to sell off parts of the organization to
refocus attention on core business areas.
 Downsizing: A strategy adopted to decrease the size of operations,
often by reducing the workforce.
Growth Strategy
• An organization can grow by using concentration (focusing on its primary line of
business and increasing the number of products offered or markets served in this
primary business).
• Or, An organization can grow through diversification (a strategy of moving into new
lines of business; acquiring or investing in related or new business areas).
• Related diversification happens when a company combines with other companies
in different, but related, industries. (i.e. adding new but related products or services;
Moving into a new business that is related to the company’s existing business
activities).
• In horizontal integration, a company grows by seeking ownership or increased
control over competitors; or by combining with competitors.
• In vertical integration, a company grows by backward or forward integration into
adjacent activities in the value network (i.e. by acquiring suppliers or distributors).
• In backward vertical integration, the organization becomes its own supplier so
it can control its inputs.
• In forward vertical integration, the organization becomes its own distributor
and is able to control its outputs.
• Unrelated diversification happens when a company expands into or combines with
firms in different and unrelated industries (i.e. adding new, unrelated products or
services; expanding into a totally new line of business).
Types Of Diversification

Diversification

Related Unrelated
Diversification Diversification

Horizontal Vertical
Integration Integration

Backward Vertical Forward Vertical

Integration Integration
COMPETITIVE STRATEGIES
• Strategic Business Unit (SBU): The term strategic business unit (SBU) is
often used to describe a business firm that is part of a larger enterprise.
SBU is a division of a large organization that has a unique business
mission, product line, competitors, and markets.
• Whereas the enterprise on a whole will have a corporate strategy, each
SBU will have its own competitive strategy.
• Competitive Advantage: A unique strength that competitors are unable to
duplicate or find too costly to imitate. Companies gain competitive
advantage from their core competencies.
• Core competencies are special strengths or things that the organization
has or does exceptionally well in comparison with competitors.
• Core competencies may be found in special knowledge or expertise,
superior technologies, efficient supply chains, or unique distribution
systems, among many other possibilities.

• Michael Porter has developed THREE GENERIC STRATEGIES that

managers may pursue to make their organizations more competitive:
(1) Cost Leadership (2) Differentiation and (3) Focus
Michael Porter’s Generic Strategies
• Cost Leadership: A strategy in which an organization seeks to operate
with low cost so that products or services can be sold at low prices.
• Success with the cost leadership strategy requires tight cost and
managerial controls, as well as products or services that are easy to
create and distribute.
• Differentiation: A strategy in which an organization seeks to offer products
or services that are unique and different from the competition.
• Differentiation includes uniqueness in such areas as product quality,
design, and level of after-sales service. Example: Apple (Product
design).
• Success with a differentiation strategy requires organizational strengths
in marketing, research and development, and creativity.
• Focus: A strategy in which an organization concentrates on serving a
specific regional market or group of buyers better than anyone else.
• Focused Cost Leadership: Uses cost leadership and targets a special
market.
• Focused Differentiation: Uses differentiation and targets a special
market.
REFERENCES:

 Robbins, S. P. and Coulter, M. (2016) Management. 13th ed.

Harlow: Pearson Education Limited.
 Griffin, R. W. (2016) Fundamentals of Management. 8th ed.
Boston: Cengage Learning.
 Certo, S. C. and Certo, S. T. (2016) Modern Management:
Concepts and Skills. 14th ed. Harlow: Pearson Education.
 Daft, R. L. (2010) Management. 9 t h ed. Mason: South-Western
Cengage Learning.