Corporate Strategy & Organizational

Culture
BY – ANKIT KUMAR MISHRA
 A. Corporate Strategy

A corporate strategy entails a clearly defined, long-term vision that organizations set, seeking to create corporate value and motivate the workforce
to implement the proper actions to achieve customer satisfaction.

It take decisions related to:

• Allocating resources among the different businesses of a firm.

• Transferring resources from one set of businesses to others.

• Managing and nurturing a portfolio of businesses.

• Creating value across businesses in the portfolio.

 Types of Corporate Strategy

According to Glueck, there are four strategic alternatives:

• Stability Strategy

• Expansion Strategy

• Retrenchment Strategy

• Combination Strategy
 Stability Strategy

It is adopted by an organization when it attempts at incremental improvement of its performance by marginally changing one or more of its
businesses in terms of their respective customer groups, customer functions, and alternative technologies – either singly or collectively.

Reasons for adopting Stability Strategies

• Market is matured.

• Less risky approach, consume less resources.

• Consolidation is sought through stabilizing after a period of rapid expansions.

• Expansion perceived as being threating,

 Types of Stability Strategy

• No change strategy

No change Strategy is a conscious decision to do nothing new i.e. to continue with the present business definition. This is done to save
resources, money, time of the organization which may go waste unnecessary.

• Profit strategy
In profit strategy organization tries to sustain its corporate profitability with the short term measures. Organization believes that the problem are
short lived and tried to undertake measures like reducing investment, cut cost, raise prices, increase productivity or adopt some other  measures
to tide over what are assumed to be temporarily difficulties

• Pause/proceed with caution strategy

It is employed by the organization that was to take the ground before moving ahead with a full-fledged corporate strategy that had a visiting
place of expansion and wish to rest a while before moving ahead.
 Examples

• Cigarette companies are best example of the organization who adopts of no change strategy.
• Netflix change its monthly plan to 149 because of reducing profit in Indian market is an example of profit strategy.

• HUL, who are better known for their soap and detergent, started  to sell few thousands of pair of shoes  in some cities to gauge market reaction. It
was a proceed with caution strategy. before it decided to focus on the export market through Ponds  Export based at Pondicherry as shoes were
clearly a non core area for HUL.
 Expansion strategy

It is followed when an organization aims at high growth by substantially broadening the scope of one or more of its businesses in terms of their
respective customer groups, customer functions, and alternatives technologies-singly or jointly-in order to improve its overall performance.

It also known as growth or intensification strategies.

Reasons for adopting Expansion Strategies

• It may become imperative when market demand increase in pace of activity.

• Increasing size may lead to more control over the market vis-à-vis competitors.

• Advantages from the experience curve and scale of operations may follow
 Types of Expansion Strategy
• Concentration
It involves converging resources in one or more of a firm’s business in terms of their respective customer needs, customer functions, or alternative Technology either singly or jointly in
such a manner that expansions result. The  firm can opt for market penetration, market development or product development strategy

• Integration

It means combining activities related to the present activity of a firm. It can be horizontal or vertical integration. In vertical integration organization start making new products that serve
its own needs. In horizontal integration, organization take up the same type of product at same level of production or marketing process.

• Diversification

It involves a substantial change in business definition in terms of customer function customer groups or alternative technology in one or more of the firm’ businesses. In unrelated
diversification, organization takes up  activity that is unrelated to their business definitions either in term of customer groups, customer function. In concentric or related diversification, an
organization adopt a strategy which requires taking up those activities which are related to the existing business definition.

• Internationalization

In this expansion strategy,  organization aims to market their product or service beyond the domestic or national market. They. create value by transferring product and services to the
foreign market where those products and services are not available
 Examples

• Bajaj auto is a great example of concentration strategy. They has consistently concentrated on two or three wheelers.
• Acquisition of WhatsApp and Instagram by Facebook is an example of horizontal Integration. Netflix producing their own web-series and movie
for their streaming platform is an example of Vertical Integration.

• Apple watch is an example of related diversification. ITC has successfully diversified into many businesses beyond their core business.

• IKEA India is an providing world class furniture in India. Netflix offering south Korean shows under their Internationalization strategy.
 Retrenchment Strategies

It is followed when an organization aims at contraction of its activities by eliminating/reducing businesses in order to improve its overall
performance

Reasons for adopting Retrenchment Strategies

• The management no longer wishes to remain in business, either partly or wholly, due to continuous loss and the organization become unviable.

• The market is not profitable or threating.

• Stability can be ensured by reallocation of resources from unprofitable to profitable business.

 Types of Retrenchment Strategies

• Turnaround Strategy
If the organization chooses to focus on ways and means to reverse the process of decline, it adopts turnaround strategy.

• Divestment or Divestiture Strategy

It involves the sales or liquidation of a portion of business, profit centers or SBU. It done after the failing of turnaround strategies.

• Liquidation Strategy
Its is the last resort strategy when organization cant be turn around or cant be divested as there are no buyers. It aims to recoup as much money
possible before the closure take place
 Examples

• HUL divested its marines foods business to Mumbai-based Temptation food in order to get out of all non core businesses.
• Motors Liquidation Company formerly known as Generals Motor Corporation have to undergo liquidation due to heavy debt burden and company
have to sell their assets.

• Dell were in huge loss in 2013 and have to adopt turnaround strategies to become a profitable company again.
 Combination Strategy

It is followed when firm adopts a mixture of stability, expansion and retrenchment strategies either at the same time in its different businesses or at
different times in same business with the aim of improving its performance.

Reasons for adopting Combination Strategies

• The size of the organization is large and faces a complex environment.

• Organization have different businesses, each requires different strategies.

 Examples

• Pidilite Industry, the maker of Fevicol adhesive, contemplated expansion through related diversification through extension of its product portfolio
across three business segments: adhesive & sealants, construction paint & chemical, and art materials. It divested specialty chemical business and
acquired M-seal from Mahindra. Its international expansion and joint ventures in recent years have been in West Asia Singapore and Brazil.

• ITC is a diversified conglomerate t having corporate portfolio consisting of FMCG goods, hotels, paperboards and packaging, Agri Business and
IT. It adopted a turnaround strategy for the speciality paper Business triveni tissues, after its acquisition and Merger merges with its paperboard
business. They divested their financial service businesses.
 B. Organizational Strategy

Organizational culture  is composed of beliefs and values that the members of an organization share in common. An organization has an strong
culture if it has specific values that are widely and deeply shared.

The manifestation of organizational culture in an organization are evident in:

• Shared things (e.g. The way people dress)

• Shared sayings (e.g. let’s get down to work)

• Shared actions (e.g. service-oriented approach)

• Shared feelings (e.g. hard work is rewarded here)

 Types of Organizational Culture

• Clan Culture

There is internal focus and integration with flexibility and discretion. This means that the organization use priority to meeting the needs of the employee. There is a
feeling of extended family

• Adaptability Culture

There is external focus and differentiation with flexibility and discretion. The organization tried to meet the customer needs. People exhibit entrepreneurial values.
Innovation risk taking and creativity all the Hallmark of this organization

• Market Culture

There is external focus and differentiation with stability and control. The organization is result oriented and emphasis is placed on competitiveness. Employees
exhibits professionalism with ambition and serve customer. They try to achieve sales growth and profitability.

• Bureaucratic culture

There is internal focus and integration with stability and control. There are well set procedure for work with established policies. There is consistency in action,
conformity to rule and collaboration among employees. The organization tries to integrated and efficient
 Advantage of Strong Organizational Culture

• Increased employee engagement

• Decreased turnover

• Strong brand identity

• Elevated productivity

• Transformational power

• Top performers

• Effective onboarding
• Healthy team environment
Thank You!