You are on page 1of 29


Nivedita Pantawane

customer functions and alternative technologies € Advantages from experience curve € Increasing size € Conducive environment € Ex: Expanding into new customer segments.€ When an organization aims at high growth € In terms of customer groups. .

€ Expansion through Concentration € Expansion through Integration € Expansion through Diversification € Expansion through Cooperation € Expansion through Internationalization € Expansion through Digitalisation .

¶ It involves investment of resources in a product line for an identified market with the help of proven technology.· Focus more intensely on existing businesses. .


¶Combining activities related to the current activities of the firm.· € Widening the scope of the business € Developing a value chain € Moving up or down the value chain € Types: o Horizontal o Vertical .

bigger size € Benefits: 1.Horizontal integration € When an organization take sup the same type of products at the same level of production or marketing process. Product differentiation 3. Reduction in rivalry . Economies of scale. Market power 4. scope 2. € Brings a stronger competitive position.

Vertical Integration € ¶ ny activity undertaken with the purpose of either supplying A inputs or serving as a customer for outputs.· € Types: Forward Backward € Taper integration strategy € Quasi integration strategy € Vertical disintegration ² outsourcing .

Marketing and technology related concentric diversification 2. Concentric or related .Marketing related concentric diversification .· € Types: 1.€ ¶Substantial change in business definition ² singly or jointly in terms of customer functions.Technology related concentric diversification . Conglomerate or unrelated . customer group or alternative technologies of one or more of a firm·s businesses.

€ Market products across borders € Rapid environmental changes .

structure. rivalry Factor conditions Demand conditions Related & supporting industries Serendipity .PORTER·S DIAMOND MODEL Government Firm strategy.


indirect € Contractual entry modes.International entry modes € Export entry modes ² direct.licensing. franchising. technical agreements. contractual manufacturing € Investment entry modes Regionalization strategies .

No change .Profit . additional services € Types: .risky € Stable environment € Many a times after a rapid expansion € Ex: modernization.Pause/ Proceed with caution € Less .

Liquidation .€ No intention to remain in the same market € Threatening environment € Leave unprofitable business € Contraction of activities € Types: .Turnaround .Divestment .

New business models .Emergence of substitute products .New organizational forms .€ Reasons: External .Adverse govt policies .Dominant technologies .Changing customer needs and preferences .Demand saturation .

Poor quality of functional mgt .Ineffective sales and marketing .Unproductive new product development .High costs .Excess assets .Ineffective top mgt .Continual resistance to externally imposed change .Internal .

Replacement of existing team € Liquidation Strategy Closing down of the organization and selling of assets . Existing CEO and team 2.€ Turn around strategy (Internal Retrenchment) Can be handled by 1. External consultants 3.

Divestment ( Divestiture / cutback) strategy Involves liquidation A part of rehabilitation or restructuring Reasons: Business mismatch Competition Technology cope up mismatch € Better option is available for investment € Get Legal benefit ²MRTP € Types: 1. Part of company is spinned off into a independent entity with / without stake of parent company 2. Sell an unit outright .

expansion and retrenchment strategies € Applied simultaneously or sequentially .€A mix of stability.

Corporate restructuring At Macro level it means economic reforms for structural adjustments At micro level ² corporate restructuring. financial restructuring. organizational restructuring .

€ Mergers and Acquisitions € Joint ventures € Strategic alliances .

Mergers € A merger is a combination/ consolidation/ integration/ amalgamation of two or more organizations in which one acquires the assets and liabilities of the other .Vertical merger .Conglomerate merger .Or both the organizations are dissolved and assets & liabilities are combined and new stock is issued € Types: .in exchange for shares or cash .Horizontal merger .Concentric merger .

4. 3. 2. 6. step procedure of M & As Spell out the objective Indicate how the objective would be achieved Assess managerial quality Check the compatibility of business styles Anticipate and solve problems early Treat people with dignity and concern . 5.Acquisitions One company acquires another € Types: Friendly Hostile € Six 1.

Joint Ventures € An entity resulting from a long term contractual agreement between o two or more parties o to undertake mutually beneficial economic activities o exercise joint control and o contribute equity and share in the profits or losses of the entity .

€ Why - JVs? When an activity is uneconomical for an organization to do alone. When the risk of business has to be shared and therefore is reduced for the participating firms When the distinctive competence of two or more organizations can be brought together When setting up an organization requires surmounting hurdles such as import quotas.Across countries .Across industries . tariffs. nationalisticpolitical interests and cultural road blocks € Types: .Within industries .

Reduce manufacturing costs .Strategic Alliances € Two or more firms unite to pursue a set of agreed upon goals but remain independent subsequent to the formation of the alliance € The partner firms share benefits of the alliance and control over the performance of assigned tasks € The partner firms contribute on continuing basis in one or more key strategic areas Why SAs? .Develop and diffuse technology .Enter new markets .

Phase in the relationship between the partners 3. Precompetitive alliance (Low interaction / High interaction) Four principles of for SAs: 1. Pro competitive alliances ( Low interaction / Low conflict) 2. Provide for an exit strategy € Types .of SAs: 1. Competitive alliance (High interaction / High conflict) 4. Clearly define strategy and assign responsibilities 2. Blend the cultures of the partners 4. Noncompetitive alliances (High Interaction / Low conflict) 3.