Combination Strategy

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  • 1. STRATEGY Strategy (Greek ""stratgia, "art of troop leader; office of general, command, generalship") is a high level plan to achieve one or more goals under conditions of uncertainty. Strategy is important because the resources available to achieve these goals are usually limited. Henry Mintzberg from McGill University defined strategy as "a pattern in a stream of decisions"

2. MEANING GRAND STRATEGIES Grand strategies are the decisions or choices of long term plans from available alternatives. Grand strategies also called as master or corporate strategy. It is based on analysis of internal and external environment. They involve Expansion, Quality Improvement, Market Development, Innovation, Liquidation, etc. Usually they are selected by top level managers such as directors, executives etc. 3. GRAND STRATEGY ExpansionStabilityConcentrationNo changeRetrenchmentSimultaneous TurnaroundintegrationPause/Proceed with CautionCooperationInternationalization DigitalizationSequentialDivestmentDiversification Profit StrategiesCombinationCombination of both Liquidation 4. Stability Strategy A strategy is stability strategy when a firm attempts to maintain its status-quo with existing levels of efforts and it is satisfied with only incremental growth/improvement by marginally changing the business and concentrates its resources where it has or can develop rapidly a meaningful competitive advantages in the narrowest possible product market scope. Absence of significant change:- i.e. continuing to serve the same clients by offering the same product or service, maintaining market share, and sustaining the organization's return-on investment. 5. GROWTH STRATEGY Growth Strategies are means by which an organization plans to achieve the increased level of objective that is much higher than its past achievement level. Organizations may select a growth strategy to increase their profits, sales or market share. to reduce cost of production per unit. increase in performance objectives. 6. RETRENCHMENT STRATEGY It is followed by when an organization substantially reduces the scope of its activities. This strategy is often used in order to cut expenses with the goal of becoming a more financial stable business. Typically the strategy involves withdrawing from certain markets or the discontinuation of selling certain products or service in order to make a beneficial turnaround. 7. COMBINATION STRATEGY Combination strategy is not an independent classification but it is a combination of different strategies stability, growth, retrenchment invarious forms. It also know as Mixed or Hybrid Strategy. Thus the possible combinations of strategies may be: Stability in some businesses and growth in other businesses Stability in some businesses and retrenchment in other businesses Growth in some businesses and retrenchment in other businesses Stability, growth and retrenchment in different businesses. 8. TYPES Simultaneous SequentialBoth 9. Reasons for following Different products in different product life cycle When different products of the organization are at different product life-cycle stages, they require different types of investment. Business Cycle Business cycle may affect the prospect of various businesses differently. Number of businesses When the number of businesses in an organization has gone beyond the optimum number, they are required to be reduced because some business may not be that attractive from longterm point of view. 10. BENEFITS Developing competitive advantage and achieving large market share. The firm is comparatively more protected from the impact of downward trend in the industry. The firm can bear the pressures put by suppliers in the form of increasing prices of their supplies as well as customers in the form of bargaining for lower product price. Cost advantage acts as an entry barrier 11. DRAWBACKS It can be sustained only if barriers exist that prevent competitors from achieving the same low cost. Severe cost reduction may dilute customer focus and customer interests may be ignored, Customers requiring extra features and ready to pay higher price are lost. 12. ITC Ltd. 13. Aditya Birla Group Of Companies