Corporate Level Strategies

DR.HAMEED AKHTAR
Strategies
• 1. Corporate Level Strategies (Grand Strategies)
• 2. Business Level Strategies (Generic Strategies)
• 3. Functional Level Strategies
corporate Level Strategies
• Corporate level strategies are basically about the choice of direction
that a firm adopts in order to achieve its objectives.
• Corporate strategy is essentially a blueprint for the growth of the
firm.
• The corporate strategy sets the overall direction for the organization
to follow.
• It also spells out the extent, pace and timing of the firm’s growth.
Corporate Level Strategies 
• Corporate strategy is mainly concerned with the choice of businesses,
products and markets.
• The competitive and functional strategies of the firm are formulated
to synchronize with the corporate strategy to enable it to reach its
desired objectives.
• Corporate strategy addresses the issues of a multi business
enterprise as a whole. Also addresses issues relating to the intent,
scope, and nature of the enterprise and in particular has to provide
answers to the following questions…
Corporate Level Strategies Questions:-
•  1. What should be the nature and values of the enterprise in the
broadest sense? What are the aims in terms of creating value for
stakeholders?
• 2. What kind of businesses should we be in? What should be the
scope of activity in the future so what should we divest and what
should we seek to add?
• 3. What structure, systems and processes will be necessary to link the
various businesses to each other and to the corporate centre?
• 4. How can the corporate centre add value to make the whole worth
more than the sum of the parts?
Types of Corporate Level Strategies
• A. STABILITY STRATEGY
• Make no change to the company’s current activities
• B. EXPANSION STRATEGY Expand the company’s activities
• C. RETRENCHMENT STRATEGY Reduce the company’s level of
activities
• D. COMBINATION STRTAEGY A combination of above activities
A. STABILITY STRATEGY
• Stability strategy is a strategy in which the organization retain its
present strategy at the corporate level and continues focusing on its
present products and markets.
• Make no change to the company’s current activities
• The firm stays with its current business and product markets;
maintains the existing level of efforts; and is satisfied with
incremental growth.
A. STABILITY STRATEGY
• It does not seek to invest in new factories and capital assets, gain
market share, or invade new geographical territories  Organization
choose this strategy when the industry faces slow or no growth
prospects They also choose this strategy when they go through a
period of rapid expansion and need to consolidate their operations
before going for another bout of expansion
Conditions Favoring Stability Strategy
•  An organization might change stability when:-
• 1. The industry or the economy is disturbed; The environment is volatile;
Uncertain Conditions
• 2. Environment turbulence is minimal and the firm does not foresee any major
threat to itself and the industry concerned as a whole
• 3. The organization just finished a period of rapid growth and needs to
consolidate its gains before pursuing more growth
• 4. The firm’s growth ambitions are very modest and its content with incremental
growth
• 5. The industry is in a mature stage with few or no growth prospects and the firm
is currently in a comfortable position in the industry
. STABILITY STRATEGY- Types
• (i). No Change Strategy
• (ii). Profit Strategy
• (iii). Pause/Proceed with Caution Strategy
A(i) No Change Strategy 
• This strategy is a conscious decision to do nothing i.e. to continue
with the present business definition Taking no decision sometimes is
a decision too !!! Several small and medium sized organizations
operating in a familiar market- more often a niche market that is
limited in scope- and offering products or services through a time
tested technology, rely on the no change strategy
Profit Strategy
• No organization can indefinitely continue with a no change strategy.
Things do change and the organization is faced with a situation where
it has to do something An organization may asses the situation where
the profitability by artificial measures, by adopting a profit strategy In
a situation where the profitability is drifting lower, organizations
undertake measures to reduce investments, cut costs, raise prices,
increase productivity or adopt some such measures to tide over
temporary difficulties
Pause/Proceed with Caution Strategy
• It is to test the ground before moving ahead with a full fledged
corporate strategy or organizations that have had a blistering pace of
expansion and wish to rest awhile before moving ahead. Essential
when intervening of consolidation is necessary The purpose is to let
the strategic changes seep down the organizational levels, let
structural changes take place and systems to adopt to the new
strategies. It is a temporary strategy Ex Bata and liberty dominated by
global brands like adidas, nike, reebok
EXAPNSION STRATEGY-
•  Also known as growth or intensification strategies Expand the
company’s activities When aims at high growth by broadening the
scope of one of its businesses in terms of their respective customer
groups, customer functions and alternative technologies in order to
improve its overall performance. Adopted to accelerate the rate of
growth of sales, profits and market share faster by entering new
markets, acquiring new resources, developing new technologies and
creating new managerial capabilities
EXAPNSION STRATEGY
• Growth is a way of life. Almost all organizations plan to expand. This is
why expansion strategies are most popular corporate strategies  A
growing economy, growing markets, customers seeking new ways of
need satisfaction and emerging technologies offer ample
opportunities for companies to seek expansion  Firms choose
expansion strategy when their resource availability and past financial
performance are both high
EXAPNSION STRATEGY
• examples A chocolate manufacturer expands its customer group to
include middle aged and old persons to its existing customers
comprising children and adolescents  A printing firm changes from
the traditional letter press printing to desk top publishing in order to
increase its production and efficiency In above examples company
moves in one or other direction so as to substantially alter its present
business definition
. EXAPNSION STRATEGY- TYPES
• B1.Expansion Through Concentration 
• B 2.Expansion Through Integration
• i) Vertical Integration ii) Horizontal Integration 
• B 3.Expansion Through Diversification 
• B 4. Expansion Through Cooperation i) Mergers ii) Takeovers iii) Joint
Ventures iv) Strategic Alliance 
• B 5. Expansion Through Internationalization i) International Strategies
ii) Multi-Domestic Str. iii) Global Str. iv) Transnational Str.
•  Expansion Through Concentration Concentration Strategies Market
Penetration Market Development Product Development
Expansion Through Concentration 1. Market
Penetration:-
• The firm seeks to sell more products to the same market  When a
firm believes that there exist ample opportunities by aggressively
exploiting its current products and current markets  It achieve
growth through existing products by:  Motivating the existing
customers to buy its product more frequently and in larger quantities
(ex- Volume discounts, bonus cards, customer retention)  Increasing
its efforts to attract its competitors’ customers (ex- Attractive product
design, quality, attractive price)  Targeting new customers in its
current market (ex- Price Concessions, better customer services,
increasing publicity)
. Expansion Through Concentration 2 .
Market Development:- 
• The firm seeks to sell the same products to new markets  A firm
seeks to increase its sales by taking its product into new markets. The
possible methods for market development are:  The firm can move
its present product into new geographical areas. This is done by
increasing its sales force, appointing new channel partners, sales
agents or manufacturing representatives and by franchising its
operation  The firm can expand sales by attracting new market
segments. Making minor modifications in the existing products that
appeal to new segments can do the trick
. Expansion Through Concentration 3 .
Product Development:
• The firm seeks to sell new products to the same market  Involves
development of new products or improved products for its current
markets. The possible methods for product development are:  They
can expand sales through developing new products  The company
can create different or improved versions of the current products 
The company can make necessary changes in its existing products to
suit the different likes and dislikes of the customers
Conditions Favoring Expansion Through
Concentration
• Firm’s industry is resistant to major technological advancements 
Firm’s target markets are not product saturated  Firm’s markets are
sufficiently distinctive to dissuade competitors in adjacent markets
from entering firm’s segment  Firm’s inputs are stable in price and
quantity and available in the amounts and at the times needed 
Firm’s industry is stable  Firm’s competitive advantages are based on
efficient production or distribution channels  Success of market
generalists
Concentrated Growth: IBM Case Study
• It is the strategy in which the firm directs its resources to the profitable growth of a single
product, in a single market, with a single dominant technology and taking advantage of
economies of scale. Issue The company’s semiconductor unit, which had bet on a strategy of
manufacturing all kinds of chips for all 400 customers, had lost $ 1.2 billion over the previous 18
months. In spite of spending billions of upgrade its chip plant they were getting thrashed by
Asian rivals that were manufacturing at much higher volumes and offering bargain-basement
prices. Strategy formulation On July 15, 2003, 70 experts headed by Chief Executive Samuel J.
Palmisano gathered in a conference to formulate the strategy. Key outcome  The chip and
computer unites would be combined  Instead of manufacturing all kinds of chips for 400
customers, It would focus primarily on one family of chips (Power microprocessors).  It would
produce some chips for itself and the remaining for other key partner like Nintendo, Apple G5
computers, Cisco Systems networking gear. It would recruit co-investors to help fund advances
in the chip manufacturing technology. Results  IBM gained share in high-end servers.  IBM
became processer supplier for next generation game consoles to companies like Sony, Microsoft
& Nintendo & controls 100 % market share.
Expansion through Diversification 
•  Diversification involves moving into new lines of business 
Diversification involves a substantial change in business definition 
When new products are made for new markets then diversification
takes place(see Ansoff’s Matrix)  Ex- L&T Wha t next ?
Types of Diversification
• (i) Related (Concentric) Diversification (ii) Unrelated (Conglomerate)
Diversification
Related (Concentric) Diversification
• i)  When an organization takes up an activity in such a manner that it
is related to the existing business definition, it is related diversification
 It may be of three types 1. Marketing related diversification Sewing
machine company diversifies into kitchen ware and household
appliances which are sold through chain of retail stores to family
consumers. 2. Technology related diversification Insurance company
offering insurance to institutional customers also starts individual
customers 3. Marketing and Technology related diversification
Synthetic water tank manufacturer makes other synthetic items such
as synthetic doors and windows through its hardware suppliers
network
 (i) Unrelated (Conglomerate) Diversification
• When an organization adopts a strategy which requires taking up
those activities which are unrelated to the existing business definition
 Company seeks to grow by adding entirely unrelated products and
markets to its existing business  A firm generally introduces to
products using different technologies in new markets  The ITC group
is agribusiness, FMCG, hotels, technology, IT, Tyres  The Aditya Birla
Group is in a variety of unrelated businesses like aluminum,
outsourcing, cement, chemicals, copper, gas, mining, retail, software,
telecom, textile
Conditions Favoring Expansion Through
Diversification 
• Increase firm’s stock value  Increase growth rate of firm  Investment
is better use of funds than using them for internal growth  Improves
stability of earnings and sales  Balance or fill out product line 
Diversify product line  Acquire a needed resource quickly  Achieve
tax savings  Increase efficiency and profitability