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    Generic Strategy: Unit IV Anjali Singh

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    Gaurav Yadav
    The document discusses four generic strategic alternatives: stability, expansion, retrenchment, and combination. Stability focuses on maintaining the current business definition. Expansion grows the business into new products, markets, or functions. Retrenchment reduces activities in unprofitable areas by divesting products or markets. Combination uses multiple strategies simultaneously or over time due to changing environments or different product life cycles.

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    Generic Strategy: Unit IV Anjali Singh

    Uploaded by

    Gaurav Yadav
    3K views18 pages
    The document discusses four generic strategic alternatives: stability, expansion, retrenchment, and combination. Stability focuses on maintaining the current business definition. Expansion grows the business into new products, markets, or functions. Retrenchment reduces activities in unprofitable areas by divesting products or markets. Combination uses multiple strategies simultaneously or over time due to changing environments or different product life cycles.

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    Generic Strategy Alternatives

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    The document discusses four generic strategic alternatives: stability, expansion, retrenchment, and combination. Stability focuses on maintaining the current business definition. Expansion grows the business into new products, markets, or functions. Retrenchment reduces activities in unprofitable areas by divesting products or markets. Combination uses multiple strategies simultaneously or over time due to changing environments or different product life cycles.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    3K views18 pages

    Generic Strategy: Unit IV Anjali Singh

    Uploaded by

    Gaurav Yadav
    The document discusses four generic strategic alternatives: stability, expansion, retrenchment, and combination. Stability focuses on maintaining the current business definition. Expansion grows the business into new products, markets, or functions. Retrenchment reduces activities in unprofitable areas by divesting products or markets. Combination uses multiple strategies simultaneously or over time due to changing environments or different product life cycles.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18
    At a glance
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    The key takeaways are the four generic strategy alternatives of stability, expansion, retrenchment and combination strategies.

    The four generic strategy alternatives are stability, expansion, retrenchment and combination.

    Firms may pursue a stability strategy when they are successful but don't know why, when the environment is stable, or due to resource or environmental constraints.

    Generic Strategy

    Unit IV
    Anjali Singh
    Choice Phase
    Generation of strategic alternatives that can fill the
    gap
    Choice of a strategy to reduce the gap between threat
    and opportunity
    Strategic Alternatives
    Choice of products and services – breadth and depth
    How can products be differentiated – additional uses ?
    Level of quality?
    Choice of Markets – territories, channels and
    customer types
    How does the firm want to add value - complete
    vertical integration or focus on few areas only
    Four Generic Strategy Alternatives
    Stability
    Expansion
    Retrenchment
    Combination
    Generic Strategic Alternatives
    Expand Retrench Stabilize Co
    ati

    Business Pace Business Pace Business Pace


    Definition Definition Definition
    Products Add new Find new Drop old Decrease Maintain Package Dr
    Territories Uses products product changes &a
    developme Improve new
    nt quality pro
    Markets Find New Penetrate Drop Reduce Maintain Protect Dr
    territories Markets Distributio Market market cus
    n channel share share, focus fin
    on on
    Niche
    Function Integration Increase Captive Decrease Maintain Improve Inc
    Capacity company R&D production cap
    efficiency &
    im
    Effi
    Stability Strategy
    Safety Oriented , Status Quo Strategy
    Focus is on
    Current products ,markets and functions
    Same level of effort as at present
    Stability Strategy
    Same product/service or same market and function
    sectors as defined in its business definition or very similar
    sectors
    Main strategic decision focus is on incremental
    improvement of functional performance
    Concentration of resources where it has competitive
    advantage
    May also include defensive moves like taking legal action
    or applying for patents
    Tracking new developments to ensure strategy is relevant
    Stability Strategy-when
    Normally applicable for maturity stage
    Maintain comfortable profit/market situation
    Control wild swings in past performances
    Stability Strategy-why ?
    Firm is successful but management does not know why
    Less risky
    When firms pursue it unconsciously
    Easier and comfortable
    Environment is stable
    Resources or environment constraint
    Expansion could be dysfunctional
    Rest between expansion
    Costs may have gone haywire
    Stability Strategy- Types
    Incremental Growth
    Harvesting Strategy
    Stable/declining markets
    Product is not prestigious
    Small market share – increase in share is costly
    Contribution of product/SBU is insignificant to
    the total sales
    Sustainable growth strategy
    Stability as a pause strategy
    Expansion Strategy
    When a firm
    Serves the public in additional sectors or
    products/services/markets/functions
    Focuses its strategic decisions on major increase in the
    pace of activity within the present business definition
    Expansion Strategy – When
    Introduction stage
    Growth stage
    Expansion Strategy – Why ?
    Survival
    Equated with effectiveness
    Belief that society benefits from expansion
    Managerial motivation
    Belief in experience curve
    Belief that growth yield monopoly power
    Pressure from Stockholders / financial analysts
    Retrenchment Strategy
    Retrenchment strategy followed when
    Reducing product/markets may be seen to be
    necessary/desirable
    Firm focuses strategic decisions on functional
    improvements through the reduction of activities in
    units with negative cash flows
    Retrenchment Strategy
    Redefine its business by divesting a product line / SBU
    Abandon some market territories
    Reduce its functions
    Use lay off , reduce R &D, marketing
    Retrenchment Strategy – Why?

    Firm is not doing well


    Pressure from stakeholders to improve performance
    Environment is threatening
    Better opportunities in environment elsewhere
    Combination Strategy
    Focus on conscious use of several grand strategies
    ( stability , expansion, retrenchment) simultaneously
    Focus on use of several grand strategies at different
    future times.
    Combination Strategy – Why ?
    Firm faces different environments and these
    environments are changing at different rates
    Firm’s products are at different stages of life cycle
    Multiple Industry firm

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