Combination strategies

Corporate level strategy
Stability
strategies
Expansion strategies Retrenchment strategies
Combination
strategies
No change
strategies
Pause/proceed
with caution
strategies
Profit strategies
Concentration
Integration
Diversification
Cooperation
Internationalization
Digitalization
Turnaround
Divestment
Liquidation
Simultaneous
Sequential
Combination
of both

Stability Strategies
A firm pursues stability strategy when
1. It continues to serve the public in the same product or service, market,
and function sectors as defined in its business definition.
2. Its main strategic decisions focus on incremental improvement of
functional performance.

Types of Stability Strategies
No change strategies
Pause/proceed with caution strategies
Profit strategies

No Change Strategies
Taking no decision sometimes, is a decision too!
This strategy is relevant in predictable and certain external
environment and stable organizational environment.
Small and medium sized firms rely on this strategy

Pause/Proceed With Caution Strategies
It is employed to test the ground before moving ahead with a full-
fledged corporate strategy
The purpose is to let the system adapt to the new strategies
It is deliberate and conscious attempt

Profit Strategies
Things do change
It is assumed that the problem is short lived
Only motive is sustaining profitability for a temporary phase
It works only if the problems are really short lived

Expansion Strategies
The corporate strategy of expansion is followed when
an organization aims at high growth by substantially
broadening the scope of one or more of its business in
terms of their respective customer groups, customer
functions and alternative technologies-singly or
jointly-in order to improve its overall performance.

Types of Expansion Strategies
Expansion through concentration
Expansion through integration
Expansion through diversification
Expansion through cooperation
Expansion through internationalisation
Expansion through digitation

Expansion Through
Concentration

Concentration Strategies
Concentration is a simple, first-level type of
expansion strategy. It involves converging
resources in one or more of a firm businesses
in terms of their respective customer needs,
customer functions, or alternative
technologies-either singly or jointly- in such a
manner that expansion results.

Example
• The cola war between Coca Cola and Pepsi: where both of them
were fighting for the soft drink market. They relied on their
marketing activities to gain popularity.

Market Penetration
Market penetration involves selling more product to the
same market: a firm may attempt at focusing intensely on
existing markets with its present products, using a market
penetration type of concentration.

Market Development
• It involves selling the same products to new markets: it may try
attracting new users for existing products, resulting in a market
development type of concentration.
•Example: Earlier the target market for coca-cola was US market
for soft drinks then when coca-cola took their products to Russia
to increase their market share.

Product Development
• It involves selling new products to the same markets:
it may introduce newer products in the existing
markets by concentration on product development.
Due to the demand from its current market firm
create new product.
• For example: Mc Donald in order to gain market share
in India

Integration Strategies
Integration (from the Latin integer, meaning whole or entire )
generally means combining parts so that they work together or form
a whole. Informational technology , there are several common
usages.
Integration during product development process in which separately
produced components or sub system s are combined and problems
in their interactions are addressed.

Horizontal Integration
When an organisation takes up the same type
of products at the same level of production or
marketing process, it is said to follow a strategy
of horizontal integration.

Vertical Integration
•When an organization starts making new
products that serve its own needs, vertical
integration takes place.
•Any new activity undertaken with the purpose
of either supplying inputs(such as raw
materials) or serving as a customer for outputs
(such as marketing of firm”s product) is vertical
integration.

Example
• Amazon.com backward vertically integrated when it became not only
a bookseller but a book publisher. As a bookseller, Amazon.com buys
books from various suppliers, such as publishing companies. By
becoming a publisher itself, it has integrated into its business the role
of supplier and can sell books that its own publishing company
publishes

Expansion Through
Diversification

Diversification Strategies
• When new products are made for new markets then
diversification take place. The notion of diversifying is therefore
related to the newness of products or markets or both.
• By adopting diversification, an organisation does something novel
in terms of making new products or serving new markets or doing
both simultaneously.
• 2 types:
Concentric diversification
conglomerate diversification

Concentric Diversification
• If the new business is in any way related to the original business in
terms of the customer groups served, customer functions performed
or alternative technologies employed, then it is concentric
diversification.

Types of Concentric Diversification
• Marketing-related concentric diversification-: A similar type of
product is offered with the help of unrelated technology.
• Technology-related concentric diversification-: A new type of
product or service is provided with the help of related technology.
• Marketing-and technology-related concentric diversification-: A
similar type of product or service is provided with the help of a
related technology.

Conglomerate Diversification
• When an organisation adopts a strategy which requires taking up
those activities which are unrelated to the existing business
definition of any of its businesses, it is conglomerate diversification.

Expansion Through
Internationalization

Internationalization Strategies
International strategies are type of expansion strategies that require
organizations to market their products or services beyond the
domestic or national market. For doing so, an organization would
have to assess the international environment, evaluate its own
capabilities and devise strategies to enter foreign markets.

Expansion Through
Cooperative Strategies

Cooperative Strategies
• Corporate strategy is basically the growth design of the firm: it spells
out the growth objective of the firm-the direction, extent, pace and
timing of the firm’s growth.
• Corporate strategy is basically concerned with the choice of
businesses, product and markets.

Types Of Corporate Strategies
• Mergers and acquisitions
• Joint Ventures
• Strategic Alliances

Merger and Acquisition
• Mergers and acquisitions -: refers to the aspect of corporate strategy,
corporate finance and management dealing with the buying, selling,
dividing and combining of different companies and similar entities
that can help an enterprise grow rapidly in its sector or location of
origin, or a new field or new location, without creating a subsidiary,
other child entity or using a joint venture.

Example
Flipkart- Myntra
• The seven year old Bangalore based domestic e-retailer acquired the
online fashion portal for an undisclosed amount in May 2014. Industry
analysts and insiders believe it was a $300 million or Rs 2,000 crore
deal.
• Flipkart co-founder Sachin Bansal insisted that this was a “completely
different acquisition story” as it was not “driven by distress”, alluding to
a plethora of small e-commerce players either having wound up or
been bought over in the past two years. Together, both company heads
claimed, they were scripting “one of the largest e-commerce stories”.

Types of Mergers
• Horizontal Merger : Both cos. have similar products / product lines.
• Vertical Merger : One co. is a supplier of the other.
• Concentric Merger : Two cos. are either related technology wise or
market wise.
• Conglomerate Merger : Two cos. have entirely different products and
markets

examples
• Horizontal merger: The merger of Bank of Mathura with ICICI
(Industrial Credit and Investment Corporation of India) Bank
• Vertical merger: New Delhi: Tata Motors Ltd acquired an 80%
stake in Trilix Srl, an Italian design and engineering firm for €1.85
million (Rs. 11.29 crore).
• Concentric meger: Citigroup's acquisition of Travelers Insurance.
While both were in the financial services industry, they had
different product lines.

Joint venture strategies
• A joint venture could be considered as an entity resulting from a
long- term contractual agreement between two or more parties, to
undertake mutually beneficial economic activities, exercise joint
control and contribute equity and share in the profit or losses of the
entity.

Example
Indo Cat Pvt. Limited
• Date of establishment – 1st of June 2006
• Joint venture Holders-USA, Intercat
• Areas of operation- It deals with manufacturing as well as
marketing of FCC additives and catalysts
• One of the joint venture companies that play an important role
in the field of manufacturing and distribution of several additives
is named as Indo Cat Pvt Limited

Types of joint venture
• Between two Indian organisations in one industry.
• Between two Indian organisations across different industries.
• Between an Indian organisation and a foreign organisation in India.
• Between an Indian organisation and a foreign organisation in foreign
country.
• Between an Indian organisation and a foreign organisation in a third
country.

Strategic Alliances
• Two or more firms unite to pursue a set of agreed upon goals, but
remain independent subsequent to the information of the alliances
• The partners firms contribute on a continuing basis, in one or more
key strategic area, for ex. technology

Retrenchment strategies
A retrenchment strategy is pursued by a firm when:
• It sees the desirability of or necessity for reducing its product or
service lines, markets, or functions. In this strategy a co. decides to
improve its performance in reaching its objectives by focusing on
functional improvement, reduction in costs, reduction in number of
functions it performs by becoming a captive co, reduction in the
number of products and markets it serves and also liquidation of
business.
• when it cuts its size of employees due to recession / reorganization.
• Retrenchment strategy follows the saying “Slow down and take a
breath, we have to do better”.

Types of Retrenchment Strategies
1. Turnaround Strategy :
• Revenue generating : Only promote those products having high
demand.
• Cost cutting : Encourage VRS, lower promotion costs etc.
• Asset Reduction : Sell off assets that are underperforming.
• Combination : Of all of the above three.

Example
• When the Finnish handset giant Nokia announced its global
turnaround strategy last year, it was about exploiting the rapidly
shifting market for smartphones, profiting from its new partnership
with Microsoft and developing services based on its own assets

2. Divestment Strategies :
• Organization decides to get out of a certain business & sells off
units / divisions.
• Probable reasons :
• Inadequate growth rate or market potential
• Technology change
• Management unable to control business

Example
• HUL divested its marine food business to Mumbai based temptation
foods to focus on their main core business.
• Asian paints undertook an international divestment when it decided
to divest its stake in Australian operations because of low profits.

• For example, the TATA group continued concentrating on its various
business including steel, automobile manufacturing, etc while selling
Tomco, which did not share a synergistic relationship with its current
portfolio of businesses. Similarly, the LTV steel company’s decision
(after filing in 1986) to concentrate on “flat rolled” steel products,
while divesting other steel operations, reflects the intent to maintain
a leadership position in production of high-quality, value-added steel
for critical engineering application.

3. Liquidation Strategy :
•Sell off business.
•Probable reasons :
•Very uncertain future.
•Accumulated losses.
•Some co. offers high price.
•Less resources to continue.
•Diversify into other businesses.

Combination Strategies
Combination strategies are used by a firm when:
Its main strategic decisions focus on the conscious use of several grand
strategies (expansion, stability, retrenchment) at the same
time(simultaneously) in several SBUs of the company.

Types of Combination Strategies
Simultaneous combination strategies
Sequential combination strategies
Combination of simultaneous and sequential astrategies

Combination strategies

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Combination strategies