Strategic Planning


·   Stability  Strategy  :-  In the present competitive era, one of the important objective of an organization to remain stable in the market to safeguarding assets, to continue in the chosen business path, to maintain efficiency, to maintain the position which already reached and to get better returns on the resources. It is the best alternative during the time of recession. During recession business faced reduced demand of its products even at low price. Funds are become scare and profit declines and organization is tried to reduce its cost. They work hard to maintain their existing market share so that company survive in the market.

·   Expansion  Strategy   :-    Expansion  strategy  is  implemented  by with dynamism and success. It includes reformulation of major goals, make major investment, going for new products, new technology, new market, innovative decisions and so on. It includes diversifying, merging and acquiring businesses.

·   Retrenchment Strategy :- The business enterprise can redefine its business by divesting a major product line or market. It is absolutely necessary for coping with hostile or adverse situation in the environment and when any other strategies are likely to be suicidal. It  is  not  always  very  bad  strategy  to  adopt  as  it  save  the organization’s interest and minimising adverse effect and also apply resources   anywhere   which   may   be   given   good   returns   to organization.

·   Combination  strategies  :-  The  above  three  strategies  are  not mutually exclusive. It is possible to adopt mix of the above three as per particular situations. An enterprise may seek stability in some

II.      There are mainly three generic strategies are given by the Michael porter which are explained here as under :

·   Cost leadership strategies :- Cost leadership emphasizes producing standardized products at very low per unit cost for consumers who are price sensitive. It results in increasing productivity and decreasing in cost throughout the production process. It allows firms to earn higher profit than its competitors. It is adopting when market is price insensitive and no room is left for differentiation and cost leadership is better when customers are not care much about differences between brands.

·   Differentiation :- Differentiation is strategy to producing products and services according tastes and preferences of the customers who are relatively price insensitive. It aims that distinguished its products from its competitors through unique design features, technological leadership, unique uses of products and attributes like quality and



attracted  attributed  of  the  products.  This  is  useful  in  perfectly competitive market where all products are look similar.

·   Focus  :-  It  means  producing  products  or  services  that  fulfil  the specific  needs  of  the  group  of  customers.  It  is  adopt  by  the organization when customers have different preferences and requirements and when rival firms are not attempting to specialize in the same target market.

III.      Diversification strategy :- It can be related or unrelated to existing businesses of the firm. Based on its nature and extent of relationship it is classified into four broad categories which are explained here as under :

·   Vertically  integrated  diversification  :-  In  it,  firms  are  opt  to engage in business that are related to existing business of the firm. The firm  remain  within  the  same  process.  It  moves  forward  and backward  in  the  chain  and  enter  into  specific  products  with  the

Horizontal integrated diversification :-  It includes acquisition of one or more similar business operating at the same stage of the production or marketing.

·   Concentric diversification :-  it is a related diversification. In it the new  business  is  linked  with  existing  business  through  process, technology or market. The new product is provided with the existing facilities and processes. The most common reason for adopting this diversification is that opportunities of firm’s existing line of business available. However concentric diversification is different from vertically integrated diversification in the nature of linkage the new products with the existing one. In concentric diversification  new product is connected in a loop like manner with the existing process.

·   Conglomerate diversification :-  It is unrelated diversification as no any kind of linkage is exist between new products and existing ones. The   new   businesses  or  products  are  disjointed  from  existing



businesses or products. It is totally unrelated diversification. conglomerate diversification has no fear at all with the firm’s present position. For an example godrej are diversified into oil. Soaps and so on.

IV.     Turnaround strategy :- Retrenchment may be done either internally or externally. Internal retrenchment is known as turnaround strategy. There are certain conditions like negative cash flow, negative profits, declining market share, high turnover of employees, low morale, uncompetitive products or services and mismanagement are suggest that turnaround strategy is needed to be followed if an organization has to survive. It is referred as effort to return an organization to

profitability and increasing positive cash flow to a sufficient level. It is used when both weakness and threats are adversely affected and the basic survival is in question. The action plan for successfully implemented is describe as under :

  • ·   Assessment of current problems
  • ·   Analyze the situation and develop a strategic plan
  • ·   Implementing an emergency action plan
  • ·   Restructuring the business
  • ·   Returning to normal




V.      Divestment  strategies  :-  It involve the sale or liquidation of a portion of business or major division or SBU. It is part of restructuring. This strategy is adopted due to various reasons which are as under :

·   When turnaround is adopted but it proved to be unsuccessful.

·   A business that had been acquired proves to be mismatch and cannot be integrated.

·   Continuously negative cash flow from a business that create financial problem for whole company.

·   Increase the competition and firms are not able to cope with them.

·   A better alternative is available for investment




·   Technological  upgradation  is  required  if  the  business  is  to survive



VI.    Liquidation strategies :- It is most unattractive strategy in all strategies. It involves closing down the firm and selling its assets. It is considered as last option because there are serious consequences like loss of employment of workers and other employees, termination of opportunities  where  a  firm  could  pursue  any  future  activities and continuous of failure.

VII.     Merger  and  acquisition  strategy  :-  Merger and acquisition are process of combining two or more organizations together. There is very low difference between both terms but the impact of combination is totally different in both cases. Some organizations are prefer to grow through mergers. It is considered as process when two or more companies are come together to expand the business operations. In it two organizations are combines to increase their strength and financial

gain along with breaking the trade barriers. When one organization takes over the other and controls all its operations, it is known as acquisition. In this process, one financially strong organization overpowers the weaker one. It happens during the recession period.

VIII.     Best cost provider strategy :- It involve providing consumers more value for the money by emphasizing low cost and better quality difference. It can be done through (i) offerings products or services at lower  price  than rival  firms with comparable quality  (ii)  charging similar price for the products or services with much higher quality and better features.

IX.     Corporate strategy :- It is basically the growth design of the firm. It describe the growth objective of the firm and also include the extent, pace, timing and direction of the firm’s growth. Thus we can also describe it as a growth strategy design of the firm.

X.      Strategic  management  process  :-  It  refers  to  the  managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy and the whatever the  corrective  adjustments  in  the  vision,  objectives,  strategy  and




File Size: 244.39kb