Wednesday, July 4, 2012

Types of Grand Strategies

Types of Grand Strategies
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5
Types of Grand Strategies.
There are major 13 important grand strategies/ Generic strategies which are as under.
  1. Concentrated Growth:
This is the most important grand strategy. All resources used for growth of a single product in a single market with a single dominated technology. Many of the firms fell victim to merger mania were once mistakenly convinced that the best way to achieve their objective was to pursue unrelated diversification in the search for financial opportunities and synergy.
Market analysis shows that the decline is fueled by negative environmental publicity, perceptions of poor customers services and concern about the price versus value of the company services given the wide array of do it yourself alternative.

2) Market Development:
offering existing products to new customers with slight change. Market development commonly ranks second only to concentration as the least costly and least risky of grand strategies. It consist of marketing present products, often with only cosmetic modification, to customers in related market areas by adding channels of distribution or by changing the content of advertising or promotion.

3) Product Development:
This strategy focus of modification in existing products, development of new product. Product development involves the substantial modification of existing products or the creation of new but related products that can marketed to current customer through established channels.
The product development strategy is based on the penetration of existing markets by incorporating product modifications into existing items or by developing a new product with a clear connection to the existing lines.This is also included in grand strategy.
4) Innovation:
This strategy focus on begining new solutions to the customer problems and totally new product development. In many industries it has become increasingly risky to innovate. Both customer and industrial market have come to expect periodic changes and improvements in the products offered.
5) Horizontal Integration.
Another important type of grand strategy involve horizontal integration. Acquiring one or more firms doing similar business. when firms ling term strategy is based on growth through the acquisition of one or more similar firms operating at the same stage of the production marketing chain its grand strategy is called horizontal integration.

6) Vertical integration:
Acquire firms that supply it with inputs or are customers for its outputs. when firms grand strategy is to acquire firms that supply it with inputs such a raw material or are customer for its outputs such as warehouses for finished products vertical integration is involved. The rason for choosing a vertical strategy are more varied and sometimes less obvious.

7) Concentric Diversification:
Involves the opposition acquisition of business that are related to the acquiring firms in terms of technology, markets or products. Grand strategy involving diversification represent distinctive departure from a firms existing base of operations typically the acquisition or internal generation of a separate business.

8) Conglomerate Diversification:
Occasionally a firm practically a vary large one plans to acquire a business because it represents the most promising investment opportunity available.
Difference between two types of diversification is that concentric diversification emphasize some commodities in market, product or technology whereas conglomerated diversification is based principally on profit consideration.

9) Turn Around:
It is basically retrenchment it is used firm's survival.
i) Cost reduction ii) Asset Reduction.

i) Cost reduction:
Example includes decreasing the workforce through employee attrition leasing rather then purchasing equipment, extending the life of machinery, etc.

ii) Asset Reduction:
Example include the sale of land, building and equipment not essential to basic activity of the firm and elimination of the "perks". Such as company's airplane etc.

10) Divestiture strategy:

A divestiture strategy involves the sale of firms or a major component of it. The reasons for divestiture vary. They often arise because of partial mismatches between the acquired firm and parent corporation. A second reason is corporate financial needs.

11) Liquidation Strategy:
In liquidation a firm sold out its tangible assets. When liquidation is the grand strategy firm typically is sold in parts only occasionally as a whole but for its tangible assets value and not as a going concern.
12) Bankruptcy:
Business failure are playing an increasingly important role in the economy. In an average week more then 300companies fail. More then 75% of these financially desperate firms file for a liquidation bankruptcy the agree to a complete distribution of their assets to creditors most of whom receive a small fraction of the amount they are owed.
13) Corporate Combinations.
The 15 grand strategies discussed above used singly and much more often in combinations represent the traditional alternatives used by firms in united state.



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