Identifying
Alternative
Strategies
By Fatima Shoukat (2020-ag-4515)
What is Grand
Strategy?
A grand strategy gives overall direction to help a
company achieve its long-term goals. It acts like a
big plan or blueprint for major decisions. But using
grand strategies is limited because of two main
reasons:
1-Traditional managers prefer small, safe changes
and ignore bigger, better strategies.
2- Some Strategic managers know about grand
strategies but don’t know how to use them, so
they need proper training.
Major Strategy Options
Stability
01 Strategy 02 Growth Strategy
Retrenchment Combination
03 Strategy 04 Strategy
0
1
Stability
strategy
Definition:
Stability strategy is when a company makes
small improvements to how it works, without
making big changes. It may slightly change its
products, customers, or technology to perform
better.
Examples:
A tea company offers extra services to big
buyers to boost sales and work more
efficiently.
A copier company improves its customer
service to build a better image and sell more
add-ons
Characteristics of Stability
Strategy
1. The company continues with the same business, products, and
markets without major changes.
2. It tries to improve slowly by using resources better and becoming more
efficient.
3. The company only aims for small, steady growth—not big changes.
4. There’s no change in what the company does overall.
5. It is a safe, low-risk strategy that focuses on keeping things stable.
6. It doesn’t require a lot of new investment.
7. The risks are lower.
8. It is a fairly frequently employed strategy. It lets the company focus on
current products and markets. But it doesn’t allow for new growth
through new products, markets, or big investment.
Conditions of stability strategy
When the company is doing well and expects to keep
earning good income and profit by continuing its
current business.
When the company only wants small, steady growth
and is satisfied with its current position.
When the industry is stable and the company is in a
strong position within it.
When there are no big changes or threats expected in
the business environment.
Small companies often use this strategy to stay safe
and protect what they’ve already achieved.
0
2
Growth
strategy
Definition:
An expansion strategy is used when a
company wants big growth by expanding its
business. This can be done by adding new
customer groups, new services, or using new
technologies.
Examples:
A chocolate company starts selling to older
people, not just kids and teens.
A stockbroker firm adds personal financial
services for small investors to grow and
reduce risks
Characteristics of Growth Strategy
1) Expansion strategy is the opposite of stability strategy. While stability
gives small rewards with low risk, expansion offers high rewards but
with higher risk.
2) It is the most commonly used growth strategy.
3) It is best for companies that want big growth.
4) It involves changing or expanding the company’s business.
5) It helps renew the company by bringing in new investments, products,
or markets.
6) Expansion is flexible and offers many ways to grow by changing
products, markets, or services.
7) There are two main types of expansion:
○ Intensification (growing within the current business)
○ Diversification (entering new businesses or markets).
Types of Growth strategy
Growth Strategy
Intensification Diversification
Strategy Strategy
Market Market Product Vertically
Concentric Conglomerate
Penetration Development Development integrated
diversification diversification
Strategy Strategy Strategy diversification
Intensification Strategy
Intensification strategy means growing a company by
focusing more on its existing business. The company puts
more effort and investment into its current products and
markets to increase sales, profits, and market share. It's about
finding more opportunities in what the company is already
doing and going deeper into that business.
Types of Intensification Strategies:
Market Penetration:
Grow by selling more of the same product in the same
market.
Example: A mobile company offers discounts and ads to
attract more buyers for its existing phones in the current
city.
Market Development:
Grow by selling the same product in new markets or new
customer groups.
Example: A soft drink brand starts selling in a new country or
targets older people instead of just teenagers.
Product Development:
Grow by offering new or improved products to your current
market.
Example: A shampoo company launches a new formula with
added vitamins for the same group of customers.
Diversification Strategy
When a company can't grow more through its current products
or markets, it can choose diversification — which means
adding new products or services to grow the business.
Types of Diversification Strategies:
1) Related Diversification:
A. Vertical Integration is when a company grows by adding
new activities that are connected to its current business. It
can grow in two directions:
Backward integration
Forward integration
Backward Integration (Upstream):
The company starts doing things that provide its raw materials or
parts.
Example:
● A sugar factory starts growing sugarcane.
● A TV company makes its own screen parts.
Forward Integration (Downstream):
The company starts doing things closer to the final customer, like
selling or distributing its products.
Example:
● A textile company opens its own clothing stores.
● A spinning mill adds machines to make fabric and sell finished clothes.
So, backward means moving closer to the source (inputs), and forward
means moving closer to the customer (outputs).
B) Concentric Diversification is when a company adds new products or
services that are related to its current business. The connection can be
through customers, functions, or technology.
Types of Concentric Diversification:
Marketing-Related: The new product is similar in use but made with
different technology.
Example: A sewing machine company starts selling kitchen items to the
same type of customers (like housewives).
Technology-Related: The new service uses similar technology but
serves different customers.
Example: A company that leases equipment to big companies starts
offering loans to people for buying home appliances.
Marketing and Technology-Related: The new product is similar and
uses similar technology, and it is sold to the same customers.
Example: A raincoat company starts making waterproof shoes and gloves
and sells them in the same shops.
2) Un-related Diversification:
Conglomerate Diversification:
It is when a company starts a completely new
business that has no connection to its existing
products, customers, or technology. It means the
new business is totally unrelated to what the
company already does.
Examples:
Essar Group works in shipping, construction,
and steel – all different fields.
TTK Group makes products like pressure
cookers, medicines, clothing, and even runs
publishing – all unrelated areas.
Conditions of Growth strategy
When the company has big and growing goals – like
increasing assets, income, and profits – it needs expansion,
not just staying the same.
When there are many new opportunities in the market, and
the company wants to grow by taking advantage of them.
When the company needs to fight strong competition,
expansion helps it become bigger and more powerful than
others.
When a company is a leader or wants to be a leader, it
must keep expanding to protect its top position. If it stops,
it might lose its place.
0
3
Retrenchment
strategy
Definition:
Retrenchment Strategy means
cutting down on some products,
services, or goals to fix problems and
improve the company’s performance. It
is a defensive move.
Examples:
A newspaper company cuts down its
print edition and focuses more on digital
news, where it sees better growth and less
cost.
A retail chain closes stores in less
profitable cities to cut costs and focus on
areas where it earns more profits.
Types of Retrenchment Strategy
1. Turnaround strategies
2. Divestment Strategies
1-Turnaround Strategy:
It is used when a company is not doing well and needs to improve to
survive. It means trying to reverse a bad situation and make the
company better again.
Types of Turnaround:
● Internal Turnaround: Focus on improving the company from the
inside (like making operations more efficient).
Example: A factory upgrades machines and improves worker skills
to reduce waste.
External Turnaround: More serious. May involve selling
parts of the business or even closing it.
Example:
A failing startup merges with a successful one
to survive.
Action Plan for a Successful Turnaround:
Study the product, market, production, and competition.
Understand the company’s place in the market and how
production works.
Set clear goals, monitor progress, and make changes
when needed.
2- Divestment Strategies:
It means selling or closing a part of the business, like a department,
product line, or unit (SBU). This is done when the company is not doing
well, and even a turnaround has failed or won’t help.
Characteristics of divestment Strategy:
1. It involves cutting or selling some business parts to reduce losses.
2. It is a normal business decision—not something to be ashamed of.
3. It changes the company’s overall business direction, just like an
expansion strategy.
4. It may be needed due to:
Outdated products or processes
Business becoming unprofitable
Too much competition
Too many companies in the same industry
Failed strategies
3- Liquidation Strategies:
This is the most extreme retrenchment strategy. It means
completely closing the business and selling all its
assets.
Used as a last option when nothing else works. It Leads to
job loss for employees. The company cannot continue
any future business. Seen as a failure and may damage
the company’s image.
Example:
Kingfisher Airlines was once a popular airline in India. But
due to huge financial losses, high debt, and poor
management, it couldn’t continue operations.
Conditions of Retrenchment
strategy
When the business becomes unattractive, unprofitable, or
unviable.
When products or processes become outdated or obsolete.
When competition is too strong and the firm can't compete
successfully.
When the entire industry is struggling or has too much
capacity.
When the business is in the decline stage of its product life
cycle.
When there are environmental or market threats affecting
the business
04
Combination
strategy
Definition:
A combination strategy means using different types of
strategies—stability, growth, and retrenchment—at
the same time in different parts of the business. It’s not a
separate strategy on its own, but a mix, used by
companies that have multiple business areas, each
facing different challenges.
Possible combinations include:
1. Stability in some businesses and growth in others.
2. Stability in some and retrenchment in others.
3. Growth in some and retrenchment in others.
4. A mix of stability, growth, and retrenchment
across different businesses.
Examples:
1. Samsung
• Mobile division may focus on growth by launching new
models.
• TV division may be in a stable stage with steady sales.
• Older product lines like feature phones may face
retrenchment due to declining demand.
2. Microsoft
● Cloud services (Azure) are in growth, gaining market
share.
● Windows OS is in a stable phase with regular updates.
● Older products like Internet Explorer have been retired
— a retrenchment move.
Any
Questions
?