Grand strategies are the strategies which decide the path of the firm which it follows to achieve its set objectives. Simply it involves the decision of choosing the alternatives between the long term goals. These grand strategies are also termed as corporate level strategies and master strategies.
There are 4 types of grand strategies which an organisation follows to achieve its objectives:
1] Stability strategy
This strategy focuses on maintaining the current position of the organisation and making some small incremental changes. These strategies are mostly followed when there are challenges and the company wants the business to continue. Recessions, Political Instabilities, Pandemics call for such strategies. In these strategies no major changes are made, only some improvements, restructuring to maintain the stability.
Stability strategy is of 3 types:
No change strategy-
This means do not change anything and work per current work. If an organisation is getting enough returns and does not want expansion they can adopt this strategy.
Profit Strategy-
This strategy used to be followed when the company wanted to increase the sales.
Pause and Proceed Strategy-
This strategy used to be followed when there is good growth of the company in the last few years and gives the time to the company to plan and get the future strategy ready.
2} Expansion Strategy
This is developed by Igor an soff. This is two by two framework used by the companies to help in growth initiatives.
It has 4 quadrants:
- Market penetration
- Market Development
- Product Development
- Diversification
A] Market Penetration
This strategy basically focuses on selling the current products to its current customers. It focuses on increasing market share, revenue and profitability.
Their strategies can include offering trials, discounts, price adjustments, enhancing distribution channels.
B] Market Development
It focuses on tapping the new market or introducing the existing products to the new markets.
Its main focus is expanding the customer base and tapping into new markets.
The strategies they can use is exploring new distribution channels, targeting new demographic regions etc.
C] Product Development
This focuses on creating new products and services to increase the sales in the existing market.
It focuses on catering the evolving customer needs, competitive advantages and additional market share.
It can use the strategy of adding new features and versions of existing product.
D] Diversification
This focuses on tapping the new market and producing the new products.
There are 2 types of diversification:
- Related diversification - In this diversification a company expands into new market and or products that are related to existing business. For ex- A company manufacturing smart phones might extend its production in the field of smartwatches, electronics, tablets etc.
- Unrelated diversification - This refers to entering into that market which has no connection with the existing business unit. For ex- A technology company diversifying into real estate.
3} Retrenchment Strategy
This strategy helps when a business is focusing on cutting the operations with a view to cut the expenses and reach a higher profitable situation. The firm can either reconstruct or discontinue an operation. There are 3 types of retrenchment strategy.
- Turnaround
- Divestment
- Liquidation
Ex- A hotel may focus on the rooms only which provide more profit and shut down the less profitable services given in the banquets halls during the weddings and time of season.
4] Combination Strategy
This strategy focuses on combining all 3 strategies and making the best use out of it.
This type of strategy is followed when a business has various units and serves different purposes.
For ex a baby Diaper Company produces the diapers for the children and they continue it to produce for children this is stability strategy and after that it started to produce for old age people this is expansion strategy and after that it started to remove its production for baby wipes this can be called as retrenchment
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