GRAND STRATEGIES USED IN STRATEGIC MANAGEMENT
Grand strategies sometimes called master or business strategies (It comes in the section of strategic planning), provide basic direction for strategic actions. They are the basis of coordinated and sustained efforts directed towards achieving long-term objectives.
There are 15 Principal grand strategies and the firm combines several grand strategies. For clarity, however each of the principal grand strategies is described independently.
- Concentrated growth
Many of the firms that fell victim to merger mania were once mistakenly convinced that the best way to achieve their objectives was to pursue unrelated diversification in the search of financial opportunity and synergy. These firms are just a few of the majority of businesses worldwide firms that pursue a concentrated growth strategy by focusing on dominant product and market combination. Concentrated growth is the strategy of the firm that directs its resources to the profitable growth of dominant product in a dominant market with a dominant technology.
- Market development commonly ranks second only to concentration as the least costly and least risky of the 15 grand strategies.it Consists of marketing present products, often with only cosmetic modifications to customers in related market areas by adding channels of distribution or by changing the content of advertising or promotion.
- Product development involves the substantial modification of existing products or the creation of new but related products that can be marketed to current customers through established channels. The product development strategy often is adapted either to prolong the life cycle development of current products or take advantage of favorite reputation or brand name.
- Innovation in many industries, it has become increasingly risky not to innovate. Both consumer and industrial markets have come to expect periodic changes and improvements in the product offered, as a result some firms find it profitable to make innovation their grand strategy.
- Horizontal acquisition When a firm’s long term strategy is based on growth through the acquisition of one or more similar firms operating at the same stage of the product marketing chain its grand strategy is called horizontal acquisition.
- Vertical acquisition When a firm’s grand strategy is to acquire firms that supply such as raw materials or are customers for its outputs vertical acquisition is involved. To illustrate, if a shirt manufacturer acquires a textile producer-by purchasing its common stock, buying its assets or exchanging ownership interest the strategy is vertical acquisition.
- Concentric diversification involves the acquisition of businesses that are related to the acquiring firm in terms of technology, markets or products. With this grand strategy, the selected new business possesses a high degree of compatibility with the firm’s current business.
- Conglomerate Diversification Occasionally a firm, particularly a very large one plans to acquire a business because it represents the most promising investment available.
- Turnaround for any one of a large number of reasons, a firm can find itself with declining profits. Among these reasons are economic recessions, production inefficiencies, innovative breakthroughs by competitors. In many cases, strategic managers believe that such a firm can survive and eventually recover if a concerted effort is made over the period of years to fortify its distinctive competencies. This is known as turnaround strategy.
- Divestiture it involves the sale of a firm or a major component of the firm.
- Liquidation When liquidation is the grand strategy, the firm typically is sold in parts, only occasionally as a whole- but for its tangible asset value and not as a going concern.
- Bankruptcy Business failures are playing an important role in American economy. In an average week, more than 300 companies fail and file for bankruptcy. The management and the stakeholders should implement an action plan on whether they can bring back the company from the present situation.
- Joint Ventures Occasionally two or more capable firms lack a necessary component for success in a particular competitive environment. So they do a joint venture to strengthen themselves.
- Strategic alliances are distinguishable from joint ventures because the companies involved do not take equity position in one another. In many instances strategic alliances are partnerships that exist for a defined period for which partners contribute their skills and expertise to a cooperative project.
- Consortia, Keiretsus and Chaebols
Consortia are defined as a large interlocking relationships between business and industry. In Japan such consortia are known as Keiretsus; in South Korea as chaebols.
Finally, to conclude there are many instances of case studies where one of these grand strategies are applied like how google eyes apple stores and considers to do retail and sun pharmaceuticals and Ranbaxy merger.