CORPORATE LEVEL

STRATEGIES
Strategic Management Module 2 Session
3
Family tree of strategies
Stability
Retrenchment
Agenda
Corporate level
strategies
Corporate
level
strategies
Stability Retrenchment Expansion
Stability
strategies
Stability
No-change Profit
Proceed
with caution


Retrenchment
strategies
Retrenchment
Turnaround Divestment Liquidation


Expansion
strategies
Expansion
Concentration
Integration
Diversification
Internationalization
Cooperation
Digitalization


Stability Strategy
Stability
strategies
Stability
No-change Profit
Proceed
with caution


Stability strategy implies continuing the current
activities of the firm without any significant change in
direction.
Why do companies pursue a stability strategy?
The firm is doing well or perceives itself as successful
1) It is less risky
2) It is easier and more comfortable
3) The environment is relatively unstable
4) Too much expansion can lead to inefficiencies
Situations where a stability strategy is more
advisable than the growth strategy:
1) If the external environment is highly dynamic and
unpredictable
2) Strategic managers may feel that the cost of
growth may be higher than the potential benefits
3) Excessive expansion may result in violation of anti
trust laws
Stability
strategies
Stability
No-change Profit
Proceed
with caution


A no change strategy is
a decision to do nothing
new i.e continue current
operations and policies
for the foreseeable
future.
Some organizations
pursue stability strategy
for a temporary period of
time until the particular
environmental situation
changes, especially if
they have been growing
too fast in the previous
period.
The profit strategy is an
attempt to artificially
maintain profits by
reducing investments
and short-term
expenditures.
Retrenchment Strategy
Retrenchment
strategies
Retrenchment
Turnaround Divestment Liquidation


A strategy used by corporations to
reduce the diversity or the overall size
of the operations of the company. This
strategy is often used in order to
cut expenses with the goal of becoming
a more financial stable business.
Typically the strategy involves
withdrawing from certain markets or the
discontinuation
of selling certain products or service in
order to make a beneficial turnaround.

Retrenchment
strategies
Retrenchment
Turnaround Divestment Liquidation


Conditions
Persistent negative cash flow
Negative profit
Declining market share
Deterioration in physical facilities
Over manning, high turnover of employees and low morale
Uncompetitive products and services
Mismanagement
Turnaround strategy means to
convert, change or transform a
loss-making company into a profit-
making company.
Retrenchment
strategies
Retrenchment
Turnaround Divestment Liquidation


Conditions
Business is a mismatch and cannot be integrated within the
company
Persistent negative flows
Severity of competition
Not possible to in technology upgradation
Selling off a part of business to survive
May be as part of a merger plan

Divestment is a form of
retrenchment strategy used by
businesses when they downsize
the scope of their business
activities. Divestment usually
involves eliminating a portion of a
business
Retrenchment
strategies
Retrenchment
Turnaround Divestment Liquidation


Lead to serious consequences including loss of employment,
termination of opportunities etc
Compulsory winding-up by court order
Voluntary winding- up
Voluntary winding- up under court supervision

Liquidation is the process by
which a company (or part of a
company) is brought to an end,
and the assets and property of the
company redistributed.
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