DEFENSIVE

STRATEGY
AHIL, SMAILAH B.
 Defensive Strategies

“ Are only used by market leaders in strategic management. “

The Goal of these strategies is to hold onto their position as the market leader,
fighting off competitors who try to take away their market share.

Defensive Strategy
Who and What for
Defensive Strategy
Objectives of a Powerful Defender

To maintain the existing market share

and to maximize profitability.

To reinforce existing market position.

To safeguard the existing levels of

competitive advantage.

To keep up top position in local and

existing markets.

For raising barriers of entry.

 Principle:
“To make it difficult for the competitors to
acquire the market share and the new
entrants to access the market.”
Various Defensive Strategy
01 Position Defense
Simplest defensive strategy. It simply involves trying to hold
your current position in the market.

To do this:
 Continue to invest in your current markets
 Attempt to build your brand name and
customer loyalty.

02 Mobile Defense
Involves making constant changes to your business so that it
will be difficult for the competitors to compete with you.
04
Involves:
 Introduce new products
 Enter new markets
 Making changes to existing products
Various Defensive Strategy

03 Flanking Defense
It defends its market share by diversifying into new markets
and niche segments.

 If you lose your market share in the existing

market you can make up for it in these new
markets.

04 Counter-Offensive Defense
It is a retaliatory strategy. When competitor attacks your
business, you strike back with your own attack.

05 Contraction Defense
Is the least desirable defense because it involves retreating
from markets.

 Allows you to redeploy your resources into

other areas.
 Defensive Strategy
Fred R. David

“Selling
“Selling all of a company’s
“Organization
a division orregroups through
part ofassets,
an in parts,
organization.”
for their
Cost and Assettangible
reduction worth.”
to reverse
Retrenchment declining Sales and Profits.”

“Often
“ also“Recognition
used to raised
known of defeat.for further
capital
as Turnaround or
strategic acquisitions orStrategy.”
However, it
Reorganizationalmay be investments.”
better to
Divestiture cease operating than to continue
losing large sums of money.”
“Can“Can be selling
entail part of off
theland
overall
andRetrenchment
buildings to
strategy
raise to ridcash,
needed an organization of businesses
pruning product lines,
Liquidation that aremarginal
closing unprofitable, requireand
businesses tooobsolete
much capital,
or dofactories, andwith
not fit well the firm’s
reducing otherofactivities.”
number
employees.”
Guidelines for when Strategy may be effective:
1. Organization
Pursued retrenchment
has
has apursued
clearly
strategy
distinctive
bothand failed
competence
retrenchmentto
but
accomplish
has failed
strategy andimprovements.
aconsistently to meet and
divestiture strategy its objective
neither
2. Division
and been
has goalsneeds
overtime.
more resources to be competitive.
successful.
Retrenchment
2. Organization’s
3. Division
Organization
is responsible
isonly an organization’s
one alternative
of the
for weaker competitors
is bankruptcy. overall
in a
3. poor
givenperformance.
When industry.
the stockholders of a firm can minimize
3.
4. Organization
Division
their is a misfit
losses isby
plagued
with the
sellingby the
rest organization’s
inefficiency,
of the organization.
low
Divestiture 5. When
profitability,
assets. a large
pooramount
employee of cash
morale,is and
needed
pressure
quickly
and
from cannot
stockholders
be obtained
to improve reasonably
performance. from other
4. Organization
resources. failed to capitalize on external
6. When
opportunities,
government
minimizeantitrust
externalaction
threats,
threatens an
Liquidation organization.
take advantage of internal strengths, and
overcome internal weaknesses overtime.
5. Organization has grown so large so quickly that
major internal reorganization is needed.
 Defensive Strategy
3 Reasons Defensive Strategy Matters Importance of Defensive Strategy

A new competitor can do incredible damage to your business.

The stronger your business the more likely A competitor that manages to capture even a small
competitors will attack and try to get a piece of it. part of your business can do significant damage.

With defensive strategy there is no room for error.

A growth initiative might work or might not. The situation is very different when it comes to
defense.

Defensive Strategy is a distinct undertaking.

“The best defense is a good offense.” “The best defense is a strong defensive strategy.”
Thank you
Any Question?