corporate level strategy

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CORPORATE LEVEL STRATEGY SUBMITTED TO: SUBMITTED BY: PARMINDER KAUR AMANDEEP KAUR (HOD of commerce dept.) M.com 3 rd semester Roll no 21761400948 B.D.ARYA GIRLS COLLEGE JALANDHAR CANTT.

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Page 1: Corporate level strategy

CORPORATE LEVEL STRATEGY

SUBMITTED TO: SUBMITTED BY: PARMINDER KAUR AMANDEEP KAUR(HOD of commerce dept.) M.com 3rd semester Roll no 21761400948

B.D.ARYA GIRLS COLLEGE JALANDHAR CANTT.

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ACKNOWLEDGEMENT

I would like to special thanks of my Ms Parminder kaur (Head of commerce department) who gave me the presentation on the topic CORPORATE LEVEL STRATEGY , which helped me in doing lot of research and I came to know about so many new things .I am really thankful to them.

Secondly I would also like to thanks my teachers, parents and friends who helped me a lot in finalizing this project within the limited time frame.

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INTRODUCTION

In response to ever changing business environment, no firm can follow a single strategy. The changing situations demand different set of strategies to be followed by firms. The choice of strategies are wide and much depends upon how organization perceive its strength and weakness Vis a Vis the opportunities and threats the external environment presents. With the change in external environment top level management change the corporate level strategies time to time. After successfully done with the external and internal evaluation or analysis the next step is to formulate the strategies. An organization firstly chooses the corporate strategy.

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MEANING OF CORPORATE LEVEL STRATEGY

Corporate level strategy is basically about the choice of direction that a firm adopt in order to achieve its objective. There could be small firm involve in single business and a large, complex or diversified firm with several different businesses. The corporate level strategy in both case provide the basic direction of the firm. In case of small firm, it could mean the adoption of course of action that would yield a better profit for the firm. In case of large firm the CLS is about managing the various businesses to maximize their contribution to overall corporate objective. Top management makes strategic decisions that affect the entire organization.

Corporate level strategy occupies the highest level strategic decision making and covers actions dealing with the objective of the firm, acquisition & allocation of resources and coordination of strategies of various SBU for optimal performance.

Corporate strategies are basically about decisions related to:

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Allocating resources among different business of a firm.

Transferring resources from one set of business to other.

Managing the portfolio of the business.

TYPES OF CORPORATE LEVEL STRATEGY

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1.

Stability Strategy

Stability strategy is adopted by organization when it attempt at an incremental improvement of its functional performance by marginal changing one or more of its business in the term of their

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respective customer group, customer function and alternative technologies either singly or jointly. The stability strategy signifies that firm is continued to serve the same customers with same product as at present.

TYPES OF STABILITY STRATEGIES

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1. Pause strategy : It is employed by firm that

wish to test the ground before moving ahead with a full-fledge corporate strategy or by firms that have an intense pace of expansion and wish to rest for a while before moving ahead.

2. No change strategy: It is conscious decision to do nothing new. The firm will continue with its present definition. When a firm has stable external and internal environment the firm will continue with its present strategy.

3. Profit strategy: The organization assesses the situation in which old obsolete product or technology is being replaced by new one.

2.

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Growth Strategy

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Meaning of growth strategy

The corporate strategy of expansion or growth is followed when an organization aims at high growth by exploiting the opportunities in the environment or by broadening the scope of one or more of its business in the term of their respective customer group , customer function or alternative technologies – singly or jointly in order to improve overall performance. Growth can be in the form of intensification (following growth within existing business) or diversification (following growth by entering into new business ).It serve the public with more product /services , finding new customers by enhancing market share.

In Indian economy what the Birlas achieved over the last 50years has been achieved by Ambanis within 15 years through Reliance group which is no.1 recognized as one of the “FORTUNE 500” companies all over the world.

TYPES OF STRATEGIES

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1. EXPENSION THROUGH CONCENTRATION

Concentration strategies are very sensible. These strategies involve trying to compete successfully within only a single industry. Mc Donald’s, Subway

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etc. are firms that have relied heavily on concentration strategy to become dominant players.

Concentration on single product or services entails increasing sales, profits, or market share faster than it has increased in the past.

E.g. Bajaj Auto has consistently concentrated on two & three wheeler since last several years as it finds it to be a high growth & attractive industry to invest.

2. Expansion through integration

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Integration means combining activities related to present activity of the firm. Integration strategy is one of the ways to share the benefits of synergist effect. Any integration is taking place to grow financially strong, have a benefit of research and development, economies of production and marketing.

Types of integration strategy:

Integration Strategy

Vertical Integration

Backward Integration

Forward Integration

Horizontal Integration

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Horizontal integration: It is possible when two or more firms engaged in similar activities think of joining hands for their betterment.eg: The textile producer company taking over its rival textile company is horizontal integration.

Vertical integration: Vertical integration takes place when two firms combine their downstream or upstream activities for sharing benefits. Suppose you are shirt manufacturer when you take over earlier stage i.e. textile producer it is called backward integration or when you take over the business of clothing store it is called forward integration. Bombay Dyeing textile unit is the best

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example of it.

Diversification involve a substantial change in the business definition- singly or jointly – in the term of customer group , customer function or alternative technology of one or more firm’s business. It means diverting into new product line, market or into new business that are outside the current business or market.

TYPES OF DIVERSIFICATION:

Example of related diversification is changing the flavor of kurkure and lays products and Aditya Birla provides different product lines are the example of unrelated diversification.

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Expansion through internationalization

Internationalization strategies are a type of expansion strategies that require organization to market their product or services beyond the domestic or national market. For doing so an organization would have to assess the international environment, evaluate its own capabilities & devise strategies to enter foreign market.

International entry modes:

1. Export entry modes: It involve direct export (marketing is done through a direct agent or through direct branch in the oversea market) or indirect export (marketing is done through intermediaries).

2. Contractual entry mode: these modes are non-equity association b/w an international companies. It involves licensing, franchising technical agreement etc.

3. Investment entry mode: these modes involve ownership of production units in the oversea market based on some form of equity investment or direct foreign investment.

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The term co-operation expresses the idea of simultaneous competition and cooperation among rival of the firms for mutual benefit.

Cooperation could be take place in various ways:

1.Merger and acquisition or takeover.

2.Joint venture.

3.Strategic alliance.

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EXPANSION THROUGH DIGITALISATION

Digitalization is a vast subject, encompassing a number of areas such as business, social science and technology. Digitalization actually means computerization and electronisation. The computerization, electronisation and digitalization are supported by two other components of networking and telecommunication that create the phenomenon of convergence. Convergence merges all kind of information into common digital form. We have e-business, e-commerce, e- trading, e-banking, e-governance, e-healthcare etc. all these concepts comes under the digitalization.

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3.

Retrench- Ment

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strategy

MEANING OF RETRENCHMENT STRATEGY

Retrenchment strategy is followed when an organization substantially reduce the scope of its activities or reduction in existing product line or services along with the level of objectives set below the past achievement. It is essentially a defensive strategy adopted as a reaction to operating problems coming from either internal mismanagement, unanticipated action by competitor or changes in market condition. The reasons that force the manager to go for this retrenchment strategy can be poor performance, threat to survive, inefficiency of resources, getting improved managerial efficiency.

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Example: To protect Taj Mahal from environment pollution as many as 2000 units around Taj Mahal were ask to shift or to close.

1.Turnaround strategy:

Turmaround strategies from their name from the action involved i.e.reversing a negative trend and turning around the organisation to profitability. Turnaround situation may be improvement in organisation lower performance.

2.Divestment strategy :

It involves selling off partion or business segment or product division to other business.

3.Harvest strategy :

Harvest or asset reduction strategy ia a strategy where by the firm reduce its asset to minimum,

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even sacrifice the future profits for the purpose of generating enough hand cash. It is alredy stated that a firm has to choose between liquidity and profitability.

4. Liquidation strategy:

In the case firm has not succeded in the earlier described strategies, it resort to liquidation strategy as the last resort. As the last strategy, this liquidation strategy is to sell of or close down the firm to avoid bankcrupty fairly better deal with shareholder than running the risk of making the firm to suffer from losses.

4.

Combination

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stratgy

Meaning of combination strategy

Combination strategy (reffered to as mixed or hybrid strategy) is the mixture of stability , expansion or retrenchment strategies, applied either simultaneously (at the same time in different businesses) or sequentially (at the different time in the same business). A Combination strategy is the pursuit of two or more of the previous strategies simultaneously. For example, one business in the company may be pursuing growth while another in the same company is contracting. In the spring of

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1989, for instance, Texas Air was rapidly expanding its Continental Airlines unit. But its Eastern Airlines operation was being consolidated. Eastern’s management was selling off routes and planes, cutting back the number of cities served, and making plans for operating a much smaller airline.

Conclusion

The corporate strategy applies to whole enterprise. it is an intellectual process. It aims to put critical resources of the organisation to the best possible use. Corporate level strategy are formed or amended as when change takes place. The changes in economic, social and political environment necessitate the change in the strategies. Since problems, opportunities and ideas cannot be expected according to

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time table, they have to be dealt with whenever they happen to be perceive. The use of particular strategy is based upon situation environment of the business. A firm needs to always have a good corporate strategy in mind if it wants to maximize its profits for the future.

BIBLIOGRAPHY

www.ac www.businessdictionary.com/ ademia.edu/.../ Answer_------Corporate_Level_ Strategies _Kinds_ ...

www.gartner.com/it-glossary/ digitalization

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www.simply- strategic -planning.com/ corporate - level - strategy .html

www.jstor.org/stable/256169

Kazmi, Azar (2009) Strategic Management and Business Policy 3rd Edition, McGraw Hill Education Private Limited, Delhi.

Santokhi C.N., Gupta Neeti, Singh Rupinder, Gupta Anuj (2014) Strategic Management, Kalyani Publisher.

http://www.businessdictionary.com/definition/corporate- strategy.html#ixzz3pN230aNP

Content

Sr. no. particulars Page no. Remarks

1. Introduction 1

2. Meaning of corporate level strategy & types

2-3

3. Stability strategy & its types

4-6

4. Growth strategy 7-8

5. Types of growth strategy

9

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6. Concentration strategy

10

7. Integration strategy 11

8. Diversification strategy

12

9. Internationalization strategy

13

10. Cooperation strategy

14

11. Digitalization strategy

15

12. Retrenchment strategy

16-17

13. Types of retrenchment strategy

18

14. Combination strategy

19

15. Conclusion 20