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Share RSS Print Email Business strategies are long-term plans business owners implement to achieve goals and objectives. Smaller or home-based businesses may not use a wide variety of business strategies as part of their daily operations. Larger organizations commonly use business strategies to ensure all company employees are on the same page. Business owners can also use strategies to promote the company’s mission and values during normal operations.
Features Business owners can use different types of business strategies to accomplish goals and objectives. Owners usually spend large amounts of time planning strategies to ensure the company makes sufficient financial returns from each strategy. Business strategies can also be dictated by current economic events. Defining the number of competitors, consumer demand for the company's products and the business industry in which the company operates can also help owners and managers develop strategies for their company.
Growth Many small businesses focus on growth strategies early in their business operations. Growth strategies require business owners to make decisions that advance the company’s performance and increases production output. Business owners must also market the business and develop a strong market share in the business environment. Growth strategies can include developing new products for existing markets, creating new uses for existing goods or services and producing new products for new economic markets.
Stability Stability strategies are usually implemented once companies have completed their growth strategies. Business owners attempt to create a stable environment by refining business operations and increasing profitability. Stability strategies can include limiting the number of products sold to consumers, minimizing special or technical skills for employees and creating a constant demand for company goods and services. The strategies also allow business owners to create strategic business relationships with other companies to maintain stable operations.
Retrenchment Strategy Retrenchment is a corporate-level strategy that seeks to reduce the size or diversity of an organization's operations. Retrenchment is also a reduction of expenditures in order to become financially stable. Retrenchment is a pullback or a withdrawal from offering some current products or serving some markets. In a military situation a retrenchment provides a second line of defense. Retrenchment is often a strategy employed prior to or as part of a Turnaround strategy. Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry that the business is already in. At the corporate level, it is generally very interesting [clarification needed] entering a promising business outside of the scoThe
different types of diversification strategies
The strategies of diversification can include internal development of new products or markets, acquisition of a firm, alliance with a complementary company, licensing of new technologies, and distributing or importing a products line manufactured by another firm. Generally, the final strategy involves a combination of these options. This combination is determined in function of available opportunities and consistency with the objectives and the resources of the company.
There are three types of diversification: concentric, horizontal, and conglomerate. [edit]Concentric
diversification
This means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage. For example, a company that manufactures industrial adhesives might decide to diversify into adhesives to be sold via retailers. The technology would be the same but the marketing effort would need to change.
It also seems to increase its market share to launch a new product that helps the particular company to earn profit. For instance, the addition of tomato ketchup and sauce to the existing "Maggi" brand processed items of Food Specialities Ltd. is an example of technological-related concentric diversification.
The company could seek new products that have technological or marketing synergies with existing product lines appealing to a new group of customers.This also helps the company to tap that part of the market which remains untapped, and which presents an opportunity to earn profits. [edit]Horizontal
diversification
The company adds new products or services that are often technologically or commercially unrelated to current products but that may appeal to current customers. In a competitive environment, this form of diversification is desirable if the present customers are loyal to the current products and if the new products have a good quality and are well promoted and priced. Moreover, the new products are marketed to the same economic environment as the existing products, which may lead to rigidity and instability. In other words, this strategy tends to increase the firm's dependence on certain market segments. For example, a company that was making notebooks earlier may also enter the pen market with its new product. [edit]Another interpretation
Horizontal integration occurs when a firm enters a new business (either related or unrelated) at the same stage of production as its current operations. For example, Avon's move to market jewelry through its door-to-door sales force involved marketing new products through existing channels of distribution. An alternative form of that Avon has also undertaken is selling its products by mail order (e.g., clothing, plastic products) and through retail stores (e.g.,Tiffany's). In both cases, Avon is still at the retail stage of the production process. [edit]Conglomerate
diversification (or lateral diversification)
The company markets new products or services that have no technological or commercial synergies with current products but that may appeal to new groups of customers. The conglomerate diversification has very little relationship with the firm's current business. Therefore, the main reasons of adopting such a strategy are first to improve the profitability and the flexibility of the company, and second to get a better reception in capital markets as the company gets bigger. Even if this strategy is very risky, it could also, if successful, provide increased growth and profitability. pe of the existing business unit.
Share RSS Print Email Business strategies are long-term plans business owners implement to achieve goals and objectives. Smaller or home-based businesses may not use a wide variety of business strategies as part of their daily operations. Larger organizations commonly use business strategies to ensure all company employees are on the same page. Business owners can also use strategies to promote the company’s mission and values during normal operations.
Features Business owners can use different types of business strategies to accomplish goals and objectives. Owners usually spend large amounts of time planning strategies to ensure the company makes sufficient financial returns from each strategy. Business strategies can also be dictated by current economic events. Defining the number of competitors, consumer demand for the company's products and the business industry in which the company operates can also help owners and managers develop strategies for their company.
Growth Many small businesses focus on growth strategies early in their business operations. Growth strategies require business owners to make decisions that advance the company’s performance and increases production output. Business owners must also market the business and develop a strong market share in the business environment. Growth strategies can include developing new products for existing markets, creating new uses for existing goods or services and producing new products for new economic markets.
Stability Stability strategies are usually implemented once companies have completed their growth strategies. Business owners attempt to create a stable environment by refining business operations and increasing profitability. Stability strategies can include limiting the number of products sold to consumers, minimizing special or technical skills for employees and creating a constant demand for company goods and services. The strategies also allow business owners to create strategic business relationships with other companies to maintain stable operations.
Retrenchment Strategy Retrenchment is a corporate-level strategy that seeks to reduce the size or diversity of an organization's operations. Retrenchment is also a reduction of expenditures in order to become financially stable. Retrenchment is a pullback or a withdrawal from offering some current products or serving some markets. In a military situation a retrenchment provides a second line of defense. Retrenchment is often a strategy employed prior to or as part of a Turnaround strategy. Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry that the business is already in. At the corporate level, it is generally very interesting [clarification needed] entering a promising business outside of the scoThe
different types of diversification strategies
The strategies of diversification can include internal development of new products or markets, acquisition of a firm, alliance with a complementary company, licensing of new technologies, and distributing or importing a products line manufactured by another firm. Generally, the final strategy involves a combination of these options. This combination is determined in function of available opportunities and consistency with the objectives and the resources of the company.
There are three types of diversification: concentric, horizontal, and conglomerate. [edit]Concentric
diversification
This means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage. For example, a company that manufactures industrial adhesives might decide to diversify into adhesives to be sold via retailers. The technology would be the same but the marketing effort would need to change.
It also seems to increase its market share to launch a new product that helps the particular company to earn profit. For instance, the addition of tomato ketchup and sauce to the existing "Maggi" brand processed items of Food Specialities Ltd. is an example of technological-related concentric diversification.
The company could seek new products that have technological or marketing synergies with existing product lines appealing to a new group of customers.This also helps the company to tap that part of the market which remains untapped, and which presents an opportunity to earn profits. [edit]Horizontal
diversification
The company adds new products or services that are often technologically or commercially unrelated to current products but that may appeal to current customers. In a competitive environment, this form of diversification is desirable if the present customers are loyal to the current products and if the new products have a good quality and are well promoted and priced. Moreover, the new products are marketed to the same economic environment as the existing products, which may lead to rigidity and instability. In other words, this strategy tends to increase the firm's dependence on certain market segments. For example, a company that was making notebooks earlier may also enter the pen market with its new product. [edit]Another interpretation
Horizontal integration occurs when a firm enters a new business (either related or unrelated) at the same stage of production as its current operations. For example, Avon's move to market jewelry through its door-to-door sales force involved marketing new products through existing channels of distribution. An alternative form of that Avon has also undertaken is selling its products by mail order (e.g., clothing, plastic products) and through retail stores (e.g.,Tiffany's). In both cases, Avon is still at the retail stage of the production process. [edit]Conglomerate
diversification (or lateral diversification)
The company markets new products or services that have no technological or commercial synergies with current products but that may appeal to new groups of customers. The conglomerate diversification has very little relationship with the firm's current business. Therefore, the main reasons of adopting such a strategy are first to improve the profitability and the flexibility of the company, and second to get a better reception in capital markets as the company gets bigger. Even if this strategy is very risky, it could also, if successful, provide increased growth and profitability. pe of the existing business unit.
