STRATEGIC MANAEMENT GROWTH

1. GOOD AFTERNOON

2. STABILITY AND GROWTH STRATEGY:-
A GAME CHANGER FOR
ORGANISATION
PRESENTED BY
BIKASH KUMAR NAYAK
BALARAM BEHERA
SUMIT KUMAR DAS

3. INTRODUCTION
• Corporate strategies, also known as
grand or root strategies, are
fundamentally concerned with the
selection of businesses in which an
organisation should be in and with
the development and coordination
of the portfolio.

4. CORPORATE LEVEL STRATEGY
Analysing
Internal
Environment
Analysing
External
Environment

5. SWOT ANALYSIS

6. FORMS OF CORPORATE LEVEL
STRATEGY
• STABILITY
• GROWTH
• RETRENCHMENT

7. STABILITY STRATEGY
Stability strategy also implies
focusing on improvements of
functional performances and
maintaining the level of
achievement as in the immediate
past.

8. FORMS OF STABILITY STRATEGIES
• Stability through diversification
• Stability through minor functional strategies

9. WHEN TO PURSUE STABILITY
STRATEGIES?
• The organisation is serving defined
market
• The organisation continues to pursue
same objective
• There is scope for incremental
improvement of functional performance
in the same line business

10. WHY TO PURSUE THE STABILLITY
STRATEGY?
• It is less risky
• The environmental faced is relatively stable.
• Expansion may be perceived as being
threatening.
• satisfactory level of profit rather than
increased profit.
• Operate in a low growth or no growth
industry.

11. HOW TO PURSUE STABILITY STRATEGY
AND FORMED?
• MAINTAINCE OF STASTUS QUO
• SUSTAINBLE GROWTH
• PAUSE/PROCEED WITH CAUTION STARATEGY
• NO CHANGE STRATEGY
• PROFIT STARATEGY

12. STABILITY STRATEGY IN CONTEXT OF
INDIAN COMPANES
• SAIL has adopted stability strategy because of
over capacity in steel sector. Instead of
increasing operational efficiency of its various
plants.
• Cement, chemicals, plastics, banking,
fertilizers, iron and steel industry adopt it.

13. FAILURE OF STABILITY STRATEGIES
• CHANGE IN ENVIRONMENT
• TECHNOLOGICAL ADVANCEMENT
• CHANGE IN CUSTOMER TASTE AND
PREFERENCE

14. GROWTH
A growth strategy is one that an enterprise
pursue when it increases its level objectives
upward in significant increment, much higher
than an exploration of its past achievement
level, the most frequent increase indicating a
growth strategy is to rise the market share and
sales objectives upward significantly

15. WHY TO PURSUE GROWTH?
• Growth is necessary for survival in future
• Growth offers large scale of opeeration
• Growth strategy is taken up because
motivation to do so
• Intangible advantage of growth

16. INTERNAL GROWTH ROUTE
Expansion. The process of expansion :
1. Determine options for capacity expansion
2. Access future cost & demand of inputs.
3. Access probable technological change
4. Predict capacity addition by competitors
5. Access demand & supply in industry
6. Determine expected cash flow from expansion.
7. Test the analysis for consistency.

17. GROWTH STRATEGIESCHART
GROWTH
STRATEGIES
INTERNAL
GROWTH
CONCENTRIC
EXPANSION
DIVERSIFICAT
ION
INTEGRATIO
N
EXTERNAL
GROWTH
MERGER ACQUISITION
JOINT
VENTURE
STRATEGIC
ALLIANCE

18. It involves converging resourses in one or more
of firms business in terms of their customer
needs, customer function or alternative
technologies, the aim is to to expand
organizations present business
CONCENTRIC EXPANSION

19. DIVERSIFICATION
• Diversification : Entry of an organization into a
business which is new to an organization either
market wise or technology wise or both.
• Types of diversification :
• Horizontal integration : Entering similar products
or product lines.
• Concentric Diversification : Some similar factors
can be used by diversification. E.g. : A tea
company starts producing other food products to
take advantage of its distribution network etc.
• Conglomerate diversification : Company enters
entirely different product – market segments.

20. INTEGRATION
• Vertical Integration :
• Backward Integration : Takes place when a
company looks for various options through
which it can own an important source of raw
material.
• Forward integration : Takes place when a
company looks for various options through
which it can own a distribution network for its
products.

21. FORM OF EXTERNAL GROWTH
STRATEGY
• MERGER
• ACQUISITION
• JOINT VENTURE
• STRATEGIC ALLIANCE

22. MERGER
A Merger is a combination of two or more
businesses in which one acquires the asset and
liabilities of the other in exchange for stock or
cash or both.

23. WHY MERGER TAKE PLACE?
• To increase the value of the firm’ stock
• To increase the growth rate of the firm
• To make a good investment
• To improve the stability of the firm’s earnings
and sales
• To balance or fill out the product line
• To diversify the product line when the current
product have reached their in peak in life cycle

24. PROS OF MERGER
• The firm enjoys economies of scale
• To utilise the fund in maximising way
• The firm will be in a position to diversify the
activities
• The more effective and efficient utilisation of
resources
• Revival of sick unit

25. CONS OF MERGER
• The psychological problem of the top
management of merging the firm
• Negative attitude of the senior partner
towards the junior partner
• The merger leads to the concentration of
economic power, monopolistic conditions
and thereby political power, higher prices,
restricted supply etc.

26. WHY TO FAILURE OF MERGER?
• Paying too much for the acquired firm
• Assuming that a growing market or product
will continue its recent outstanding
performances
• Leaping into a merger without carefully
studying its consequences
• Buying too large firm and thus incurring an
excessively large debt

27. ACQUISITIONS OR TAKEOVER
Takeover is the attempt of one firm to acquire
ownership or control over another firm against
the wishes of latter’s management

28. WHY TO TAKE PLACE THE TAKE OVER?
• To reduce the competition by purchasing a
competitor
• To acquire the needed resources quickly
• For tax reasons it may be desirable to
purchase a firm with tax losses which will
offset the current or future earning
• To increase efficiency and profitability

29. PROS OF TAKEOVER
• Takeover ensure management accountability
• Takeover provide easy growth opportunities
• They create mobility of resources from one
activity to another activity
• They avoid gestation periods and problems
involved in new projects
• They provide the chances of survival to the
sick units and alternatives to the
disinvestment strategy

30. CONS OF THE TAKE OVER
• Professionalization of the management may
be replaced by money power
• Takeover do not create any real asset to the
society
• They result in monopoly and in connection of
economic power
• They are detrimental to the society
• Interests of the minority shareholders are not
protected

31. JOINT VENTURE
Joint venture are the partnerships in which two
or more firms carry out a specific project or
corporate in a selected area of business.

32. PROS OF THE JOINT VENTURE
• To spread development costs
• JV allows the firms the expertise in different
fields to combine their knowledge
• JV are more useful in entering international
market
• JV provide quick access to channels of
distribution
• JV provide the facility of foreign technology to
the host partner

33. CONS OF THE JOINT VENTURE
• Problems of equity participation by the
foreign and home partner
• Foreign exchange regulation imposed by both
the GOVT.
• Division of profits with other partner
• Loss control of other firm
• Differences of culture and customs of both the
partner

34. STRATEGIC ALLIANCE
Strategic alliance is another form of combining
the efforts of two or more organisations to
develop competitive advantage. In strategic
alliance, two or more partners join together for
certain specified objectives and for certain
period.

35. REASONS FOR STRATEGIC ALLIANCE
• Entering new markets
• Reducing manufacture costs
• Developing and diffusing technology

36. CONCLUSION
• TO SUM UP, WE CONCLUDE THAT BOTH
STABILITY AND GROWTH STRATEGY ARE
REALLY A GAME CHANGER FOR
ORGANISATION,IF ORGANISATION PREDICTS
ITS ENVIRONMENTAL FACTOR CORRECTLY AND
CAPITALISE ITS SRTENGTH TO OVERCOME
THREAT IN RIGHT MANNER OR OTHERWISE IT
FINALLY END TO DOOM.

37. THANK YOU