Corporate level strategies include stability, expansion, retrenchment, and combination strategies. Expansion strategies involve increasing business through concentration, integration, diversification, cooperation through mergers/acquisitions, joint ventures, and internationalization. Retrenchment strategies focus on reducing scope through divestment or liquidation when facing threats. Firms evaluate strategies using methods like value chain analysis, financial analysis, benchmarking, and balanced scorecards.
2. Grand Strategies
Stability Strategy: Less risky, stable environment,
expansion threatening, consolidation after
stabilisation
Expansion strategy: increase pace, more
prospects, increasing the size, advantages
accrue
Retrenchment strategy:Management try to give
up, threatening environment, unprofitable
situation
Combination Strategies: Large set up, complex
environment, different businesses
4. Expansion strategy
Expansion through concentration:one activity
(Bajaj auto)
Expansion through integration:vertical &
horizontal
Expansion through diversification:Concentric &
Conglomerative ( different)
Expansion through
cooperation:Mergers,(horizontal –same, vertical –
process centric, concentric-related), takeovers,
joint ventures, strategic alliance
Expansion through internationalisation
5. Mergers
Types: Horizontal, Vertical, concentric,
conglomerate(unrelated)
Issues in mergers: Strategic issues, financial issues,
managerial issues, legal issues
Reasons:(buyer)
To increase the value of the orgn stock
Increase the growth rate & make good investment
Improve stability of earning and sales
Balance, complete and diversify product line
Reduce competition
Acquire needed resources quickly
Avail tax concessions and benefits
Take advantages of synergy
Seller
Increase the value of equity
Increase the growth rate
Stabilise operations
Take the benefit of tax legislation
Deal with top management succession problem
6. Mergers and acquisitions in India
Tata Steel's mega takeover of European steel major Corus for $12.2 billion.
The biggest ever for an Indian company. This is the first big thing which
marked the arrival of India Inc on the global stage. The next big thing
everyone is talking about is Tata Nano.
Vodafone's purchase of 52% stake in Hutch Essar for about $10 billion. Essar
group still holds 32% in the Joint venture.
Hindalco of Aditya Birla group's acquisition of Novellis for $6 billion.
Ranbaxy's sale to Japan's Daiichi for $4.5 billion. Sing brothers sold the
company to Daiichi and since then there is no real good news coming out of
Ranbaxy.
ONGC acquisition of Russia based Imperial Energy for $2.8 billion. This
marked the turn around of India's hunt for natural reserves to compete with
China.
NTT DoCoMo-Tata Tele services deal for $2.7 billion. The second biggest
telecom deal after the Vodafone. Reliance MTN deal if went through would
have been a good addition to the list.
HDFC Bank acquisition of Centurion Bank of Punjab for $2.4 billion.
Tata Motors acquisition of luxury car maker Jaguar Land Rover for $2.3 billion.
This could probably the most ambitious deal after the Ranbaxy one. It
certainly landed Tata Motors into lot of trouble.
Wind Energy premier Suzlon Energy's acquistion of RePower for $1.7 billion.
Reliance Industries taking over Reliance Petroleum Limited (RPL) for 8500
crores or $1.6 billion.
7. Take over strategies
Seen after 1991
Substantial Acquisitions of shares and takeovers
Regulations, 1994 (take over code)
Procedure: spell out objectives, indicate how
objectives achieved, assess managerial quality,
check the compatibility of business styles,
anticipate and solve problems, treat people with
dignity and concern.
8. Joint venture strategies
Temporary partnership (consortium)
Conditions: when difficult to operate alone, when
distinctive competence needed, when hurdles in
setting up organisation
Types: two firms in one industry, two firms in
different industries, Indian firm and foreign
company in India, Indian firm and foreign
company in that foreign country, Indian firm and a
foreign company in third country.
Eg. IBM World Trade Corporation and Tata
Industries Ltd formed Tata Information Systems
Ltd, Cummins Engine company and TELCO form
to mfr TELCO engines
9. Strategic alliances
Yashino and Rangan: agree upon goals but remain
independent, share the benefits, contribute in key
strategic areas-technology, product etc.
Lando Zeppei: win win attitude, relationship
reciprocal, pooling resources for mutual gain
Types: Pro-competitive alliances, Non-competitive
alliances,competitive alliance, precompetitive alliance
Reasons for strategic alliance: entering new market,
reducing manufacturing costs, developing and
diffusing technology
Managing strategic alliance: define a strategy and
assign responsibility, Phase in the relationship with
partners, Blend the cultures of the partners, provide
for an exit strategy.
10. Expansion through
internationalisation
International strategy: create product & services to
international markets
Multi domestic strategy:achieve high level of domestic
response
Global strategy: low cost structure
Transactional strategy: low cost and high level
domestic response
Forms:
Export entry mode- direct, indirect
Contractual entry mode-licensing, franchising, technical
agreements, service contracts,contract manufacturing,
production sharing, build-operate-transfer
Investment entry mode- joint venture, independent
ventures
11. Retrenchment strategy
Reduce the scope of its activity
Find out problem areas
Identify the threats
Forms:
Non-recovery situation
Temporary recovery situation
Sustained survival situation
Sustained recovery situation
12. Turnaround strategies
Reversing a negative trend like
Negative cash flow
Negative profits
Declining market share
Deterioration in physical facilities
Overmanning, high turnover of employees, low
morale
Uncompetitive products or services
Mismanagement
Approaches:
Surgical
Non surgical or humane
15. Value chain analysis (Porter 1985)-
value creating activities
Porter (1985)
Value creating activities
Generic Value chain:
Primary: inbound logistics, operations,
outbound logistics, marketing and sales,
service
Supportive activities: Procurement,
HRD, technology development,
infrastructure
16.
17. Quantitative analysis
Financial Analysis:
Ratio analysis – liquidity, profitability and leverage
ratios
Economic value-added analysis (stern stewart &
company US) –profitability in terms of Return on
capital
Activity Based Costing (ABC)
Non financial analysis:
Employee turnover, absenteeism, market ranking,
rate of advertising recall, total cycle time of
production, inventory units, service call rates,
number of patents registered per period
20. Comparative analysis
Historical analysis: past performance
Industrial norms:competition, cost structure
Benchmarking: find the best practices
Performance benchmarking
Process benchmarking
Strategic benchmarking
Generic benchmarking (compare own process to
others)
Internal benchmarking
Functional benchmarking
Competitive benchmarking
21.
22. Comprehensive Analysis :
Balanced Scrore card
Balanced scorecard :
Robert S Kaplan and
David P Norton
Customer perspective:
how customer see us?
Internal business
perspective: what must
we excel at?
Innovation and learning
perspective: Can we
continue to improve and
create value
Financial perspective:
How do we look at
shareholders