Corporate Level Strategies

Intensification strategies
 Market penetration
• Market penetration involves trying to gain additional share of a firm’s existing
markets using existing products. Often firms will rely on advertising to attract new
customers with existing markets

Nike features famous athletes in print and television ads designed to take market
share within the athletic shoes business from Adida sand other rivals.

Market development involves taking existing products and trying to sell them
within new markets.

One way to reach a new market is to enter a new retail channel. Starbucks has
stepped beyond selling coffee beans only in its stores and now sells beans in
grocery stores. This enables Starbucks to reach consumers that do not visit its
coffeehouses.
Product Development
Product development involves creating new products to serve existing markets.

Coca-Cola and Pepsi regularly introduce new varieties— such as Coke Zero and
Pepsi Cherry Vanilla—in an attempt to take market share from each other and
from their smaller rivals.
Vertical Integration When pursuing a vertical integration strategy, a
firm gets involved in new portions of the value chain. This approach
can be very attractive when a firm’s suppliers or buyers have too much
power over the firm and are becoming increasingly profitable at the
firm’s expense.
Oil companies like ConocoPhillips can be involved in all stages of the
value chain, including crude oil exploration, drilling for oil, shipping oil
to refineries, refining crude oil into products such as gasoline,
distributing fuel to gas stations, and operating gas stations.
Forward Integration When pursuing a vertical integration strategy, a
firm gets involved in new portions of the value chain. This approach can
be very attractive when a firm’s suppliers or buyers have too much
power
over the firm and are becoming increasingly profitable at the firm’s
expense.
Disney has pursued forward vertical integration by operating more than
three hundred retail stores that sell merchandise based on Disney’s
characters and movies. This allows Disney to capture profits that would
otherwise be enjoyed by another store.
Backward Integration
• When pursuing a vertical integration strategy, a firm gets involved in
new portions of the value chain. This approach can be very attractive
when a firm’s suppliers or buyers have too much power over the firm
and are becoming increasingly profitable at the firm’s expense.

Ford Motor Company created subsidiaries that provided key inputs to

vehicles such as rubber, glass, and metal. This approach ensured that
Ford would not be hurt by suppliers holding out for higher prices or
providing materials of inferior quality.

Horizontal Integration
• It is a type of integration strategies pursued by a company
in order to strengthen its position in the industry. A corporate that
implements this type of strategy usually mergers or acquires another
company that is in the same production stage.

One example of horizontal integration is what happened between the

infamous Daimler Benz and Chrysler merger (car developing,
manufacturing and retailing).
Acquisition
• An acquisition takes place when one company purchases
another company. Generally, the acquired company issmaller than the
firm that purchases it.
Disney was much bigger than Miramax and Pixar when it joined with
these firms in 1993 and 2006, respectively, thus these two
horizontal integration moves are considered to be acquisitions.
Merger
• A merger is a combination of two or more organizations in which one
acquires the assets and liabilities of the other in
exchange for shares or cash or both the organization are dissolved
and the assets and liabilities are combinedand new stock is issued

Big oil got even bigger in 1999, when Exxon and Mobil signed a $81
billion agreement to merge and form Exxon Mobil. ExxonMobil remains
the strongest leader in the oil market, with a huge hold on the
international market and dramatic earnings.
Strategic Alliance
• A strategic alliance is a cooperative arrangement between two or
more organizations that does not involve the creation of a new
entity.
In June 2011,Twitter announced the formation of a strategic
alliance with Yahoo! Japan. The alliance involves relevant Tweets
appearing within various functions offered by Yahoo! Japan.

Diversification strategies
• Firms using diversification strategies enter entirely new
industries. While vertical integration involves a firm moving into a
new part of a value chain that it is already is within, diversification
requires moving into new value chains.

Avon's move to market jewellery through its door-to-door sales

force involved marketing new products through existing channels of
distribution.
Concentric Diversification
• When an organization takes up an activity in such a manner that is
related to the existing business definition of one or more of firms
businesses, either in terms of customer groups, customer’s functions or
alternative technologies, it is called concentric diversification

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

Conglomerate Diversification
• When an organization adopts a strategy which requires taking of
those activities which are unrelated to the existing businesses
definition of one or more of its businesses either in terms of their
respective customer groups, customer functions or alternative
technologies, it is called conglomerate diversification.
Example of Indian company which have adopted apart of growth and
expansion through conglomerate diversification the classic examples
is of ITC, a cigarette company diversifying into the hotel industry.
Export
• Exporting is an effective entry strategy for companies that are just
beginning to enter a new foreign market. It’s a low-cost, low-risk
option compared to the other strategies.

Imports
• Importing is the flipside of exporting. Importing refers to buying
goods and services from foreign sources and bringing them back into
the home country.

Licensing
Licensing is another way to enter a foreign market with a limited
degree of risk. Under international Licensing, a firm in one country
permits a firm in another country to use its intellectual property
(Patents, trade marks etc). Ex MacDonalds

Joint Ventures
An equity joint venture is a contractual, strategic partnership
between two or more separate business entities to pursue a business
opportunity together. Ex Sony Ericssion
Stability strategies
Stability strategy is a strategy in which the organization retains its
present strategy at the corporate level and continues focusing on its
present products and markets.

Steel Authority of India has adopted stability strategy because of over

capacity in steel sector. Instead it has concentrated on increasing
operational efficiency of its various plants rather than going for
expansion. Others industries are ‘heavy commercial vehicle’, ‘coal
industry’.

Pause/ Proceed with Caution Strategy

It is employed by the firm that wish to test the ground before moving
ahead with a full fledged grand strategy, or by firms that have an
intense pace of expansion and wish to rest for a while before moving
ahead
In the India shoe market dominated by Bata and Liberty, Hindustan
Levers better known for soaps and detergents, produces substantial
quantity of shoes and shoe uppers for the export market. In late 2000,
it started selling a few thousand pairs in the cities to find out the
market reaction. This is a pause proceed with caution strategy before
it goes full steam into another FMCG sector that has a lot ofpotential
No-Change Strategy
It is a conscious decision to do nothing new. The firm will continue with
its present business definition. When a firm has a stable internal and
external environment the firm will continue with its present strategy.

Profit Strategy
• A profit strategy is one that capitalizes on a situation in which old
and obsolete product or technology is being replaced by a new one.
This type of strategy does not require new investment, so it is
not a growth strategy. Firms adopting this strategy decide to follow
the same technology, at least partially, while transiting into new
technological domains.
Retrenchment strategy
• A retrenchment grand strategy is followed when an organization
aims at a contraction of its activities through substantial reduction or
the elimination of the scope of one or more of its businesses in terms of
their respective customer groups, customer functions, or alternative
technologies either singly or jointly in order to improve its overall
performance.

General Motors of the United States stopped producing a number of

"makes" of automobile. GM decided that it needed to retrench by
concentrating on just a few "makes." It hoped this would help it
return to profitability.
Turnaround strategies
• Turn around strategies derives their name from the action involved
that is reversing a negative trend. There are certain conditions or
indicators which point out that a turnaround is needed for an
organization to survive. An organization which faces one or
more of these issues is referred to as a ‘sick’ company.

There are three ways in which turnarounds can be managed

 – The existing chief executive and management team handles the
entire turnaround strategy with the advisory support of a external
consultant.
 – In another case the existing team withdraws temporarily and an
executive consultant or turnaround specialist is employed to do the
job.
 – The last method involves the replacement of the existing team
specially the chief executive, or merging the sick organization with a
healthy one.
Xerox revealed a Turnaround Programme in December 2000, which
included cutting $1 billion in costs, and raising up to $4 billion through
the sale of assets, exiting non-core businesses and lay-offs.
Subsequently, in August 2001, Mulcahy was made CEO. Xerox continued
to report losses in 2001, but it returned to profit in 2002 and continued
to report profits in 2003.
Divestment strategy
• A divestment strategy involves the sale or liquidation of a portion of
business, or a major division.

TATA group is a highly diversified entity with a range of businesses

under its fold. They identified their non – core businesses for
divestment. TOMCO was divested and sold to Hindustan Levers as
soaps and a detergent was not considered a core business for the
Tatas.

Liquidation Strategy
• A retrenchment strategy which is considered the most extreme and
unattractive is the liquidation strategy, which involves closing down
a firm and selling its assets. It is considered as the last resort because it
leads to serious consequences such as loss of employment for
workers and other employees, termination of opportunities where a firm
could pursue any future activities and the stigma of failure.