Strategic Management

Topics of Discussion Meaning of Grand Strategy Grand Strategy Selection Matrix Grand Strategies in the Matrix

Meaning of Grand Strategy

Grand Strategies (also called Master Strategies) provide basic direction for the strategic actions to be taken by the company

Grand Strategy Selection Matrix

Overcome Weakness
Turnaround or retrenchment

Vertical integration Conglomerate diversification

I II IV III

Internal
(redirected resources within the firm)

Divesture Liquidation

External
(acquisition or merger for resource capability)

Concentrated growth Market development Product development Innovation

Horizontal integration Concentric diversification Joint venture

Maximize Strengths

Cell 4: Grand Strategies used by maximizing Strengths and using internal resources of the firm

Concentrated Growth Market Development Product Development Innovation

Concentrated Growth

Grand Strategy of a firm that directs its resources to profitable growth of a single product in a single market with a single dominant technology. E.g Mercedes focused only on a single product (luxury cars) in a single market (high income people) with a single dominant technology (German Engineering)

Market Development

Grand strategy of a firm where the firm enters into different market segment with a single product. For example, Raymonds entered into womens segment (Be Line of clothes) with single product (clothes)

Product Development

Grand strategy of the firm where the firm launches new products targeted at the same or similar market segment. For example, ICICI Bank Credit cards (new products targeted at the same/similar market segment); DLFs Home loans business

Innovation

Grand strategy that seeks to reap premium margins associated with creation and customer acceptance of a new product or service. E.g Intel has been pursuing expansion through strategic emphasis of innovation, Toyota is another company focusing on continuous innovation.

Cell 3: Grand Strategies used by maximizing Strengths and using external resources to the firm

Horizontal Integration Concentric Diversification Joint Ventures

Horizontal Integration

Grand Strategy based on growth through acquisition of similar firms operating at the same stage of production/marketing. E.g Arcelor and Mittals merging of their steel production capabilities

Concentric Diversification

Grand Strategy that involves entering into a business having similarity with existing production/marketing capabilities. E.g Acer into assembling of desktop personal computers from laptops; Nestle into marketing biscuits from marketing chocolates

Joint Ventures

Grand strategy in which companies create a co-owned business that operates for their mutual benefit. E.g Hero Honda, Mahindra Renault etc.

Cell 2: Grand Strategies used by overcoming weaknesses and using external resources to the firm

Vertical Integration Conglomerate Diversification

Vertical Integration

Grand strategy that is based on entering into the business of supplying the raw material inputs (Backward Integration) e.g Tata Coffee into having their own coffee plantations or entering into business of providing output to the consumers (Forward Integration) e.g Shriram Fertilisers owning their own farms and supplying the crops to the consumers and distributors

Conglomerate Diversification

Grand strategy that involves entering into an entirely new business in a new market segment. E.g ITC diversifying its business from selling Wills cigarette to clothes retailing through its Wills Lifestyle stores

Cell 1: Grand Strategies used by overcoming weaknesses and using internal resources of the firm

Turnaround or Retrenchment Divestiture Liquidation

Turnaround or Retrenchment

Turnaround Grand strategy that involves converting a loss making unit into a profit making unit. E.g Jessop & Co. was turnaround by the acquirer of the company Pawan Ruia (Dunlop Tyres) Retrenchment Grand strategy involved in cost cutting activities. E.g Reliance retail focusing on aggressive cost cutting measures by closing down its retail stores

Divestiture

Grand strategy that involves sale of a firm or its major part through sale of equity shares or ownership in the company. E.g, IBM sold its PC business to Lenovo.

Liquidation

Grand involved in sale of assets of the business for their sale value. E.g Sale of Assets of JK Woolen Mills