BS- Corporate Strategy- Growth, Stability, Stability and Retrenchment

**Corporate Level Strategies: An Overview for Business Success**

This comprehensive presentation explores various corporate-level strategies that organizations use to achieve growth, stability, and competitive advantage in the market. Corporate strategy is essential for determining a company's overall scope, business goals, and the allocation of resources across different business units. Senior management plays a crucial role in formulating these strategies to ensure long-term profitability and business expansion.

### **Types of Corporate Strategies:**

1. **Growth/Expansion Strategy:**
- Growth strategies involve expanding business operations through market penetration, product development, market development, and diversification.
- The **Ansoff Matrix** is highlighted as a key tool in understanding these growth strategies. Each type—such as market penetration and diversification—offers distinct pathways for businesses to increase their market share and profitability.

2. **Stability Strategy:**
- Stability strategies focus on maintaining a company's current position without aggressively seeking new business opportunities.
- Common approaches include the **pause strategy** (taking a break after rapid growth) and the **no-change strategy** (maintaining successful operations without exploring new markets).

3. **Retrenchment Strategy:**
- Retrenchment strategies help companies recover from declining performance by reducing operations, cutting costs, or selling underperforming business units.
- **Divestment** and **turnaround strategies** are common examples. The case of Tata Motors’ potential divestment of Jaguar Land Rover (JLR) is used to illustrate how companies streamline operations for financial stability.

4. **Combination Strategy:**
- A combination strategy is employed when businesses use multiple strategies simultaneously or sequentially to enhance overall performance.
- This strategy is often adopted when businesses need to focus on core operations while reducing non-performing assets.

5. **International Strategies:**
- Companies that operate in multiple markets employ international strategies such as **global**, **multidomestic**, and **transnational** strategies.
- The examples of **Starbucks**, **Rolex**, and **Porsche** demonstrate how businesses successfully expand their operations globally by either standardizing products or adapting to local markets.

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This presentation provides a deep dive into the formulation and execution of corporate-level strategies, offering valuable insights for business professionals and students alike. It highlights key concepts, practical examples, and tools that help organizations achieve sustainable growth and competitive advantage in an ever-changing business environment.

1. STRATEGY
CORPORATE

2. A corporate-level strategy defines a
company mission and influences all other
business plans.
Senior management makes strategic
decisions for an organization to outline its
goals for the coming year and ensure
profits.
Corporate strategy is the set of goals and
principles that determines the overall scope
and direction of the business. It includes
deciding the product lines, plants, business
expansion, etc.
Ultimately, it helps you gain a competitive
advantage over other market participants.
However, setting the right corporate
strategies can be daunting.

3. Growth/ Expansion strategy
TYPES OF CORPORATE STRATEGIES
Stability strategy
Retrenchment strategy
Combination strategy

4. GROWTH STRATEGIES
(UNDERSTANDING THE ANSOFF MATRIX)
Growth strategies expand a company’s business operations.
Growth strategy takes several forms, including increasing market
share by concentrating on the core business, rolling out new
products, or expanding into new markets.
Corporate strategic management has four types of growth
strategies, explained by the Ansoff Matrix.
Market penetration1.
Product development2.
Market development3.
Diversification4.

6. MARKET PENETRATION STRATEGY1.
Market penetration is the number of customers you have in a market
compared to the estimated total available market (total number of
customers in the market).
Market penetration = (number of customers/ target market size) x 100
Market penetration strategy means working to get a higher market share by
tapping into existing products in existing markets.
To use market penetration strategies, your company must already exist in
the market with a product.
The aim of market penetration strategies is to increase sales and your
customer base by winning over some (or all, if possible) of your
competitors’ customers.

7. EFFECTIVE MARKET PENETRATION STRATEGIES
Adjust pricing- Lowering your price could establish you as a budget-
friendly brand. Your competitors automatically become more expensive,
making some of their customers turn to you.
Rework your marketing plan-You may start by increasing brand awareness
because your consumer base is likelier to grow as more people get familiar
with your products/ services.
You may also consider selling your products/ services through multiple
distribution channels. Also, offer discounts and other promotional packages.
Update your product-Improving your product/ service (so it addresses
customers’ needs better) can be a real game changer. Reach out to
customers through surveys to know what they want to see in your products.

8. Offer franchise opportunities- Franchising increases your distribution
channel, making it an excellent business strategy for growth. In the
arrangement, you give an individual or group the right to sell your
established products and use your trademarks and proprietary knowledge.
Update your product-Improving your product/ service (so it addresses
customers’ needs better) can be a real game changer. Reach out to
customers through surveys to know what they want to see in your products.
Look for partnership opportunities-When two businesses form a
partnership, they virtually merge their customers. So, partnering with a
business that has a strong presence in the market helps you increase your
customer base.
Acquire a competitor- When you acquire, you get the market share of the
acquired business to increase your overall market share.

9. 2. PRODUCT DEVELOPMENT STRATEGY
To increase the efforts
and bottom line of your
business is product
development.
Product development
strategy is creating new
products or enhancing
existing products to
create new business in
an existing market.

10. Product development goes through many stages, from ideation to
commercialization. Specifically, all product development goes through the
following stages:
Ideation. The team brainstorms to come up with ideas for a new product.
Idea screening. The product development team screens the idea and selects
those with the most potential to do well in the market.
Prototyping. Use the ideas selected to create a prototype of the proposed
product. Use the prototype to determine whether the product will function as
intended.
Analysis. Test the product out in the market, and analyze possible problems with
it.
Product creation. Incorporate feedback from analysis into the prototype and
create the finished product.
Marketing testing. Test the product in a focus group to evaluate customer
feedback and the effectiveness of its marketing.
Commercialization. Make necessary adjustments based on market testing, then
release the product to the wider market.

11. EFFECTIVE PRODUCT DEVELOPMENT STRATEGIES
Create new products-While the new product should be different from the
existing one, it should supplement what the old one does instead of replacing
it.
Increase product value-Including additional value to an existing product will
encourage more people to buy the product. Interestingly, increasing product
value is not limited to adding more features. You may add value by adding
customer support or offering more quantity of the products.
Create a new version of the product- Make a new version of an existing
product with some upgrades. Product updates (based on market information
of what customers want to see improved) will encourage people to buy the
new version.
Offer a trial- Offering a free or less-expensive version of a product is a good
way to get the product to target customers who otherwise may not purchase
the full version.

12. EFFECTIVE MARKET PENETRATION STRATEGIES
Offer customization- If possible, allow customers to customize your product
to suit their needs. When customers can customize your product to create
unique and personal gifts, many of them will prefer your brand over
competitors offering only a generic version.
Update your product-Improving your product/ service (so it addresses
customers’ needs better) can be a real game changer. Reach out to customers
through surveys to know what they want to see in your products.
Look for partnership opportunities-When two businesses form a partnership,
they virtually merge their customers. So, partnering with a business that has a
strong presence in the market helps you increase your customer base.
Acquire a competitor- When you acquire, you get the market share of the
acquired business to increase your overall market share.

13. 3. MARKET DEVELOPMENT STRATEGY
Market development is a
business growth strategy
focusing on bringing existing
products to new markets.
Market development is about
expanding into new markets
with the same products/
services you’re already selling.
It increases your customer
base and bottom line by
selling your products/ services
in previously unexplored
markets.

14. Every market development strategy involves certain steps. These include:
Research your growth opportunities. When expanding to a new market, start by
identifying your target audience in the new market. Then analyze the new market to
know your potential competitors and identify opportunities for capturing the market.
Establish your goals. Develop a business-level strategy. Know what you want to achieve
by entering the new market. Develop goals for the aspects of your business you want to
grow, such as increased sales and net profit, etc.
Allocate resources. Determine the resources you need to achieve your goals (funding,
equipment, staff, etc.). Also, identify how you’ll source these resources.
Develop a marketing plan. Entering a new market requires increasing marketing needs
as you need to generate brand awareness and generate demand. You should create a
plan for how to do this.
Launch your product. Introduce the product to the new market.
Analyze results. Collect marketing data, and track the product's success in the new
market.

15. EFFECTIVE MARKET DEVELOPMENT STRATEGY
Geographic expansion-This strategy expands your business operations
to new territories. It involves offering your products in previously
unexplored geographical locations.
1.
For example, consider a business that sells a product only in the United
States. It can implement geographic expansion by deciding to start
advertising and selling the same product in Canada or Mexico.
With a share of its existing market and the new market, the business will
have a larger customer base.
2. Franchising- In franchising, you give business owners the right to sell
franchised products in different markets. So, franchising helps you expand
into a new market without high risks.

16. 4. DIVERSIFICATION STRATEGY
Diversification is a business growth strategy that involves introducing new
products to new markets.
Companies diversify to expand into unexplored markets and increase
profitability.
The diversification strategy is often used by companies that have
established a strong reputation in their existing markets. Their reputation
goes ahead of them to bring customers when they enter new markets with a
new product.
However, diversification is a high-risk business-level strategy. First,
there’re risks associated with developing new products. Secondly, there’re
risks associated with entering a new market.

18. TYPES OF DIVERSIFICATION
CONCENTRIC
DIVERSIFICATION
HORIZONTAL
DIVERSIFICATION
CONGLOMERATE
DIVERSIFICATION

19. Con-centric diversification- involves bringing new products,
which are closely related to existing products, to market.
This allows the company to take advantage of existing
competencies and resources when developing the new
product.
An example of concentric diversification is when a regular car
manufacturer produces an electric car.
Conglomerate diversification- Conglomerate diversification
involves entering new markets with products completely
unrelated to existing ones.
The business, which is then known as a conglomerate, operates
multiple business entities in entirely different industries.
An example is a washing machine manufacturer launching a
tomato paste product.

20. Horizontal diversification- involves bringing a new
product (that complements an existing product) to
market.
The new product is unrelated to your existing product, but
customers use them together.
An example is a clothing company launching a footwear
line or a washing machine manufacturer launching a
detergent.
When products are complimentary, customers who buy
one will seek out the other. So, horizontal diversification
relies on customer loyalty for existing products
transferring to new ones.

21. 2. STABILITY STRATEGIES
A stability strategy focuses on the existing business and market.
It is a business strategy where the company focuses on
maintaining a current position that is already working well for it.
For this reason, the stability strategy is often called the “status
quo strategy.”
Unlike growth corporate level strategies, stability strategies do
not have new business development in their focus. The company
does not seek to develop new products or enter new markets.
Instead, it focuses on serving customers in the same market and
with the same products/ services as defined in its business
definition.

22. TYPES OF STABILITY STRATEGIES
PAUSE STRATEGY
NO CHANGE STRATEGY PROFIT STRATEGY
CUT
COST
INCREASE
PRODUCTIVITY
INCREASE
PRICES
INCREASE
MARKETING EFFORTS

23. 1. PAUSE STRATEGY
The pause strategy is a stability strategy that companies adopt after a
period of rapid growth.
After investing in growth strategies, the best practice is to have some
rest time before pursuing further growth. The purpose of the brief “rest
time” is to analyze the situation and act accordingly, consolidating
results for increased profitability.
When adopting the pause strategy, you move cautiously by only
marginally altering various business units to enhance their functional
performance. This may include improving certain technologies,
customer functions, etc.
Each business unit you marginally alter experiences cost efficiency and
higher productivity.

24. SCENARIO
In 2010, after the success of the iPhone 4, Apple decided to
take a strategic pause before launching the iPhone 4S.
Instead of releasing the new model within a year, as was
expected, Apple delayed the launch for 16 months. This
pause allowed Apple to focus on refining its technology,
enhancing features, and ensuring a robust supply chain.

25. 2. NO CHANGE STRATEGY
No change strategy explains itself in its name. It means “not
doing anything new but continuing with what is working fine
already.”
When taking the no-change stability strategy, the firm is unwilling to
try something new that may affect its current position. So, it
channels resources into optimizing what it is already doing.
The no-change strategy works when the external business
environment is predictable and doesn’t pose any immediate
threats.
For example, the firm has a relatively good market base and
faces little or no competition.

26. SCENARIO
In 2015, Maggi faced a major crisis when the Food Safety and
Standards Authority of India (FSSAI) imposed a nationwide ban
on the product due to allegations of high lead content and
mislabeling related to monosodium glutamate (MSG). Despite
this significant challenge, Nestlé decided to maintain the core
formula and flavor of Maggi noodles once the product was
cleared and reintroduced to the market.

27. 3. PROFIT STRATEGY
The profit strategy focuses on generating cash flows while
maintaining status-quo (or continue doing what is already working for
the company).
Profit-oriented stability strategy is made necessary by an unfavorable
external environment. Sometimes a business that is doing fine may
have its profitability impacted by elements like government regulations,
economic recession, market competition, etc.
The company may decide to counter these effects and maintain
profitability without branching into new business activities.

28. Increase
productivity
SOME PROFIT-ORIENTED STABILITY CORPORATE
STRATEGIES FOR BUSINESS GROWTH INCLUDE:
Productivity is producing more goods/ services for the
same amount of work. It means increasing output without
increasing inputs and incurring costs.
Thus, productivity and profitability are two sides of the
same coin. When you increase productivity, you’ll have
more products/ services to offer for the same amount of
work, leading to increased profitability.
Ways to increase productivity include:
Invest in training programs to improve business
operations
Encourage constructive feedback
Recognize and reward exceptional performance

29. Cut cost
Profit is revenue less costs. So, lowering costs
increases profitability. Since growing revenue is
relatively more difficult, cutting costs is a faster
way to increase profitability.
Ways to cut costs for improved profitability and
incremental business growth include:
Streamline the supply chain.
Downsize to a smaller office/ facility.
Reduce less critical professional services.
Eliminate redundant activities.
Trim your labor force and/ or negotiate wage cuts.
Introduce new technology (where the technology
will significantly reduce employee costs).

30. Increase prices
Increasing the price of your products and services
increases revenue, leading to better profitability. With a
higher price, you’ll generate more total revenue with
fewer units sold.
However, before increasing prices as a profit-oriented
stability strategy, project the effect of the price
change on customer behavior and consider your
competitor's price.
A price increase may be counter-productive if the
market is very price sensitive or your competitor
offers comparable quality at far lower prices. In these
situations, a better alternative to increasing prices is
seeking cost leadership by maximizing the value of
expenditures.

31. Increase
marketing
efforts
Marketing creates revenue options for
increased profitability. Marketing educates
your target audience about your product/
service and highlights its benefits.
People who buy your products have certain
expectations. Running advertisements and
promotions reinforces those expectations.
Your target customers will see the products as
the solution to their problems and will be
more likely to buy.

32. 3. RETRENCHMENT STRATEGIES
A retrenchment corporate strategy aims to change a
negative trajectory to improve a company’s position.
A retrenchment strategy is a defensive strategy that
helps a company stay in business and maintain cash
flow by “cutting off” parts weighing it down. Cutting off
underperforming parts allows a company to focus on
core competencies, giving itself a new chance at
corporate success.

33. MERGERS AND
ACQUISITIONS
CORPORATE
RESTRUCTURING
MANAGEMENT
CHANGE
SOME EXAMPLES OF RETRENCHMENT STRATEGIES
INCLUDE:
DIVESTMENT
STRATEGY
TURNAROUND
STRATEGIES
PERSONNEL
CUTS/ LAY-OFFS
LIQUIDATION

34. DIVESTMENT STRATEGY
Divestment strategy or divestiture means getting rid of aspects of a business
by closing them down or selling them off.
One popular reason for letting go of a business unit is poor performance. If a
business unit consistently performs below expectations despite all efforts to
revive it, you may be better off closing it down or selling it off. This allows you to
concentrate on business units that are performing well.
Divestment can also be a strategy to raise funds. Selling off a business unit can
give you capital to improve the production of your main products/ services. You
may also use such funds to pay off debts and solve insolvency issues.
Divestment strategies streamline your business as it lowers the complexity of the
overall business.

35. SCENARIO
Tata Motors and the Sale of Jaguar Land Rover (JLR)
In 2008, Tata Motors acquired the luxury car brands Jaguar and Land Rover (JLR)
from Ford Motor Company. The acquisition was a strategic move to expand Tata
Motors' global footprint and enter the luxury car market. However, in recent
years, Tata Motors has faced challenges with JLR, including declining sales in key
markets like China, Brexit uncertainties, and the shift towards electric vehicles.
In response, Tata Motors has considered divesting JLR to streamline operations
and focus on its core strengths in the commercial vehicle and affordable
passenger car segments. The potential divestment would allow Tata Motors to
reduce debt, improve financial stability, and invest more in future technologies
like electric vehicles.
Despite the challenges, Tata Motors remains committed to the long-term
success of its core operations, while strategically considering the sale of non-
core assets like JLR to enhance overall business performance.

36. TURNAROUND STRATEGIES
As the name suggests, a turnaround strategy involves a
complete departure from the previous course of action. It
requires doing things differently in an attempt to change
the company’s fortune.
Unpleasant business outcomes necessitating turnaround
strategies include a bad business decision, company
mismanagement, shrinking industry, loss of market share,
etc.
Examples of turnaround strategies include:

37. MERGERS AND ACQUISITIONS
A merger is when two separate entities combine to create a
new, joint organization, while an acquisition is when a company
takes over another.
In mergers, a new company emerges. But in acquisitions, a new
company does not emerge. One company ceases to exist, while
the other becomes a bigger company.
However, mergers and acquisitions consolidate a business,
increasing efficiency and capability. Mergers and acquisitions
increase market share, distribution channels, and more.

38. SCENARIO
In 2006, The Walt Disney Company acquired Pixar Animation Studios in a $7.4
billion deal. This acquisition was a strategic move for Disney to revitalize its
animation division, which had been struggling with several box office
disappointments. Pixar, known for its innovative animation technology and
blockbuster hits like "Toy Story" and "Finding Nemo," brought creative strength
and technological expertise to Disney.
Outcome: The acquisition allowed Disney to regain its position as a leader in
animation, leading to a string of successful films and franchises, including
"Frozen," "Zootopia," and the continuation of the "Toy Story" series. The merger
also exemplifies how combining complementary strengths (Disney's distribution
and marketing prowess with Pixar's creative and technological edge) can create
significant value.

39. CORPORATE RESTRUCTURING
Restructuring is the process of reorganizing a business’ resources to
make it operate more efficiently.
Restructuring modifies the financial and operational aspects of a
company. Thus, companies restructure when facing financial
difficulties and need to change strategic direction.
Companies can restructure both through financial and non-financial
measures.
Financial measures include reorganizing business debts, reducing
expenses and labor costs, and boosting productivity.
Non-financial measures of restructuring include reorganizing human
resources and distribution channels, and improving the client base.

40. SCENARIO
In the early 1990s, IBM faced significant challenges as the demand for its
traditional hardware products, like mainframe computers, declined. In response,
IBM embarked on a major corporate restructuring under the leadership of CEO
Lou Gerstner. The company shifted its focus from hardware manufacturing to IT
services and software.
Outcome: This strategic shift involved selling off unprofitable divisions, such as
its PC business, and acquiring companies in the software and services space,
including PricewaterhouseCoopers' consulting arm. Today, IBM is a leader in
cloud computing, AI, and IT services, demonstrating how corporate restructuring
can transform a company's business model and lead to renewed growth.

41. MANAGEMENT CHANGE
Retrenchment strategies also include management change,
which occurs when an organization changes its top managers'
structure, composition, and responsibilities.
It is done to improve a company’s performance, especially when
the management is not performing well, or the business is facing
financial difficulty.
Management change relies on getting new ideas from the new
people placed in leadership positions to help the company
regain its competitive advantage.

42. SCENARIO
In 1997, Apple was on the brink of bankruptcy, struggling with declining
sales and a lack of innovation. In response, the company brought back
Steve Jobs, its co-founder, as interim CEO. Jobs immediately initiated a
series of drastic changes, including streamlining the product line and
forging a partnership with Microsoft.
Outcome: Under Jobs' leadership, Apple launched revolutionary products
like the iMac, iPod, and iPhone, transforming the company into one of the
most valuable in the world. This management change is a prime example of
how visionary leadership can completely turn around a struggling company.

43. Personnel cuts/
Lay-offs
Another retrenchment strategy to improve a
business’ position is personnel cuts. An
organization uses personnel cuts by
trimming its workforce to reduce costs
during a financial crisis.
Liquidation
Liquidation is the process of “winding up” a
business and selling off its assets to pay
off its debt and obligation. Liquidation is
the last resort retrenchment strategy to
close the business.

44. 4. COMBINATION STRATEGY
As the name suggests, a combination strategy means using a mix of
the other corporate strategies (growth, stability, and
retrenchment) either simultaneously or sequentially to improve
performance.
A company using a combination strategy focuses on its business
portfolio and so changes its strategy as it sees fit to enhance value
creation. An organization uses a combination strategy if it consciously
adopts several strategies for different parts of the business.
For example, a firm may use a retrenchment strategy to close down
underperforming product lines while concentrating on its core
business and using market development to take the core product to
new markets.

45. INTERNATIONAL STRATEGIES
Companies that have business operations in more than one market, also
known as multinational corporations (MNCs), adopt a long-term plan to
outline the steps and procedures they need for accomplishing their goals
in the global marketplace.
The plan that is supposed to guide the operations of company in foreign
markets will depend on many different factors, such as your resources, the
industry you operate in, the specificities of the markets you target, etc.
Moreover, all key operations are located in the home country, while the
company exports the same standardized products and services to
foreign markets without taking local tastes into account. That’s why the
international strategy is also called the “exporting strategy.”

46. TYPES OF INTERNATIONAL STRATEGIES
GLOBAL
STRATEGY
MULTIDOMESTIC
STRATEGY
TRANSNATIONAL
STRATEGY

47. GLOBAL STRATEGY
Global companies coordinate their operations in foreign markets
to make the most of the advantages offered by each country, while
centralizing all decisions at the headquarters.
Microsoft, for example, offers the same software programs around
the world but adjusts the programs to match local languages.
Apple & Samsung smartphones are sold globally. All the features &
specifications of the phones are the same as the same product is
sold worldwide.

48. MULTIDOMESTIC STRATEGY
Multidomestic companies seek to adapt their products and services to
local markets with a high degree of independence from the
headquarters.
Their products match local tastes, which can give them a competitive
advantage over international companies in a foreign market.
Example- In India, McDonald’s introduced a range of vegetarian options
like the McAloo Tikki and removed beef and pork from its menu due to
cultural preferences. In Japan, McDonald’s offers the Teriyaki Burger,
catering to local tastes. This approach allows McDonald’s to compete
effectively in diverse markets by meeting the unique needs of local
customers while maintaining its global brand identity.

49. TRANSNATIONAL STRATEGY
This type of strategy can be seen as a combination of global and
multidomestic strategies. Decisions are made together by the
headquarters and the interconnected foreign subsidiaries, while the
products and services are tailored to local markets.
Example- Unilever offers globally recognized brands like Dove and Axe with
consistent brand messaging across markets. However, it tailors its products
and marketing strategies to local tastes and cultural nuances. For instance, in
India, Unilever’s Lifebuoy soap campaigns focus on hygiene education tailored
to rural communities, while in Brazil, the company emphasizes beauty and
personal care products suited to local preferences.

50. INTERNATIONAL STRATEGY EXAMPLES
Starbucks- The Starbucks story started with one store in Seattle in 1971,
where the headquarters is still located. Today, there are 32K Starbucks
coffee houses in 80 countries. The company’s success lies in a unified
product offering and standardized store decoration across markets—
making their coffees appreciated and their logo with the siren easily
recognizable all over the world.
Rolex- For at least a century, all Rolex watches have been made in
Switzerland: Each item has “Swiss made” printed at the bottom,
regardless of the market you buy it in, linking the brand with
Switzerland’s reputation for watch excellence. Moreover, all key
activities, including research and development, design, and sales, are
centralized in their headquarters in Geneva.

51. Porsche
In 2021, the German sports car manufacturer delivered more than 300K vehicles
worldwide. Every single one was assembled in Germany, making Porsche a great
international strategy example. What’s more intriguing, all key activities, such as
research and development, and after-sales, are managed from different
locations in their home country.
Harley-Davidson
The US company offers the same motorcycle designs in every country. Indeed,
for this kind of product, customers in foreign countries don’t require any
specific adaptation. By adopting this strategy, they reached global customer
satisfaction and managed to make their motorcycles recognized all around the
world. Harley-Davidson’s corporate headquarters is located in Milwaukee, on the
same site where the first factory was built, and product development takes
place only in the US.