Defensive-Strategy for management strategy

Defensif strategy for management

1. D EFENSIVE AHIL, SMAILAH B. S TRATEGY

2. D efensive S trategies Are only used by market leaders in strategic management. The Goal of these strategies is to hold onto their position as the market leader, fighting off competitors who try to take away their market share. “ “ Defensive Strategy Who and What for

3. To reinforce existing market position. Objectives of a Powerful Defender To maintain the existing market share and to maximize profitability. D efensive S trategy To safeguard the existing levels of competitive advantage. To keep up top position in local and existing markets. For raising barriers of entry.

4. Principle: “To make it difficult for the competitors to acquire the market share and the new entrants to access the market.”

5. Various Defensive Strategy 01 02 04 Position Defense Simplest defensive strategy. It simply involves trying to hold your current position in the market. Mobile Defense Involves making constant changes to your business so that it will be difficult for the competitors to compete with you. To do this: Continue to invest in your current markets Attempt to build your brand name and customer loyalty. Involves: Introduce new products Enter new markets Making changes to existing products

6. Various Defensive Strategy 03 04 Flanking Defense It defends its market share by diversifying into new markets and niche segments. Counter-Offensive Defense It is a retaliatory strategy. When competitor attacks your business, you strike back with your own attack. 05 Contraction Defense Is the least desirable defense because it involves retreating from markets. If you lose your market share in the existing market you can make up for it in these new markets. Allows you to redeploy your resources into other areas.

7. Fred R. David D efensive S trategy Retrenchment Divestiture Liquidation “Organization regroups through Cost and Asset reduction to reverse declining Sales and Profits .” “ also known as Turnaround or Reorganizational Strategy.” “Can entail selling off land and buildings to raise needed cash , pruning product lines, closing marginal businesses and obsolete factories, and reducing number of employees.” “ Selling a division or part of an organization.” “Often used to raised capital for further strategic acquisitions or investments.” “Can be part of the overall Retrenchment strategy to rid an organization of businesses that are unprofitable , require too much capita l, or do not fit well with the firm’s other activities.” “ Selling all of a company’s assets , in parts, for their tangible worth .” “Recognition of defeat. However, it may be better to cease operating than to continue losing large sums of money .”

8. Organization has a clearly distinctive competence but has failed consistently to meet its objective and goals overtime. 2. Organization is one of the weaker competitors in a given industry. Organization is plagued by inefficiency , low profitability , poor employee morale , and pressure from stockholders to improve performance . Organization failed to capitalize on external opportunities, minimize external threats, take advantage of internal strengths, and overcome internal weaknesses overtime. Organization has grown so large so quickly that major internal reorganization is needed . Retrenchment Divestiture Liquidation G uidelines for when S trategy may be effective: Pursued retrenchment strategy and failed to accomplish improvements. Division needs more resources to be competitive. Division is responsible for an organization’s overall poor performance. Division is a misfit with the rest of the organization. When a large amount of cash is needed quickly and cannot be obtained reasonably from other resources. When government antitrust action threatens an organization. Organization has pursued both retrenchment strategy and a divestiture strategy and neither has been successful. Organization’s only alternative is bankruptcy. When the stockholders of a firm can minimize their losses by selling the organization’s assets.

9. With defensive strategy there is no room for error. A new competitor can do incredible damage to your business. Defensive Strategy is a distinct undertaking. A competitor that manages to capture even a small part of your business can do significant damage. The situation is very different when it comes to defense. The stronger your business the more likely competitors will attack and try to get a piece of it. A growth initiative might work or might not. “The best defense is a good offense.” Importance of Defensive Strategy D efensive S trategy 3 Reasons Defensive Strategy Matters “The best defense is a strong defensive strategy.”

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