Lecture 13-15.pptxdvdscdvsvsvdsvsvsvvdsv

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1. Corporate Level Strategy Course Instructor Dr. Mohit Jamwal

2. Corporate Level Strategy A corporate-level strategy is a multi-level plan used by the leaders of companies and organisations to define, outline and reach its business direction and objectives. Small businesses can use this strategy to improve their profits over the next financial year. Large corporations may develop a strategy for each of their subsidiaries to guide the achievement of their goals. 

3. Stability Strategy When a company finds that it should continue in the existing business and is doing reasonably well in that business but no scope for significant growth, the stability is the strategy to be adopted.

4. Expansion Strategy A business or a company follows the expansion strategy when it wants to achieve a certain high growth level compared to the previous performance. The goal and reason behind the business expansion strategies may vary from business to business. It could be increasing the social benefits, increasing the market share, achieving economies of scale, prestige, and higher profit.

5. Expansion through Concentration Expansion through concentration is the grand level strategy, and it requires an investment of a plethora of capital and resources in a specific product line.

6. Expansion through Concentration

7. Expansion through diversification Diversification strategy is when a business or a company proceed with the growth and development and expand its business in different markets and product areas. In other words, it means letting your business enter into the new markets and creating a new product.

8. Types of Diversification Strategies Concentric Diversification Concentric diversification is a strategy employed by companies to expand their businesses by adding new products or services that are related to their existing ones. The goal of concentric diversification is to leverage the company’s existing competencies and resources to enter new markets and grow its business. A computer manufacturing company has expanded from the production of desktop computers to laptops. It would help the company to exploit the new trending laptop user market.

9. Contd.. Conglomerate Diversification Conglomerate diversification is when a company introduces an entirely new product and enters into the new market by targeting new customers market. Tata Group started as hotel industry, and it diversified its business into a conglomerate.

10. Contd.. Horizontal Diversification Horizontal diversification is when a business introduces newer and related products/services but appeal to different customer segments. The goal of launching the related product is to satisfy the needs of customers. It involves a limited amount of risk because you’re dealing with the same customer market. Example For instance, you’re running a paper sale company, and you launch a new and different product, printers. It would attract the attention of potential customers.

11. Contd.. Vertical Diversification Vertical integration or vertical diversification is when a business integrates two or more production processes by moving up/down the supply chain. The company takes control over some of the core production, distribution, raw material, and assembly line processes. Example You own a retail store, and you expand/diversify your business by buying your products’ production facility that you’re selling. It helps you to decrease many variable costs.

12. Expansion through Integration Integration strategy provides the business an option to have control on various processes like competitors, suppliers or distributors. It may be exercised by following horizontal or vertical extensions in the business itself.

13. Types of Integration Strategies

14. Expansion through Cooperation A cooperative strategy (or cooperation strategy) concerns an attempt by an organization to cooperate with other firms in the achievement of its objectives. The cooperation may serve to reduce costs, sure up supply chains, reduce competition, add resources/knowledge/skillsets, and create other synergies. The cooperation can be between suppliers, buyers, unrelated businesses, or even competitors - the antitrust law may be implicated.

15. Joint Ventures A joint venture is a cooperative and special arrangement between two organizations that involves each contributing to the building up of a new entity. Joint venture partners share decision-making authority, operation control, and profits of the joint venture. MillerCoors is a joint venture between Molson and SABMiller intended to distribute all their beer brands in Puerto Rico and the United States.  In 2012, Microsoft and General Electric Healthcare signed a joint agreement to create a new third company called Caradigm. Caradigm was created to develop and market an open healthcare intelligence platform. The idea behind the joint venture was Microsoft had the technical capability of making such a platform work, while GE's healthcare IT division had the expertise on the healthcare side.

16. Strategic alliance A strategic alliance is an arrangement between two companies to undertake a mutually beneficial project while each retains its independence. The agreement is less complex and less binding than a joint venture, in which two businesses pool resources to create a separate business entity. A company may enter into a strategic alliance to expand into a new market, improve its product line, or develop an edge over a competitor. The arrangement allows two businesses to work toward a common goal that will benefit both. The relationship may be short-term or long-term. Apple partnered with MasterCard while launching the Apple Pay system for contactless transactions. MasterCard customers could pair their card with an iPhone to make payments without having to use a physical card. Through this strategic alliance, MasterCard was able to up its brand presence by associating itself with a leading-edge organization such as Apple. MasterCard’s expertise helped Apple refine Apple Pay by addressing bugs and resolving issues for customers promptly and efficiently.

17. Mergers A merger describes two firms, of approximately the same size, that join forces to move forward as a single new entity, rather than remain separately owned and operated. Both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created. Both companies' stocks were surrendered, and new company stock was issued in its place. In a merger, the boards of directors for two companies approve the combination and seek shareholders' approval. For example, in 1998, a merger deal occurred between the Digital Equipment Corporation and Compaq, whereby Compaq absorbed the Digital Equipment Corporation. Compaq later merged with Hewlett-Packard in 2002. Compaq's pre-merger ticker symbol was CPQ. This was combined with Hewlett-Packard's ticker symbol (HWP) to create the current ticker symbol (HPQ).

18. Acquisitions When one company takes over another and establishes itself as the new owner, the purchase is called an acquisition. An acquisition is when one company purchases most or all of another company's shares to gain control of that company. Purchasing more than 50% of a target firm's stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company’s other shareholders. Acquisitions, which are very common in business, may occur with the target company's approval, or in spite of its disapproval. Acquisition of Twitter by Elon Musk Coca Cola acquired a stake in energy drink business Monster - the world’s second largest selling energy drink after Red bull - for $2.15bn, allowing customers to open that fridge and take out a cola, a lemonade, an orange, water, juice or an energy drink, which are all amongst Coca-Cola's product and brand portfolio. Google acquired Android in 2005 for $50 million.

19. Licensing Licensing is an agreement between licensor and licensee wherein one organization gives the other organization access to its patents, trade secrets, or technology for a fee known as royalty. The organization that gives the access is licensor. The organization that obtains the access is the licensee.

20. Franchising Franchising is a Business Strategy in which franchiser (owner of the business, product or services), affiliate with franchisees (dealers of products) for distribution, business expansion, and marketing. Franchisees use the trademark and strategies of parent company i.e. franchiser and sell the products on their behalf. Both parties agree on specific terms like advertising, training, support through Franchising agreement. Some common examples of franchising are McDonald’s, Pizza Hut, Starbucks, Burger King, etc.

21. Expansion through Internationalization

22. Retrenchment Strategy

23. Divestment Strategy Divestment strategy means the sale of a portion of your business, asset, and division. Companies apply divestment strategy when turnaround strategy has already failed. Businesses and companies follow the divestment strategy for many reasons like merger plans, creating resources, availability of alternative investment plans, tech up-gradation, persistent issues, negative cash flows, and mismatched assets. For instance, TATA Group of Companies has got a lot of businesses working under its umbrella. They examine their business now and then; if they find any business out of the company’s core ideology, they divest it. TATA divested TOMCO and sold it to Hindustan Levers because it thought detergents and soaps weren’t the company’s core business.

24. Turnaround Strategy Turnaround strategy is a tool/measure that minimizes the negative trends that impact the company’s performance. It also goes by the name of management measure that could transform the sick business into a healthy position. For instance, Dell Technologies stated in 2006 that the company would follow the cost-cutting strategy by directly selling its products to the customers. The direct sale didn’t work out, and the company faced a tremendous financial loss. Dell turnaround and pulled out from direct sale strategy in 2007. The brand started selling computers through outlets and retailers. Nowadays, Dell is the 2nad largest world’s retailers in the computer industry.

25. Liquidation Strategy Liquidation strategy is the extreme level in the retrenchment strategy where you permanently shut down the business and sell all of your assets. Liquidation is the final option of the problems of any business because it has serious outcomes. It results in the form of saying no to every potential opportunity and firing all the employees. For instance, online e-commerce is losing traffic on its store daily. The expenses are increasing than the store’s total earning. The management has no other choice but to liquidate the store and pay off the debt.

26. Combination Strateg y A combination strategy employ any simultaneous combination of other master strategies. It includes use by a firm of a different strategy in individual business units or by use of multiple strategies in a single business unit at the same or different times. This is most popular in large, complex organizations (various industries and business units).

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