Stability

The Concept
 A stable strategy arises out of a basic perception by the management that the firm should concentrate on using its present resources for developing its competitive strength in particular market areas.
In simple words, stability strategy refers to the company’s policy of continuing the same business and with the same objectives
A firm pursues stability strategy when
1. It continues to serve the public in the same product or service, market, and function sectors as defined in its business definition.
2. Its main strategic decisions focus on incremental improvement of functional performance.
2. Corporate Restructuring is the process of redesigning one or more aspects of a company.
3. The process of reorganizing a company may be implemented due to a number of different factors, such as positioning the company to be more competitive, surviving a currently adverse economic climate, or acting on the self confidence of the corporation to move in an entirely new direction.

1. What Is Stability The Concept A stable strategy arises out of a basic perception by the management that the firm should concentrate on using its present resources for developing its competitive strength in particular market areas. In simple words, stability strategy refers to the company’s policy of continuing the same business and with the same objectives.

2. Nature Of Stability Strategy A firm following stability strategy maintains its current business and product portfolios maintains the existing level of effort and it is satisfied with incremental growth . It focuses on fine-tuning its business operations and improving functional efficiencies through better employment of resources.

3. Need Of Stability Strategy A firm is said to follow stability strategy if: 1)  It decides to serve the same markets with the same products 2) Its main strategic decisions focus on incremental improvement of functional performance . 3)The focus is on maintaining and developing competitive advantages consistent with the present resources and market requirements.

4. Advantages The firm is successfully run and the objectives are achieved and there is satisfactory performance. Therefore, the management may want to continue with the same activities . A stability strategy is less risky. Unless the conditions are really bad, a firm need not take any additional risks . The management doesn’t foresee any change in the environment or opportunity in the market or any threat . When pursuing this strategy, there is no disruption in routine work

5. Disadvantages Stability strategies can be very useful in the short run, but they can be dangerous if followed for too long. Stability strategy may be indication of rigidity of the planning process.

6. Types of Stability Strategies

7. Pause/Process With Caution Strategy Some organizations pursue stability strategy for a temporary period of time until the particular environmental situation changes, especially if they have been growing too fast in the previous period. Stability strategies enable a company to consolidate its resources after prolonged rapid growth. Sometimes, firms that wish to test the ground before moving ahead with a full-fledged grand strategy employ stability strategy first .

8. NO Change Strategy No change strategy is a decision to do nothing new i.e. continue current operations and policies for the foreseeable future. If there are no significant opportunities or threats operating in the environment, or if there are no major new strengths and weaknesses within the organization or if there are no new competitors or threat of substitutes, the firm may decide not to do anything new .

9. Profit Strategy Profit strategy is an attempt to artificially maintain profits by reducing investments and short-term expenditures. Rather than announcing the company’s poor position to shareholders and other investors at large, top management may be tempted to follow this strategy. Obviously, the profit strategy is useful to get over a temporary difficulty, but if continued for long, it will lead to a serious deterioration in the company’s position. The profit strategy is thus usually the top management’s short term and often self serving response to the situation.