Running head: “TYPES OF ALTERNATIVE STRATEGIES”
Types of Alternative Strategies
In APA Style
Chikita Martin
Herzing University
Strategic Management
Alternative Strategies
There are 11 alternative strategies; forward integration which means gaining ownership or increased control over distributors and retailers, backward integration which is seeking ownership or increased control of a firm’s suppliers, horizontal integration which is seeking ownership or increased control over competitors, market penetration which is seeking increased market share for present products or services in present markets through greater marketing efforts, product development which is seeking increased sales by improving present products or services or
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2. When an organization competes in an industry that is characterized by rapid technological developments. 3. When major competitors offer better-quality products at comparable prices. 4. When an organization competes in a high-growth industry. 5. When an organization has especially strong research and development capabilities.
Diversification Strategies: Related & Unrelated Diversification
“There are 6 guidelines for when related diversification may be an effective strategy are as follows:” (David, 2011) 1. When an organization competes in a no-growth or a slow-growth industry. 2. When adding new, but related, products would significantly enhance the sales of current products. 3. When new, but related products could be offered at highly competitive prices. 4. When new, but related products have seasonal sales levels that counterbalance an organization’s existing peaks and valleys. 5. When an organization’s products are currently in the declining stage of the product’s life cycle. 6. When an organization has a strong management team.
“There are 10 guidelines for when unrelated diversification may be an especially effective strategy are as follows:” (David, 2011) 1. When revenues derived from an organization’s current products or services would
The original business strategy, which is still not fully implemented or thought out, is still intact and being somewhat utilized. Part of getting from where we are now to where we want to go, is to put together a comprehensive business and growth strategy plan that, brings about the most results. The original business strategy resembled that of a small business that had the most growth with the least risk. With little risk also means little or no technology. The company has changed, the competition is more intense and the economy is weakened. A new strategy that aligns with technology is essential in order to be successful. As business and technology have become increasingly intertwined, the strategic alignment of the two has emerged as a major corporate issue. With the emergence of IT from the back room to the forefront of business brings the alignment issue under the spotlight like never before. And as
For example, Oxfam have now tried to gain popularity to give them the opportunity to raise more money. To achieve this, Oxfam have held charity concerts and festivals. This is diversification as it is completely different
At this level, each of the SBUs is viewed as its own independent entity, pursuing its own profit-creating goals (Rothaermel, 2013). While organizations with a corporate-level strategy with a single or dominant business would be best served by a functional structure, organizations seeking related or unrelated diversification would be wise to utilize a multidivisional structure (Rothaermel, 2013).
In Forward integration involves company to develop strategy to control the firm product distribution either through distribution centers or retailers. It is a necessary action when companies have potential benefits from handling, shipping of their own products directly to customers, or the retail selling their own products in brand stores.
* Increase in sales and decrease in promotional costs for the introduction of the new product
Opportunities: international market; co- operation with other bigger companies; launching of the new products; increasing tendency of the customer demand etc.
The corporate strategy of the business diversification is to create a synergy to achieve more performance under a single umbrella rather than diverse business units (SNU, 2016). A business diversification is to build the company shareholder value when the independent business units can perform under a single corporation as an umbrella organization instead of independent parents or a corporation. A diversified organization has many business units and each business units have its own business level strategy irrespective of whether they are related or not. A successful business diversification not only spreads the business risk across the diverse units but also adds a long term economic value to the company. The strategy for starting a new business is based on industry attractiveness test, the cost of entry and the better off test (Thompson, Peteraf, Gamble, and Strickland, 2016).
To develop such strategy mix of strategic options will be applied including Integration to deal with competition and Intensive + Diversification strategies for product and market development.
As technology continue to refine how products and services are delivered to consumers, competition among industry participants becomes more refined. Organizations that are able to keep up with changing technologies become leaders while those that are not fall behind. Mergers and acquisitions are increasing while causing small businesses to sell out or seek partnerships and cooperatives in order to remain competitive and relevant.
section). This shows an increase in product purchases and an increase in market share (an increase
Industry shakeout: A growing market and high profits induces new firms like Eagle Motors to enter market and increase production which again increases competition and rivalry.
Product diversification is a feasible way to obtain growth through new products. The company can use existing product knowledge to develop the brand into new lines to increase exposure and use similar technology to increase synergies. Leveraging off an existing well-known brand to a market that is familiar with the brand will also increase the possibility of success while maintaining lower marketing costs in
Diversification is a method of investing that been shown to increase portfolio return while reducing portfolio risk as measured by standard deviation. This method specifically increases the efficient frontier for investors. The challenge to an investing firm is an appetite by its customers for an ever increasing efficient frontier. One area to explore to obtain this increase is through further diversifying through international diversification.
Conglomerate hope to outperform the overall market growth? Can size and diversity be made an asset rather than a liability?