Critical Analysis of The Business Strategies

Offensive and defensive strategies are by products or results of the corporeal strategies. A corporate strategy is a comprehensive set of activities developed by top management to aid an organization achieve its corporate objectives. Involving all parts of an organization, these strategies check both internal and external environments.As the name suggests these strategies are aimed at placing the organization in a attack mode of sorts. Organizations employing such strategies generally believe in acting before their opp whiznt. Such strategies are usually achieved by internal growth, though some like amalgamations and acquisition, etc are external.Concentration on a whizz product or serviceThe firm chooses to specialize in a single product, product line, or service. It plans to do one thing with great strength and efficiency. This specialization allows an organization to do whatever it does extremely well, perhaps even better than other organizations. Used somely by small organi zations, it reduces the amount of resources mandatory and as such is a low risk strategy. However, it ties up all of the firms resources on a single product, service, or product line.The firms success and growth is underage entirely on that particular product with nothing to fall defend on were that product to fail. Also, coupled with the facts that this strategy limits an organizations growth and opportunities, it can be considered a high-risk strategy as well. E.g. a company deciding to specialize only in the production and distri thation of a particular brand of java will find their chances for growth and profits tied inexorably with the market acceptance of that chocolate. Failure of the product will spell doom for the company.Despite these pitfalls, the niggardness strategy has nevertheless borne fruit for organizations like Holiday Inns. Considered one of the largest hotel chains in the world with 1800inns, Holiday Inns have achieved unparalleled success by cogitate on th e hospitality industry.Put plainly concentric diversification is said to be when a firm originally concentrating on one specific product, service, or product line decides to add related products or services to its already existing retinue. These new products or services are added internally (i.e. it can be a management decision) or whitethorn be acquired through acquisitions. A unspoilt example is Cadbury. Though initially focusing on biscuits, the company straight off has an impressive line-up that includes not only biscuits, still also chocolates and ice cream as well.One of the major reasons why companies choose to follow such a strategy is the potential for faster growth, and the lure of establishing a diverse if related product line. This ensures that if one product were to fail, there would still be something to fall back on.Vertical integration occurs when one firm acquires another that is involved either in an earlier stage of the production process (backward integration ) or a posterior stage of the production process (forward integration). The firm that is acquired usually follows the same line of business as that of the parent company. While backward integration will violate the firm more control over the quality and quantity of its raw materials, forward integration will ensure that the firms products will enjoy a good demand.This occurs when a firm decides to branch out and add products or services that are unrelated to its existing products and services. Conglomerate diversification can occur through acquisitions or it whitethorn be based on management decisions. The purpose in employing such a strategy is to increase sales and earnings, spread risks, or in the case of acquisitions simply to make an attractive investment.An example is the heavy vehicles and industrial equipment manufacturer Caterpillar, who have branched out into the production of boots and accessories.A merger involves combining the operations of two companies to form a new and unified organization. Acquisitions on the other hand is the taking over of another firm but allowing the acquired firm to function as a independent division or subsidiary of the acquiring firm. The main aim of this strategy is to achieve growth both in sales and earnings, which it does more quickly than any internal strategies.An accurate example would be the recent merger of carmakers Chrysler and Mercedes Benz. An example of acquisition would be BMWs takeover of Rolls Royce.Joint venture is when two or more firms combine resources to accomplish a task that an individual firm could not have done alone, or to do a job more efficiently. Considered as a means to implement a strategy rather than a strategy, joint ventures offer a way for organizations to undertake projects and spread any risks as well as operate more efficiently. General Motors collaboration with Toyota is an example of a joint venture.normally adopted by companies, who follow a wait and watch attitude, these str ategies nevertheless help an organization achieve a good foothold in the market. lessen the scope of operations or activities to improve efficientness and efficiency is retrenchment. Organizations adopting such a strategy generally believe that making the organization more effective and efficient will give it a better chance to return to a higher level of profitability. In some cases a firm may simply cut costs, reduce personnel, etc, but will decide to maintain all its current line of business, whereas, in extreme cases a firm may decide to get rid of certain product lines or services.Divestment is when a firm spins off or sells instalments of its operations. The main reasons for such a situation to face-lift are a firm may have acquired another firm that either interferes or does not contribute to its current organization mission, a segment may not be functioning satisfactorily enough to justify the resources invested in it, or the segment might be earning a profit but the mana gement decides its resources are better utilized elsewhere.Stopping the decline in a firms performance and bringing a return to successful performance involves turnaround. It combines a defensive strategy (retrenchment or divestment) with a growth strategy. The turnaround of Chrysler Corporation in early 1980s from a failing enterprise to a successful one is a good example.Usually a last resort strategy, it involves selling or disposing of the organization assets. The entire organization or only part of it may be sold. It occurs when turnaround was a failure or may not have been viable. Undertaken mainly to provide the stockholders a return on their investment, it is one of the most unpleasant strategies.The various offensive and defensive strategies are not separate, and are used in complement with one another. Most firms employ a innovation or a mixture of the various strategies. The only important factor is deciding which strategy will better suit the conditions presently being go about by the firm.