Portfolio Orientation

Q. Orientation of Portfolio Adopted (internal and External based)

* Growth oriented

* Retrenchment oriented,

* Stability oriented

* Combination oriented

* Benefits and challenges of each

INTRODUCTION

By definition, strategic orientations are principles that direct and influence the activities of a firm and generate the behaviors intended to ensure the viability and performance of the firm (Gatignon and Xuereb 1997).

Previous studies have highlighted the importance of investigating the relationships between different strategic orientations (Grinstein 2008) and early on, established that organizations that focus exclusively on implementing a single orientation tend to perform poorly in the long run (Pearson 1993). Balancing several orientations tends to result in better performance by the firms (e.g. Atuahene-Gima & Ko 2001, Bhuian et al. 2005). The meta-analytic study by Grinstein (2008), on 135 effects from 77 independent samples, concludes that firms balancing multiple orientations appear to perform better, but that there is limited literature on the relationships between orientations. Recent studies (e.g. Aloulou and Fayolle 2005; Grinstein 2008; Li et al. 2008) suggest that research should focus on the “study of the various combinations of strategic orientations that firms can pursue in different situations” (Grinstein 2008: 126).

There are three types strategic orientation These are:

1.  Stability strategies: make no change to the company’s current activities

2. Growth strategies: expand the company’s activities

3. Retrenchment strategies: reduce the company’s level of activities

4. Combination strategies: a combination of above strategies

Each one of the above strategies has a specific objective. For instance, a concentration strategy seeks to increase the growth of a single product line while a diversification strategy seeks to alter a firm’s strategic track...