Strategic Management

Vertical Integration

The vertically integrated giants of the computer industry, firms such as IBM, Digital and Burroughs, were felled like young saplings when at the end of the 1970s Apple formed a network of independent specialists that produced machines far more efficiently than the doit-all giants.

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Conglomerate Diversification

•Adding new businesses which are unrelated to firm’s existing business When : • Declining industry • Available resources • Investment opportunity • Product market saturated • Legal constraints

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Turnaround

• The overall goal of turnaround strategy is to return an underperforming or distressed company to normal in terms of acceptable levels of profitability, solvency, liquidity and cash flow • To achieve its objectives, turnaround strategy must reverse causes of distress, resolve the financial crisis, achieve a rapid improvement in financial performance, regain stakeholder support, and overcome internal constraints and unfavourable industry characteristics.

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Retrenchment Cutting back on products, markets, operations because the firm’s overall competitive and financial situation can not support commitments needed to sustain or build its operations Divestiture The sale of a firm or a major component

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Retrenchment Strategy

• Common short-run strategy designed to address organizational weaknesses and deficiencies that are leading to performance declines • What does retrenchment involve? – Stabilizing operations – Replenish & revitalize organizational resources & capabilities – Be prepared to compete again

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Liquidation Closing down the operations of a business and selling its assets and operations to pay its debts and distribute any gains to stockholders Concentrated Growth Aggressive market penetration where a firm’s strong position and favorable market growth allow it to...