The BOD and planning division at the top provide direction for the development of corporate and other strategies. Top level management and other executives especially from the planning division are involved in developing strategic options. The bases for formulating long-term strategies are mainly dependent on the capability of a firm to build competencies‚ increase market share in new and existing markets with existing and new products etc.
- Protect and Build: With this direction a firm has to compete in the market protecting or building on the current position. This is also known as stability or “no change” strategy through which a firm decides to make no deviation from the current level of activities and remain in the existing product and market. Different strategic options under this category are:
- Consolidation: It is concerned with protecting and strengthening the organization’s position in existing market with existing product. Under consolidation company could decide to combine its operation as a result of corporate restructuring.
- Market Penetration: This is another strategy to gain a competitive advantage in existing market with existing products. It is possible through aggressive marketing tactics like trade discount‚ advertising‚ price reduction and package improvement.
- Product Development: Product development strategy attempts to offer modified or new products in the existing market. It requires core competencies and research and development efforts.
- Market Development: With this strategy a firm enters into the new market segment‚ territories using its competence in its existing products. This is one of the less risky and least costly grand strategies. A firm select market development strategy with a view to achieving growth in sales‚ profit etc by expanding its activities in national ‚ regional and international markets.
- Diversification: It refers to the strategy which takes the organization away from its present markets and its present products at the same time. It attempts to extend its current range of product offering or area of activity.