Offensive and defensive strategies
Offensive and defensive strategiesOffensive and defensive strategies are by products or results of the corporate 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 consider both internal and external environments.
Offensive Strategies
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 opponent. Such strategies are usually achieved through internal growth, though some like mergers and acquisition, etc are external.
Concentration on a single product or service
The firm chooses to specialize in a single product, product line, or service. It plans to do one thing with great effectiveness and efficiency. This specialization allows an organization to do whatever it does extremely well, perhaps even better than other organizations. Used mostly by small organizations, it reduces the amount of resources required and as such is a low risk strategy. However, it ties up all of the firm's resources on a single product, service, or product line. The firm's success and growth is dependent entirely on that particular product with nothing to fall back on were that product to fail. Also, coupled with the facts that this strategy limits an organization's 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 distribution of a particular brand of chocolate 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 concentration 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 focusing on the hospitality industry.
Concentric diversification
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 may be acquired through acquisitions. A good example is Cadbury. Though initially focusing on biscuits, the company today has an impressive line-up that includes not only biscuits, but 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
Vertical integration occurs when one firm acquires another that is involved either in an earlier stage of the production process (backward integration) or a later stage of the production process (forward integration). The firm that...
To view the complete essay, you be registered.