STABILITY STRATEGY

STABILITY OR CONSOLIDATION STRATEGY

 

Nature Of Stability Strategy

 

A firm following stability strategy maintains its current business and product portfolios; maintains the existing level of effort; and is satisfied with incremental growth. It focuses on fine-tuning its business operations and improving functional efficiencies through better deployment of resources. In other words, a firm is said to follow stability/ consolidation strategy if:

 

1. It decides to serve the same markets with the same products;
2. It continues to pursue the same objectives with a strategic thrust on incremental improvement of functional performances; and
3. It concentrates its resources in a narrow product-market sphere for developing a meaningful competitive advantage. 

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CORPORATE STRATEGIES

CORPORATE STRATEGIES

 

Growth is essential for an organization. Organizations go through an inevitable progression from growth through maturity, revival, and eventually decline. The broad corporate strategy alternatives, sometimes referred to as grand strategies, are: stability/consolidation, expansion/growth, divestment/ retrenchment and combination strategies. During the organizational life cycle, managements choose between growth, stability, or retrenchment strategies to overcome deteriorating trends in performance.

 

Just as every product or business unit must follow a business strategy to improve its competitive position, every corporation must decide its orientation towards growth by asking the following three questions: 

v  Should we expand, cut back, or continue our operations unchanged?

v  Should we concentrate our activities within our current industry or should we diversify into other industries?

v  If we want to grow and expand nationally and/or globally, should we do so through internal development or through external acquisitions, mergers, or strategic alliances?

 

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