RIVAS, XENA GABRIEL S.

BSA4
MGT 6

IDENTIFYING STRATEGIC ALTERNATIVES:

 Corporate Strategy Alternatives:

A stable growth strategy can be characterizes as follows:

1. The organization is satisfied with its past performance and decides to continue to pursue the same similar
objectives.
2. Each year the level of achievement expected is increased by approximately the same percentage.
3. The organization continues to serve its customers with basically the same product or services.
4. Management may not wish to take the risk of greatly modifying its present strategy
5. Change threatens those people who employ previously learned skills when new skills are required.
6. I t also threaten sold positions of influence.

Furthermore,the management of a successful organization quite frequently assumes that strategies that have proved to
be successful in the past will continue to be successful in the future.

 Changes in strategy require changes in resource allocation. Changes in patterns of resource allocation in an
established organization are difficult to achieve and frequently require long periods.
 To-rapid growth can lead to a situation in which the organization scales of operations outpace its administrative
resource. Inefficiencies can quickly occur. The organization may not keep up with or be aware of changes that
may affect is product and market.

 Organizations pursuing a growth strategy can be described as follows:

1. They do not necessarily grow faster than the economy as a whole but do grow faster than the markets in which
their products are sold.
2. They tend to have larger-than –average profit margins.
3. They attempt to postpone or even eliminate the danger of price competition in the industry.
4. They regularly develop new products,new markets,new processes, and new use for old products.
5. Instead of adapting to change in the outside world, they tend to adapt the outside world to themselves by creating
something or a demand for something that did not exist before.

 Ansoff's Matrix
The heuristics for marketing strategies was done decades ago, so there is no need to re-invent the wheel because the
basic principles still apply. Much of the pioneering work is attributed to Igor Ansoff, often called the "father of strategic
management." Ansoff developed a matrix that portrays a firm's ability to grow by way of existing and new products in
existing and new markets.
The matrix articulates four different growth strategies based on four possible product/market combinations: market
penetration, market development, product development and product diversification.
1. Take Market Share
Market penetration is the strategy that requires taking market share from competitors in existing markets using existing
products. This strategy assumes a "zero-sum game" in which the market is flat in terms of growth. Thus, the only way to
grow your business is to take away somebody else's business.
2. New Market Expansion
Market development is Ansoff's strategy to grow the business by expanding into new markets or market segments with
existing products. This strategy is appropriate when the existing market or customer base is saturated and you've
maxed-out in terms of growth potential. Strong regional brands often expand into other regions of the country, or go
international, because they've exhausted growth potential in their home markets. This strategy may also be appropriate
when you've exhausted potential with a certain class of trade, such as supermarkets, but don't do any business with,
say, convenience stores.
3. New Products - Same Market
This strategy is based on growing your business by selling new products in existing markets. For example, you may
enjoy a strong brand name that is well-recognized and trusted by your customers, which is readily transferable to
different products. This strategy is attractive for many firms, because it is a low-risk strategy. Customers already know
who you are and what you stand for. Thus, it's easier to sell to the customers you have than to acquire new customers.
4. New Products – New Markets
This is the riskiest of Ansoff's strategies, because it involves two untested variables: new products and new markets.
However, it may be an attractive option if it offers the best potential for continued growth. Moreover, it may be an
appropriate strategy when the new opportunity aligns with a firm's core competencies. For example, CKE Restaurants,
owner of successful west coast hamburger chain, Carl' Jr., apparently had no issues with acquiring successful east
coast hamburger chain, Hardee's, and retaining the Hardees' brand name in most east coast markets even though the
menu offerings of Carl's Jr. and Hardee's are virtually identical. CKE's core competency is operating quick-serve
restaurants.