Grand Strategy

Grand Strategy is a contemporary strategy which means recent strategy. It is created by

customer view of the product/service. So it’s a customized strategy that is formulated for
fulfilling of a particular requirement of the particular problem of the company or business. It
can be used by mixing up with other strategy or it can be used as a solo strategy etc. it is also
called master or business strategies, which provide basic direction for strategic actions.
Indicate the time period over which long-rang objectives are to be achieved. Any one of these
strategies could serve as the basis for achieving the major long-term objectives of a single
firm. So it can be defined as a comprehensive general approach that give direction to firm’s
major actions. Firms involved with multiple industries, businesses, product lines, or customer
groups usually combine several grand strategies. The grand strategy is divided into two
groups
1. Positive Grand strategy: Market development, concentrated growth, product development
etc.
2. Negative Grand Strategy: Turnaround, divestiture, liquidation, bankruptcy etc.
Concentrated growth
Concentrated growth strategy is a strategy that involves concentrating on growing the market
share in existing markets based on its resources. It is a strategy of the firm that directs its
resources to the profitable growth of a dominant product (Product Utilization), in a
dominant market (Market Utilization), with a dominant technology (Technology
Utilization). Concentrated growth strategies lead to enhanced performance. Specific
conditions favor concentrated growth. The risks and rewards vary from situation to situation.
For example: After doing an analysis of a market we found that our product is superior to
others. So we will emphasis on our product and utilize it to dominate the market. Moreover
some company emphasis on market expansion and again some company emphasis on the
technology to dominate the market.
Market development
Market Development mainly based on the products that a company have. It involves selling
the existing products/services in new markets. To operationalize a market development
strategy, managers take actions like targeting promotions, opening sales offices and creating
alliances. It consists of marketing present finished products, often with only cosmetic
modifications, to customers in related market areas by adding channels of distribution or by
changing the content of advertising or promotion. Frequently, changes in media selection,
promotional appeals, and distribution are used to initiate this approach. It is second only to
concentration as the least costly and least risky of the 15 grand strategies. For example: A
company with its emphasis on increasing market share among its industry with the help of
promotions, opening sales offices and creating alliances.
Product Development
Product development involves the substantial modification of existing products or the
creation of new but related products that can be marketed to current customers through
established channels. Here the company try to sell the product in a better way. The main
focus is on products/services related to current products/services that are offering. Sometimes
there might be variants or new prototypes or sizes of products are developed. A company
may emphasize getting a product that has the highest level of product to market quickly,
developing a product that can be sold at the lowest cost, or developing a product that has
highest level of performance, or developing a product with high levels of product quality.
And reliability. In some circumstances product development is controlled by a development
budget. For example : a company that manufactures food may invest greatly in research into
healthier foods that can be marketed to the general public or a company that manufactures car
may develop safer or more fuel-efficient cars through investments in research. These
advances give firms an advantage over the competition.
Innovation
Innovation means absolutely creating or producing new product/ service, creating new
product life cycle and obsoleting similar existing products/ services. Companies seek to reap
the initially high profits associated with customer acceptance of a new or greatly improved
product. Rather than face stiffening competition as the basis of profitability shifts from
innovation to production or marketing competence, they search for other original or novel
ideas. For example: obsoleting film based camera for digital camera or obsoleting typewriter
for computer machine. These are new products which absolutely replace the old products.

Horizontal Integration
When a firm’s long-term strategy is based on growth through the acquisition of one or more
similar firms operating at the same stage of the production-marketing chain, its grand strategy
is called horizontal integration. Such acquisitions eliminate competitors and provide the
acquiring firm with access to new markets. For Example: Robi Axiata ltd acquires Airtel to
eliminate its competitors and broadens its consumers’ numbers. Disney acquires Pixar which
another acquisition examples. The deal is now widely considered to have literally and
figuratively reanimated Disney, expanded its market share, and boosted its profits.
Vertical Integration
Vertical integration that involves acquiring firms that supply it with inputs (such as raw
materials) or are customers for its outputs (such as warehouses for finished products). The
transaction may involve stock purchase, buying assets or stock swap. There are two type of
vertical integration. They are:
1. Forward Integration: Forward integration is a business technique that includes a type of
vertical integration whereby business exercises are extended to incorporate control of the
direct distribution or supply of a company's products. This type of vertical integration is
conducted by a company advancing along the supply chain. for example : a vegetable farmer
who directly sells his vegetables at a local grocery store rather than to a distribution center
that controls the placement of foodstuffs to various supermarkets.
2. Backward Integration: Backward integration is a type of vertical integration organization
extends its part to satisfy undertakings in the past finished by businesses up the supply chain.
So in other words, backward integration is which an organization purchases another
organization that supplies the products or services that is needed for production. The main
reason for backward integration is the desire to increase the dependability of the supply or
quality of the raw materials used as production inputs. For example: A company that need
raw material for a particular product for that the company acquires a company or merger with
the company.

Concentric Diversification
Concentric diversification involves accumulating related products or services to the existing
business. Concentric diversification involves the acquisition of businesses that are related to
the acquiring firm rather than by internal new business creation in terms of technology,
markets, or products. With this grand strategy, the selected new businesses possess a high
degree of compatibility with the firm’s current businesses. The ideal concentric
diversification occurs when the combined company profits increase the strengths and
opportunities and decrease the weaknesses and exposure to risk. For example: when a
computer company that primarily produces desktop computers starts manufacturing laptops,
it is pursuing a concentric diversification strategy.
Conglomerate Diversification
Conglomerate Diversification occurs when a company, particularly a very large one, try to
diversify into completely new markets with unrelated products to reach brand new customer
base by acquiring a business because it represents the most promising investment opportunity
available. The principal concern of the acquiring firm is the profit pattern of the venture.
Unlike concentric diversification, conglomerate diversification gives little concern to creating
product-market synergy with existing businesses. For example: if a computer company
decides to produce notebooks, the company is pursuing a conglomerate diversification
strategy. Conglomerate diversification requires the company to enter a new market and sell
products or services to a new consumer base. A company incurs higher research and
development costs and advertising costs. Additionally, the probability of failure is much
greater in a conglomerate diversification strategy.
Turnaround
Turnaround strategy is a part of Retrenchment Strategy. Here retrenchment means reducing
its one or more business operations with the view to reduce expenses and reach to a more
stable financial position. Turnaround strategy is used when a company is facing financial
problem. The immediacy of the resulting threat to company survival is known as situation
severity. Turnaround responses among successful firms typically include two stages of
strategic activities: retrenchment and the recovery response. The primary causes of the
turnaround situation have been associated with the second phase of the turnaround process,
the recovery response Managers reduce costs by reducing staff, leasing rather than buying
equipment, reducing marketing expenditure. Which is known as Cost Reduction. Sometimes
also sold assets to free up cash for new initiatives. Which is known as Asset Reduction. Once
costs are reduced and assets have been sold to generate cash a positive growth or
diversification strategy must be implemented to complete the turnaround. For example: Sale
of land, buildings, and equipment not essential to the basic activity of the company and
elimination of the company executives’ cars.
Divestiture
The Divestment Strategy includes the downsizing of the scope of the business. A divestiture
strategy involves the sale of a firm or a major component of a firm. When retrenchment fails
to accomplish the desired turnaround, or when a nonintegrated business activity achieves an
unusually high market value, strategic managers often decide to sell the firm. An organization
adopts the divestment strategy only when the turnaround strategy proved to be unsatisfactory
or was ignored by the firm. For example Jaguar sells its half of business to allocate its
resources to a more profitable one.
Liquidation
Liquidation Strategy is when a company sells its parts or the entire firm at auction or to a
private buyer for its tangible asset value. The intent is not to operate an ongoing business.
Liquidation Strategy is the most unpleasant strategy adopted by the company. It is the most
crucial and the last resort to retrenchment since it involves serious consequences such as a
sense of failure, loss of future opportunities, spoiled market image, loss of employment for
employees, etc. Generally, small sized firms, proprietorship firms and the partnership firms
follow the liquidation strategy more often than a company. The liquidation strategy is
unpleasant, but closing a venture that is in losses is an optimum decision rather than
continuing with its operations and suffering heaps of losses. For example: a retailer that
suffered a loss on its business may find no one interested in buying the company as a going
concern. To extract as much value out of the business as possible, the owner has a liquidation
sale and sells all the inventory, fixtures and equipment before permanently closing the store’s
doors.
Bankruptcy
Bankruptcy is a legal process under which a borrower protects and/or liquidates assets in
order to repay debts. This allows the company to undergo a reorganization of its business
affairs, debts, and assets. Sometimes businesses are successful at restructuring, while other
times, they end up liquidating assets and closing up shop permanently. For example: Enron,
WorldCom, and Lehman Brothers are some well-known examples of bankrupt companies
that never came back. But there are companies that have managed to re-emerge from
bankruptcy in better shape than before they went bust. For Example: It's tough to believe that
in 1997 Apple, one of the world's largest companies by market capitalization was once in dire
straits. While never actually filing for bankruptcy, Apple was on the verge of going bust. At
the last minute, archrival Microsoft swooped in with a $150 million investment and saved the
company. There are two types of Bankruptcy. They are
1. Liquidation bankruptcy: Liquidation bankruptcy is agreeing to a complete distribution of
firm assets to creditors, most of whom receive a small fraction of the amount they are owed.
It is an event that usually occurs when a company is insolvent, meaning it cannot pay its
obligations when they are due. The company pay these dues with the contingency fund which
has to be given to the central a minimum 5% of the whole business when the company
operates in the country. For Examples: when Adamjee Jute Mill was bankrupted then the
government sell the assets and other items to repay the debt of creditors.
2. Reorganization bankruptcy: Reorganization bankruptcy, the managers believe the firm
can remain viable through reorganization. Here when the company already bankrupted but
the managers thinks that it can be revived and can run in the market. They collect investment
from investor to revive the company. Thus, this process as known as Reorganization
bankruptcy. For example: NOKIA was bankrupted a few years ago, but then the managers of
NOKIA think that they can run in the market. And again they revived in the market and doing
business.
Joint Ventures
Joint Ventures involves creating complementary synergies. Occasionally two or more capable
firms lack necessary component for success in a particular competitive environment. The
joint ventures, which are commercial companies (children) created and operated for the
benefit of the co-owners (parents). The joint venture extends the supplier-consumer
relationship and has strategic advantages for both partners. There are two types of joint
ventures:
1. Global/ International Joint Ventures: An international joint venture is often described as
the joining together of two or more business partners from separate jurisdictions to exchange
resources, share risks and divide rewards from a joint enterprise. Usually, but not always, one
of the partners is physically located in the jurisdiction of the joint venture. For example:
Fujitsu a Laptop company joint ventures with Japan & Germany to make their product more
efficient and gain more market share than others.
2. Partial Joint Ventures: Sony is a partial joint ventures. Because it is not globally joint
ventures. It ventures with south Asian countries.
Strategic Alliances
A strategic alliance is an arrangement between two companies to undertake a mutually
beneficial project while each retains its independence. Strategic alliances are distinguished
from joint ventures because the companies involved do not take an equity position in one
another. A company may enter into a strategic alliance to expand into a new market, improve
its product line, or develop an edge over a competitor. The arrangement allows two
businesses to work toward a common goal that will benefit both. In some instances, strategic
alliances are synonymous with licensing agreements. The relationship may be short- or long-
term and the agreement may be formal or informal. For examples: Coca-Cola gives license to
other to sell their products with a royalty fee.
Consortia
Consortia can be defined as the large interlocking relationships between businesses of an
industry. A consortium is a group made up of two or more individuals, companies, or
governments that work together to achieving a common objective. Entities that participate in
a consortium pool resources but are otherwise only responsible for the obligations that are set
out in the consortium's agreement. Every entity that is under the consortium, therefore,
remains independent with regard to their normal business operations and has no say over
another member's operations that are not related to the consortium. In Japan such consortia
are known as keiretsus, in South Korea as chaebols.it is more like Cooperative Mode of
Business. It works like prorate basis. Their cooperative nature is growing in evidence as is
their market success. Consortiums are often found in the non-profit sector. Corporate, for-
profit consortiums also exist, but they are less prevalent. For example: Sony is a consortia
which started their production with 17 production line.