Manag., July-2018 – Q54
- Option : C
- Explanation : Stability Strategies
The corporate strategy of stability is adopted by an organization when it attempts at the incremental improvement of its performance by marginally changing one or more of its businesses in terms of their respective customer groups, customer functions, and alternative technologies - either singly or collectively.
In order to understand how stability strategies work, here are three examples to illustrate how organizations could aim at stability in each of the three dimensions of customers groups, customer functions and alternative technologies respectively.
> A packaged tea company provides special service to its institutional buyers, apart from its consumer sales through market intermediaries, in order to encourage bulk buying and thus improve its marketing efficiency.
> A copier machine company provides better after-sales service to its existing customers to improve its company and product image and increase sales of accessories and consumables.
> A steel company modernizes its plant to improve efficiency and productivity.
Note that all three companies here, do not go beyond what they are doing presently; they serve the same markets with the present products using the existing technology. The strategies aim at stability by causing the companies to marginally improve their performance or, at least, letting them remain where they are in case they face a volatile environment and a highly competitive market.
The essence of stability strategies is, therefore, not doing anything but sustaining moderate growth in line with the existing trends.
Sometimes, strategists, like army commanders, think it better to retreat than to advance. It is in such situations that retrenchment is a feasible strategic alternative.
