Manag., July-2016-Q36
- Option : B
- Explanation : Generic Strategy Alternatives
Generic strategy alternatives refer to the strategy alternatives in broader terms. After the nature of business of the firm is defined, the next task is to focus on the type of strategic alternative, in general, the firm should pursue. The strategist seeks to identify the right alternative through questions such as:
> Should we get out of this business entirely? > Should we try to expand? There are four strategic alternatives for any business. They are: (a) to expand, (b) to wind up or retrench, (c) to stabilise, (d) to combine its operations pertaining to its products, markets, or functions. These are explained below:
(a) Expansion strategy can be adopted in the case of highly competitive and volatile industries, particularly, if they are in the introduction stage of product/service life cycle.
(b) Stability strategy is a better choice when the firm is doing well, the environment is relatively less volatile, and the product/service has reached the stability or maturity stage of the life cycle.
(c) Retrenchment strategy is the obvious choice when the firm is not doing well in terms of sales and revenue and finds greater returns elsewhere, or the produce/service is in the finishing stage of the product life cycle.
