CORPORATE LEVEL
STRATEGY
Corporate level strategy to identify strategies
that corporations or organizations decide to pursue for the benefit of the
whole organization.
The various corporate level strategies will be discussed under the
following:
ii) Secondary level
strategies
The Expansion Strategy
The strategy basically is to grow and
increase its operations through the existing activities. In other words, the
measure is to increase the volume of the existing operations.
No new product will be introduced and the
final measure of an expansion strategy is the volume increase of its current
activities is to be the same as that of the previous year.
For example:
–
Supermarkets
(Giant, Tesco)
–
Petrol
stations (Petronas, Shell)
–
Fast
food chain outlets (Kentucky Fried Chicken, Secret Recipe)
The integration strategy
Integration strategy is to seek control of
its operations.
Control here refers to the activities along
the supply chain right from the raw material production until the purchase of
the final product by the ultimate consumer.
For example:
–
A
furniture manufacturer would buy the sawn timber as its raw material and
subject them to a series of processes to finally be assembled into a furniture
form (dining set).
The Diversification Strategy
Diversification
is basically increasing the number of outputs produced or services rendered. Thus,
a company wanting to diversify is looking at how to increase the variety of
activities in its present operations.
There are four
decisions that come under this category:
Concentric
diversification strategy is when a company would want to increase the variety
of its manufactured products that are related to its present operations.
–
Conglomerate
diversification strategy is
adding variety in a different or unrelated sector.
E.g. Sime Darby, YTL, Hong Leong Group
–
Horizontal
diversification strategy (term
quite rarely used) refers to a company having to diversify because of requests
by its regular clients. In
order for it to continue doing business with the regular clients, it is some what
obliged to meet the request.
–
Geographical
diversification strategy
is when a company goes into a new country for the first time to carry out its
current business activites. Although no new variety is added, the ‘new variety’
covers the new country as market
development strategy (functional level strategy) rarely talks about going into
a new country.
–
Turnaround
Strategies
These are strategies that are grouped
together as they all represent actions commonly used in corporations facing
some difficulties in their operations as reflected in their negative
performance indicators. Such indicators are like negative growth rate, rate of
return.
–
Liquidation
strategy is the most extreme
type of turnaround strategy. If retrenchment and divestiture are not able to
turnaround the company, then liquidation or selling of the whole company is the
only alternative left.
iii) Tactical
level strategy
Joint venture
Setting up a new
company with equity participation of all the parties involved (can be more than
two).
Merger
The
establishment of a new company while the two or more names of those involved in
the merger will not exist anymore.
E.g. Bank
Bumiputera + Commercial Bank = Bumiputera Commerce …. + Southern Bank = CIMB
E.g. Golden
Hope+Sime Darby+H&C = Sime Plantation
Acquisition/takeover
Buying the
majority equity of a company
Strategic
alliances
Alliances or Understanding
between 2 or more party
Licensing/
franchising
- Seek permission
to run a business based on that of the licensor
- E.g. KFC, McD,
Secret Recipe, SmartReaders, Menara Opticals, Levis
CORPORATE LEVEL
STRATEGY
Corporate level strategy to identify strategies
that corporations or organizations decide to pursue for the benefit of the
whole organization.
The various corporate level strategies will be discussed under the
following:
ii) Secondary level
strategies
The Expansion Strategy
The strategy basically is to grow and
increase its operations through the existing activities. In other words, the
measure is to increase the volume of the existing operations.
No new product will be introduced and the
final measure of an expansion strategy is the volume increase of its current
activities is to be the same as that of the previous year.
For example:
–
Supermarkets
(Giant, Tesco)
–
Petrol
stations (Petronas, Shell)
–
Fast
food chain outlets (Kentucky Fried Chicken, Secret Recipe)
The integration strategy
Integration strategy is to seek control of
its operations.
Control here refers to the activities along
the supply chain right from the raw material production until the purchase of
the final product by the ultimate consumer.
For example:
–
A
furniture manufacturer would buy the sawn timber as its raw material and
subject them to a series of processes to finally be assembled into a furniture
form (dining set).
The Diversification Strategy
Diversification
is basically increasing the number of outputs produced or services rendered. Thus,
a company wanting to diversify is looking at how to increase the variety of
activities in its present operations.
There are four
decisions that come under this category:
Concentric
diversification strategy is when a company would want to increase the variety
of its manufactured products that are related to its present operations.
–
Conglomerate
diversification strategy is
adding variety in a different or unrelated sector.
E.g. Sime Darby, YTL, Hong Leong Group
–
Horizontal
diversification strategy (term
quite rarely used) refers to a company having to diversify because of requests
by its regular clients. In
order for it to continue doing business with the regular clients, it is some what
obliged to meet the request.
–
Geographical
diversification strategy
is when a company goes into a new country for the first time to carry out its
current business activites. Although no new variety is added, the ‘new variety’
covers the new country as market
development strategy (functional level strategy) rarely talks about going into
a new country.
–
Turnaround
Strategies
These are strategies that are grouped
together as they all represent actions commonly used in corporations facing
some difficulties in their operations as reflected in their negative
performance indicators. Such indicators are like negative growth rate, rate of
return.
–
Liquidation
strategy is the most extreme
type of turnaround strategy. If retrenchment and divestiture are not able to
turnaround the company, then liquidation or selling of the whole company is the
only alternative left.
iii) Tactical
level strategy
Joint venture
Setting up a new
company with equity participation of all the parties involved (can be more than
two).
Merger
The
establishment of a new company while the two or more names of those involved in
the merger will not exist anymore.
E.g. Bank
Bumiputera + Commercial Bank = Bumiputera Commerce …. + Southern Bank = CIMB
E.g. Golden
Hope+Sime Darby+H&C = Sime Plantation
Acquisition/takeover
Buying the
majority equity of a company
Strategic
alliances
Alliances or Understanding
between 2 or more party
Licensing/
franchising
- Seek permission
to run a business based on that of the licensor
- E.g. KFC, McD,
Secret Recipe, SmartReaders, Menara Opticals, Levis
