Professional Documents
Culture Documents
Assignment
On
Grand Strategy
STABILITY STRATEGY
1. Concentration:
Example 1: FedEx
Fredrick Smith, an entrepreneur identified the opportunity and established
Federal Express (FedEx) in 1973. Smith operated flights exclusively for cargo
and offered home delivery and pick-up services. The business model was a big
hit and there was no looking back for the company. Looking at the success of
FedEx many other companies imitated the model. Thus FedEx concentrated on
the Courier industry in order to gain the competitive advantage over other players
in the market.
FedEx differentiates itself from other player based on its delivery process.
2. Market Development:
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Example 2: NIIT
NIIT, India’s leading information technology training institute is a good
example of a company followed the market development strategy. It started its
operation in 1982 when computer education was accessible only to engineers and
other science graduates. During 1982-1992, it focused on building awareness
about computer careers. NIIT had to change the mindset of the people to make
them consider computers as a career option. In 1992, it introduced the
“Bhavishya Jyoti Scholarship” for students who secured high marks in the
entrance test for its course. NIIT also entered into alliances with foreign
universities, these enabled students to get admission into foreign universities fir
degree courses at the end of a minimum 2 years of any NIIT course after 12 years
of schooling.
3. Product Development:
This process involves the modification of existing products or the creation of new
items in a related category. These products are marketed to current customers
through established channels.
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machines, industrial shutters, high quality steel, alloy castings and other related
products. TELCO sought of transform itself from truck manufacturer to an
automobile integrator so in early 1990s, TELCO’s chairman planned to develop a
small car i.e. Indica.
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GROWTH STRATEGY
1. Innovation:
Innovation involves the use of a new idea or method. A firm which brings out an
innovative product usually enjoys the ‘first mover’ advantage.
2. Horizontal Integration:
If a firm grows through acquiring one or more similar business which is operating
at the same stage of production-marketing chain, then the firm is said to be
following a strategy of horizontal integration. With these acquisitions, the firm
gets access to new markets and eliminates competitors
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Example 1: Global Green Company (GGC) acquired InterGarden Group
Thapar Group’s GGC acquired Belgium based InterGarden Group for €
50 million. The acquisition will give GGC a strong foothold in key European
Market.
GGC supplies gherkins, jalapenos and other preserved foods to retail and
other food service to customer in more than 23 countries and about 30 cities in
India.
Intergarden has processing factories in Belgium, Hungary, Turkey and
India. The company produces pickled products such as gherkins, silverskin,
cherries, red peppers, etc.
With this acquisition GGC has extended global footprints, giving
themselves better access to customer.
3. Vertical Integrations:
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Example 2: Chirag Din
Chirag Din is one of the leading brands of the country. It has its own
manufacturing unit and it sells the apparels through its own outlet.
Example 3: Disney
Disney owns companies mainly in the exhibition sector with TV channels
such as Disney Channel and ABC. It is a media institution owns companies in
only one sector of the industry (production, distribution or exhibition).
4. Diversification:
Example 3: ITC
ITC has diversified into a completely unrelated industry such as food,
apparels.
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RETRENCHMENT
1. Turnaround:
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By 1983, Chrysler offered 26 million shares, and its stock price rose from
$16 to $35 within weeks. Chrysler paid off its entire loan seven years before it
was due. Chrysler’s achievement showed that it had accomplished a turnaround.
2. Divestiture:
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Example 3: Divestitures in ITC Group
The divestiture of ITC Classic Finance by ITC group is one of the best
examples of divestiture. ITC Classic Finance was a loss-making company of ITC
Group. In order to get rid of loss-making company, the ITC group divested ITC
Classic Finance which subsequently got merged with ICICI.
3. Liquidation:
4. Bankruptcy:
Bankruptcy involves legal protection against creditors or others allowing the firm
to restructure its debt obligations or other payments, typically in a way that
temporarily increases cash flow. Such restructuring allows the firm time to
attempt a turnaround strategy
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reported was also three times higher than that reported in 1999, and was ranked as
South Korea’s largest ever corporate loss. In November 2000, the Korean
Government officially announced Daewoo’s and its assets were out on sale.
The reasons for Daewoo’s problem were Daewoo’s borrowings for its
expansion programs into risky and uncertain markets like Vietnam and its
decision to sell products at very low prices to gain market share, and
mismanagement and the corrupt governance practices adopted by Kim Woo
Choong, the founder of Daewoo Group.
Example 3: Ames
Ames was a chain of discount stores based out of Rocky Hill, Connecticut
in the United States. The chain went into bankruptcy in 2002.
Ames began in 1958 when two Connecticut brothers, Milton and Irving
Gilman, opened their first store in the Ames Worsted Textile Co. mill in
Southbridge, Massachusetts. -- was once the nation's sixth-largest discount
retailer with annual net sales of $2.2 billion. Before going out of business, Ames
operated 452 stores in 19 states, including the Northeast, Southeast, Midwest and
the District of Columbia.
The firm requested bankruptcy protection on August 20, 2001, and a year
later, on August 14, 2002, Ames Discount Stores announced it would close all
452 stores in the chain and wind down business.
Analysts generally believe that debt related to the acquisition of Hills
Department Stores caused the bankruptcy.
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COMBINATION
1. Joint Venture:
Joint Venture allows companies to own stake and play a role in the management
of the joint operation. Joint Venture require more direct investment and training,
management assistance and technology transfer.
2. Strategic Alliance:
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The tie-up will offer Indian students a ground to fulfill their dreams. The
alliance will provide an opportunity to overcome the existing shortfall of pilots in
the industry.
3. Consortia:
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Example 2: PICMG
The PCI Industrial Computer Manufacturers Group (PICMG) is a
consortium of over 450 companies that collaboratively develop open
specifications for high performance telecommunications and industrial computing
applications. The members of the consortium have a long history of developing
and using leading edge products for these industries.
It was founded in 1994 with an original mission to extend the PCI
standard. Its specifications include AdvancedTCA, AdvancedMC, and
CompactPCI.
Example 3: Airbus
Airbus Industries ("Airbus"), is one of the world's premier manufacturers
of civilian airliners. Airbus is owned by EADS (80%) and British Aerospace
(20%). EADS itself is a merger of Aérospatiale-Matra of France, Daimler-
Chrysler Aerospace of Germany, and Construcciones Aeronáuticas of Spain,
which were originally separate partners in the consortium, owning 37.9%, 37.9%,
and 4.2%, respectively. Airbus' status as a consortium means that profits accrue to
the partner companies’ representative to their interests. Work is allocated on the
same basis as profits.
7. Keiretsu
Example: Horizontal keiretsu are headed by major Japanese banks and include
Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa, and Dai-Ichi Kangyo Bank Groups.
8. Chaebols
Chaebol are South Korea's business conglomerates. The English word is a
transliteration of the Korean word 재벌, which is now romanized as Jaebeol. The
Korean word means business group, trust (as in Standard Oil Trust), or plutocrat,
and is often used the way "Big Business" is used in English.
Chaebol refers to the several dozen large, family-controlled Korean corporate
groups, assisted by government financing, which have played a major role in the
South Korean economy since the 1960s.
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Examples: Some have become well-known international brand names, such as
Samsung, Hyundai, and LG. Hyundai even played a role in the slight thawing of
relations between North and South Korea since 2000.
The top 10 largest chaebol in Korea in 2004 by total revenues were Samsung
($89.1 billion), Hyundai Motor Company ($57.2 billion), LG ($50.4 billion), SK
($46.4 billion), Hanjin ($16.2 billion), Hyundai Heavy Industries ($10.5 billion),
Lotte ($6.3 billion), Doosan ($4.5 billion), Hanhwa ($4.4 billion), and Kumho
Asiana or Kumho ($2.8 billion).
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