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Saturday, November 6, 2010

Assignment question is – “You have taken over as CEO of a Company and have formulated a Strategy document to improve its share value by 50% in 3 years. What steps would you follow in the implementation of the Strategy?” We have already discussed about 4 Main Areas of Strategic Alliances for Strategic Management & Business Policy.

There are three alternatives to improve the sales performance of a business unit, to fill the gap between actual sales and targeted sales:

Intensive Growth

Integrative Growth

Diversification Growth

Intensive Growth:

It refers to the process of identifying opportunities to achieve further growth within the company’s current business. To achieve intensive growth, the management should first evaluate the available opportunities to improve the performance of its existing current business.

Integrative Growth:

It refers to the process of identifying opportunities to develop or acquire business that are related to the company’s current business. More often, the business process have to be integrated for linear growth in the profits. The corporate plan may be designed to undertake backward, forward or horizontal integration within the industry.

Alternatively, if this company acquires some of it’s most profitably operating intermediaries such as wholesalers or retailers, it is forward integration. If the company legally takes over or acquires the business of any of its leading competitors, it is called horizontal integration.

Diversification Growth:

It refers to the process of identifying opportunities to develop or acquire business that are not related to the company’s current business. This makes sense when such opportunities outside the present business are identified with attractive returns and that industry has business strengths to be successful. In most cases, this is planned with new products that have technological or marketing synergies with existing business to cater to a different group of customers.

A printing press might shift over to offset printing with computerized content generation to appeal to higher-end customers and also add new application areas – or even sell stationery. Alternatively, the company might choose new business that has nothing to do with the current technology, products or markets.

TAPARIA, CEO of Rajashree comments followed a value enhancement strategy to capture the market dominated by 43 grades, where ACC and L & T were market leaders. He noticed that nobody thought of the market-positioning slot superior grade 53, which, despite high rice, leads to overall savings due to less consumption. He expected that a shift from 43 to 53 grades would require convincing, for which channel support and its participation in communication were essential.

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