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Lecture’s topics What are the basic types of strategy
that an organisation can follow? What are Porter’s competitive strategies?
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What is strategy? Strategy is the way in which
the organisation will meet its goals.
It is the
outcome of the first two steps of the strategic management process.
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The Four Grand Strategies Growth strategy Stability strategy Retrenchment strategy Combination strategy
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The Four Grand Strategies A Growth strategy is a
strategy in which an organisation attempts to increase the
level of its operations.
This could be achieved through direct expansion, new product development, or by diversifying – merging with or acquiring other firms (a quick way to build market share).
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The Four Grand Strategies A Stability strategy is a
strategy in which an organisation continues to serve its
same market and customers while maintaining its market share.
This strategy is characterised by an absence of significant change.
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The Four Grand Strategies A Retrenchment strategy is a
strategy in which an organisation is reducing its size,
usually in an environment of decline.
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The Four Grand Strategies A Combination strategy is a
strategy in which an organisation simultaneously pursuits two or
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Porter’s Competitive Strategies
Cost-leadership is a strategy whereby a
company aims to compete on price rather than on,
say, advanced features or high levels of customer service.
Note: a low cost base will not in itself bring competitive advantage – consumers must see that the product or service offered represents value for money.
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Porter’s Competitive Strategies
A differentiation strategy consists of offering
a product or service that is perceived by consumers
to be unique or distinctive on a basis other than price.