Analyzing the organizational environment and applying one or more of the strategy tools i.e. Critical Question Analysis, SWOT Analysis, Business Portfolio Analysis and the Porter’s Model; will give the managers a foundation on which to formulate organizational strategy.
The 4 common organizational strategies that evolve this way are:
Growth Strategy is adopted by management to increase the amount of businsess that an SBU is currently generating.
The growth strategy is generally applied to star SBUs or question mark SBUs who have the potential to become stars.
Management generally invests substantial amounts of money to implement this strategy and may even sacrifice short term profit to build long term gain.
Managers can also pursue a growth strategy by purchasing an SBU from another organization.
Stability is a strategy adopted by management to maintain orslightly improve the amount of business that an SBU is generating.
This strategy is generally applied to cash; cows, since these SBUs are already in an advantageous position.
Management must be careful,however, that in its pursuit of stability it does not turn cash cows into dogs.
Retrenchment is to defend or fortify.
Through Retrenchment strategy, mangement attempts to strengthen or protect the amount of business an SBU is generating.
This strategy is generally applied to cash cows or stars that are beginning to lose market share.
Divestiture is a strategy adopted to eliminate an SBU that is not generating a satisfactory amount of business and that has little hope of doing so in the near future.
In essence, the organization sells or closes down the SBU in question. This strategy is usually applied to SBUs that are dogs or question marks that have failed to increase market share but still require significant amounts of cash.
Do you need any inputs on creating strategies for your SBUs or your organization?
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