Strategy Management

Strategy Formulation

Strategy Formulation is a strategic planning or long range-planning. This process is primarily analytical, not action oriented. This process involves scanning external and internal environmental factors, analysis of the strategic factors and generation, evaluation and selection of the best alternative strategy appropriate to the analysis.

Strategy Making in Three Modes • Entrepreneurial mode: – Strategy is formulated by one powerful individual – Focus is on opportunities rather than on problems

Strategy Making in Three Modes • Adaptive Mode: – It is characterized by reactive solutions to existing problems rather than a proactive search for new opportunities

Strategy Making in Three Modes • Planning Mode: – Analysts assume main responsibility for strategy formulation – Strategic planning includes both the proactive search for new opportunities and the reactive solution of existing problems

Kinds of Strategies • Corporate Level Strategies • Business Level Strategies

Corporate Level Strategies Kinds of Grand Strategies: • • • •

Stability Strategies Growth Strategies Retrenchment Strategies Combination Strategies

Stability Strategies The basic approach is ‘maintain present course: steady as it goes.’ In an effective stability strategy, companies will concentrate their resources where the company presently has or can rapidly develop a meaningful competitive advantage in the narrowest possible product-market scope consistent with the firm’s resources and market requirement's.

Types of Stability Strategies • Maintenance of Status Quo: – Firms adopting this strategy maintain the same level of operations – Small business firms desire satisfactory level of operations rather than growth

• Sustainable Growth: – Slow growth is more desired rather than maintenance of status quo – A sustainable growth strategy is more optimistic than the zero growth

Reasons for adopting Stability Strategies • Managers of small business desire a satisfactory level of profits rather than increased profits • Maintenance of status quo involves less risk than a more growth strategy • Change may upset the smooth operations and result in poor performance especially, if the firm considers itself successful with the present level of operations

Reasons for adopting Stability Strategies • Changing operations to pursue a more aggressive growth strategy usually requires an increased investment and managerial support. Firms, which cannot provide resources, may continue with the stability strategy • Some executives maintain with the stability strategy due to inertia for change

Reasons for adopting Stability Strategies • In some cases, firms are forced to adopt stability strategy, if they operate in a low-growth or nogrowth industry • Sometimes, firms may find that the cost of growth is more than the benefits of the same • Firms that dominate its industry through their superior size and competitive advantage may pursue stability to reduce their chances of being prosecuted for engaging in monopolistic practices

Reasons for adopting Stability Strategies • Smaller firms that concentrate on specialized products or services may choose stability because of their concern that growth will result in reduced quality and customer service

Stability Strategy of Indian Companies • Many companies in different industries have been forced to adopt stability strategy because of over capacity in the industries concerned. For Example: Steel Authority of India has adopted stability strategy because of over capacity in steel sector. Instead it has concentrated on increasing operational efficiency of its various plants rather than going for expansion. Others industries are ‘heavy commercial vehicle’, ‘coal industry’.

Stability Strategy of Indian Companies Example: Apart from over capacity, regulatory restrictions in some industries have forced companies to adopt stability strategy. Cigarette, liquor industries fall in this category because of strict control over capacity expansion. Both these industries require license under the provisions of Industries (Development and regulations) Act, 1951.

Stability Strategy of Indian Companies Example: Many companies in public sector have been forced to adopt stability strategy because of government’s policy of cutting the role of public sector and budgetary support for expansion of these companies has been withdrawn.

Growth Strategies A growth strategy is one that an enterprise pursues when it increases its level of objectives upward in significant increment, much higher than an exploration of its past achievement level. The most frequent increase indicating a growth strategy is to raise the market share and or sales objectives upward significantly.

Growth Strategies If we look at the corporate performance in the recent years, we find how the various organizations have grown both in terms of sales and profit as well as assets. For example: Reliance Industries Limited Nirma Limited

Growth Strategies • Organizations may select a growth strategy to increase their profits, sales and/ or market share. • They also pursue growth strategy to reduce cost of production per unit. • Growth Strategies involve a significant increase in performance objectives.

Growth Strategies • These strategies are adopted when firms remarkably broadens the scope of their customer groups, customer functions and alternative technologies either singly or in combination with each other.

Reasons for adopting Growth Strategies • In the long run, growth is necessary for the very survival of the organizations themselves, particularly when the environment is quite volatile • Growth offers many economies because of large scale operations • Growth Strategy is taken up because of managerial motivation to do so. Managers with high degree of achievement and recognition always prefer to grow

Reasons for adopting Growth Strategies • There are certain intangible advantages of growth. These may be in the form of increased prestige of the organization, satisfaction to employees and social benefits. Example: Growing companies have high level of prestige in the corporate world, e.g., Reliance, Infosys, Hindustan Unilever, etc.

Types of Growth / Expansion Strategies Concentric Expansion Strategy The first route of growth is to expand the present line of business. It can be aimed at market penetration, market development and / or product development.

Concentric Expansion Strategy • Market Penetration: The organization tries to capture market share in the existing product and aims at expanding its business at a rate higher than the industry growth. • Eg. :Reliance has captured substantial market share in textile yarn and intermediaries • Eg. : ITC has captured substantial market share in cigarettes.

Concentric Expansion Strategy • Market Development: Attempt is made to increase sales by developing new markets either geography-wise or segment-wise. • For eg. Many companies which find that the urban market is saturated and there is little scope for expansion, opt for developing new market in rural areas. Some of the companies which have made keen attempt to develop rural market are HUL (personal products), Colgate (oral care products), LG (TV), Videocon (Consumer durables), etc.

Concentric Expansion Strategy • Product Development: efforts are attempted at to achieve growth through product innovation so as to penetrate in new segment. • For eg. SAMSUNG (TV) may offer slim line TV, Plasma TV, etc.

Benefits of Concentric Expansion Strategy • A firm that is familiar with an industry would naturally like to invest more in known business rather than unknown ones. Eg. Bajaj Auto • It involves minimal organizational changes • It enables the firm to master one or a few businesses and enable it to specialize by gaining an in depth knowledge of these businesses

Benefits of Concentric Expansion Strategy • Managers face fewer problems when dealing with known situations • Past experience is valuable as it is replicable

Limitations of Concentric Expansion Strategy “Putting all one’s eggs in one basket has its own problems” • Concentration strategies are heavily dependent on the industry • Factors like product obsolescence, fickleness of markets, and emergence of newer technologies are threats to concentrated firms

Limitations of Concentric Expansion Strategy • Concentration strategies may result in doing too much of a known thing. This may create an organizational inertia; managers may not be able to sustain interest and find the work less challenging and less stimulating

Limitations of Concentric Expansion Strategy • Concentration strategies may lead to cash flow problems that may pose a dilemma before a firm. Large cash inflows are required for building up assets while the business are growing. But when these businesses mature, firms often face a cash surplus with little scope for investing in the present businesses.

Types of Growth / Expansion Strategies Integration Strategy When firms use their existing base to expand in the direction of their raw materials or the ultimate consumers, or, alternatively they acquire complimentary or adjacent businesses, integration takes place. Integration basically means combining activities related to the present activity of a firm.

Reason For Adopting Integration Strategy • Transaction cost economics – ‘make or buy’ decision (move up the value chain) – ‘make it sell or sell’ (move down the value chain)

Types of Integration Strategy • Vertical Integration • Horizontal Integration

Vertical Integration When an organization starts making new products that serve its own needs, vertical integration takes place. Any new activity undertaken with the purpose of either supplying inputs (such as raw materials) or serving as a customer for outputs (such as, marketing of firm’s product) is vertical integration

Types of Vertical Integration • Backward Integration: retreating to the source of raw materials • Forward Integration: moves the organization nearer to the ultimate customer

Vertical Integration at Reliance Industries • Reliance started its business with textiles and went for backward integration to produce PFY and PSF, critical raw materials for textiles, PTA and MEG-raw materials for PSF and PFY, paraxylene -raw materials for PTA and MEG, and finally naphtha for producing paraxylene.

Vertical Integration at Reliance Industries • NaphthaParaxylenePTA + MEG PSf(fibres) and PFY yarns Textiles

Vertical Integration at Modern Group • Expansion strategies at Modern Group, consisting of five companies having a combined turnover of Rs.115 crore in 1989, involved diversification in the form of backward and forward integration. – Forward integration took place at Modern Suiting when it diversified into worsted suiting. With an investment of Rs.7 crore, it acquired sulzer looms, sophisticated fabric processing facilities and other sophisticated equipments to manufacture a premium terry wool suiting with the brand name ‘Amadeus’.

Vertical Integration at Modern Group – Backward integration at Modern Woolens involved a collaboration with Schild of Switzerland for wool processing, combing, and woolen tops which are necessary for the production of woolen textiles. In this manner, a number of backward and forward linkages were being attempted within the Modern Group with the objective of raising the turnover to Rs.250 crore by 1992.

Horizontal Integration • When an organization takes up the same type of products at the same level of production or marketing process, it is said to follow a strategy of horizontal integration – For Eg.: When a luggage company takes over its rival luggage company

• Horizontal Integration strategy may be frequently adopted with a view to expand geographically by buying a competitor’s business, to increase the market share or to benefit from economies of scale.

Horizontal Integration • Solidaire India Ltd. is a prominent manufacturer of TVs and has a sizeable presence in the market in southern India. It started with the name of Hi Beam Electronics Ltd. in 1974. Subsequently, this unit was merged with two other units to form a consortium called TriStar Electronics. In 1978, the brand name Solidaire was adopted. In this manner the growth strategy of the company started with Horizontal Integration.

Horizontal Integration • Takeover of Neyveli Ceramics and Refractories Ltd. (Neycer) by Spartek Ceramics India Ltd. in the early 1990s. Both the companies were in sanitary ware and tile production. By acquiring Neycer, Spartek became the largest ceramic tile manufacturer in the country.

Types of Growth / Expansion Strategies Expansion through Diversification: Diversification is the process of entry into a business which is new to an organization either marketwise or technology wise or both. Diversification may involve internal or external, related or unrelated, horizontal or vertical, and active or passive dimensions------ either singly or collectively.

Diversification Strategy Eg.: “Kesoram Cotton Mills” into textiles, cellophane paper, firebricks, cast-iron pipes, and cement. “ITC Ltd.” (a cigarette major) into hotel, paper and packaging; edible oils,etc.

Types of Diversification Strategy • • • •

Horizontal Integration Vertical Integration Concentric Diversification Conglomerate Diversification

Concentric Diversification When an organization takes up an activity in such a manner that it is related to the existing business definition of one or more of a firm’s business, either in terms of customer groups, customer functions or alternative technologies, it is called Concentric Diversification.

Types of Concentric Diversification • Marketing-related Concentric Diversification: When a similar type of product is offered with the help of unrelated technology – For example: a company in the sewing machine business diversifies into kitchenware and household appliances, which are sold to housewives through a chain of retail stores.

Types of Concentric Diversification • Technology-related Concentric Diversification: When a new type of product or service is provided with the help of related technology – For example, a leasing firm offering hire-purchase services to institutional customers also starts consumer financing for the purchase of durables to individual customers.

Types of Concentric Diversification • Marketing-and-Technology-related Concentric Diversification: when a similar type of product or service is provided with the help of related technology – for example a raincoat manufacturer makes other rubber-based items, such as, waterproof shoes and rubber gloves, sold through the same retail outlets.

Conglomerate Diversification • When an organization adopts a strategy which requires taking up those activities which are unrelated to the existing business definition of one or more of its business, either in terms of their respective customer groups, customer functions or alternative technologies

Conglomerate Diversification • For Example: – ITC, a cigarette company diversifying into the hotel industry – Essar Group in shipping, marine construction, oil support services, and iron and steel – Shriram Fibres Ltd. In nylon industrial yarn, synthetic industrial fabrics, nylon tyre cords, fluorochemicals, fluorocarbon refrigerant gases, ball and needle bearings, auto electrical, hire-purchase and leasing, and financial services

Reasons for adopting Diversification Strategies • To minimize the risk by spreading it over several businesses • To capitalize on organizational strengths or minimize weaknesses • Diversification may be the only way out if growth in existing business is blocked due to environmental and regulatory factors

Managing Diversification at the Munjal Group In 1978, the Munjal Group of Ludhiana, Punjab established manufacturers of Hero Bicycleplanned to diversify into yarn manufacture. The reasons for diversification were: • 95 % of acrylic yarn used in India comes to Ludhiana • A lot of cotton grows in Punjab and could be used in manufacturing yarn • Group philosophy to involve itself in providing basic inputs to industry • In the seventies, yarn was a profitable sector

Managing Diversification at the Munjal Group But the company (Hero Fibres) faced many problems like a downsizing in the cotton and acrylic yarn market, differing work ethos in the yarn industry as compared to that in the light engineering industry, and a high rate of turnover. The problems were resolved by adopting a plan under which the following steps were taken:

Managing Diversification at the Munjal Group 1. Close involvement of the top management and personnel from existing companies took place 2. Avoiding employment of groups of workers to prevent the formulation of a coterie, the orientation and training of managers and workers, and providing jobs to family members of workers to make migration of labour difficult This case of Hero Fibres illustrates that despite strong reasons for diversification, the actual implementation of plans is crucial to the success of diversification strategies

Types of Growth / Expansion Strategies Expansion through Cooperation: This can be done through simultaneous competition and cooperation among rival firms for mutual benefit

Types of Cooperative Strategies • • • •

Mergers Takeovers (or Acquisitions) Joint Ventures Strategic Alliances

Merger Strategy A merger is a combination of two or more organizations in which one acquires the assets and liabilities of the other in exchange for shares or cash, or both the organizations are dissolved, and the assets and liabilities are combined and new stock is issued.

Merger Strategy Examples: • Polyolefin Industries with NOCIL • TVS Whirlpool Ltd. with Whirlpool of India Ltd. • Sandoz (India Ltd.) with Hindustan Ciba Geigy Ltd. • Nirma Detergents Ltd., Nirma Soaps and Detergents Ltd., and Shiva Soaps and Detergent Ltd. With Nirma Ltd.

Types of Mergers • Horizontal Mergers: Combination of firms engaged in the same business – Eg.: Footwear Company combines with another footwear company

• Vertical Mergers: Combination of different firms engaged in activities complimentary to each other like supply of raw materials, production of goods and marketing – Eg.: Footwear Company combines with a leather tannery or with a chain of shoe retail stores

Types of Mergers • Concentric merger: Combination of firms related to each other in terms of customer groups or customer functions or alternative technologies – Eg.: Footwear Company combines with a hosiery firm making socks or with a leather goods company making purses, handbags, and so on.

Types of Mergers • Conglomerate Merger: Combination of firms unrelated to each other in terms of customer groups or customer functions or alternative technologies – Eg.: Footwear Company combines with a pharmaceutical firm

Important Issues in Mergers • Strategic issues: It relate to the commonality of strategic interest between the buyer and seller firms. The strategic advantages and distinctive competencies of the merging firms have to be analyzed

Important Issues in Mergers • Financial issues: It relates to the valuation of the seller firm and the sources of financing for mergers to take place. Value may be assessed keeping in view the assets, market standing and opportunity, earnings potential, or stock value.

• Financial issues: The basic point is to arrive at a valuation model where the impact on the EPS of the merging firm is either positive or neutral – Eg. Where this took place successfully is the ‘Ranbaxy-Crosslands’ merger where there was a considerable appreciation of the EPS of the merged identity – E.g. Where it did not took place is the case of ‘Punjab National Bank – New Bank of India’ merger where the EPS of the merged entity became negative

Important Issues in Mergers • Managerial Issues: it relate to the problems of managing firms after the merger has taken place Usually, mergers are followed by the changes in staff, specially chief executives and top managers

Important Issues in Mergers • Legal issues in Merger: It relate to the provisions made in law for the purpose of mergers.

Acquisition or Takeover Strategy • Acquisition or Takeover is the attempt of one firm to acquire ownership or control over another firm against the wishes of the latter’s management. • But in practice it can be hostile or friendly

Controversies created by Acquisition or Takeover Strategy • Takeover attempt of Escorts and DCM by Swaraj Paul, a non resident Indian based at London, created lot of resentment in Indian Business scene in 1990s • Takeover of Raasi Cement by India Cement have generated lot of tension

Acquisition or Takeover Strategy • Friendly Takeover: Tata Tea’s takeover of Consolidated Coffee (a grower of coffee beans) and Asian Coffee (a Processor)

Joint Venture Strategy • Joint Ventures are partnerships in which two or more firms carry out a specific project or corporate in a selected area of business. • It can be temporary, disbanding after the project is finished, or long-term. • Ownership of the firms remains unchanged

Joint Venture Strategy “Even a successful joint venture may not last forever. Nor does the collapse of a joint venture always imply failure. Actually, corporate partnerships are formed for specific and time bound objectives which, once achieved, leave little reason for the alliance to be continued. Joint Ventures that last longer do so because their objectives have been redesigned”.

Strategic Issues in Joint Venture Strategy • It offers the advantages of achieving objectives mutually by the participating firms • Eliminating, controlling, or reducing competition may be of strategic importance • An increase in market share • If technology is a critical variable in strategy, then Joint Ventures with foreign companies can be feasible

Examples of Joint Venture • IBM World Trade Corporation and Tata Industries Ltd. Created joint venture to form Tata Information Systems Ltd. The stated purpose was to make it India’s top information technology company • Cummins Engine Company and TELCO formed a joint venture to manufacture Telco Engines • Reliance Industries and Nynex Corporation • Tata Industries and Bell Canada • Ashok Leyland and Singapore Telecom

Strategic Alliances • Strategic Alliance is a combination of the efforts of two or more organizations to develop competitive advantage • In Strategic Alliance, two or more partners join hands together for certain specified objectives, generally, for certain specific period. When these objectives are achieved, partners terminate their alliance.

Joint Venture & Strategic Alliance • In Joint Venture, all partners bring their equity to establish Joint Venture while in Strategic Alliance, there is no contribution of equity from any partner. • A joint venture has a distinct identity and continues for longer time while a strategic alliance is of temporary nature and called off when its purpose is over.

Types of Strategic Alliance • • • • •

Technology Development Alliance Operations and Logistic Alliance Marketing, Sales and Service Alliance Single Country or Multi Country Alliance X and Y Alliance: In ‘X’ alliance, activities are divided among partners depending on the strengths of the partners. In ‘Y’ alliance, different partners have similar type of skills and they join together to reap the benefits of economies of scale.

Strategic Alliances in India ‘Oberoi group of Hotels’ has entered into Strategic Alliance with ‘Lufthansa Airlines’, ‘Hong Kong Bank’, and ‘Mercury Travels’. All these four organizations undertake promotional activities jointly. Any person who stays in Oberoi hotels gets bonus point. His bonus point increases if he travels by Lufthansa, uses Hong Kong Bank facilities, and engages Mercury Travel’s services. On the basis of his accumulated bonus points, he gets various prizes including free air ticket to New York

Types of Growth / Expansion Strategies • Internationalization Strategy: International Strategy is a type of expansion strategy that require firms to market their products or services beyond the domestic or national market. Firm would have to assess the international environment, evaluate its own capabilities, and devise strategies to enter foreign markets.

Types of International Strategies • International Strategy: Firms adopt International Strategy when they create value by transferring products and services to foreign markets where these products and services are not available. International firm, by maintaining a tight control over its overseas operations, offers standardized products and services in different countries with little or no differentiation Like IBM, Kellogg, Proctor & Gamble, Microsoft, etc adopt this strategy for the different countries they operate in.

Types of International Strategies • Multidomestic Strategy: Firm adopts a Multidomestic Strategy when they try to achieve a high level of local responsiveness by matching their products and services offerings to the national conditions operating in the countries they operate in. Multidomestic firm attempts to extensively customize their products and services according to the local conditions operating in the different countries. Like Coca Cola, McDonald, Pizza Hut, etc.

Types of International Strategies • Global strategy: The global firms tries to focus intensively on a low cost structure by leveraging their expertise in providing certain products and services, and concentrating the production of these standardized products and services at a few favourable locations around the world. These products and services are offered in an undifferentiated manner in all countries the global firm operate in, usually at competitive prices.

Types of International Strategies • Transnational Strategy: Firms adopt a Transnational strategy when they adopt a combined approach of low-cost and high local responsiveness simultaneously for their products and services.

Entry Modes • Export Entry Mode • Contractual Entry Mode – Licensing Mode – Franchising – Technical Agreements, Service Contracts

• Investment Entry Mode – Joint Venture – Independent Venture

Illustrative Example • Blue Dart Express, the courier company which started in 1994, tied up with Gelco International which was acquired by the US courier giant, Federal Express (FedEx). Later it entered into a financing arrangement with Schroeder Asia to part finance its air operating company, Blue Dart Aviation Ltd. Although FedEx has set up its own operations in India, Blue Dart continues as its associate

Illustrative Example • Archies Greetings and Gifts has collaboration with Gibson Greetings and American Greetings Corporation and has adopted the franchising route for expansion through which it operates in more than 120 Indian Cities and six countries abroad

Types of Growth / Expansion Strategies • Retrenchment Strategy: When a firm’s position is disappointing or, at the extreme, when its survival is at stake, then Retrenchment Strategy may be appropriate

Types of Retrenchment Strategies • Turnaround Strategy: If the firm chooses to focus on ways and means to reverse the process of decline, it adopts a turnaround Strategy

Approaches of Turnaround Strategy • Surgical Approach: It is mostly mechanic and requires tough attitude of the top executive. The executive issues direction for change, fire employees, close down divisions/plants, drops the product lines, replaces the machinery, issues production, marketing and finance controls, fixation of accountability for results. • This approach continues until the firm is turned around. Later the chief executives relaxes the tough environment and controls.

Approaches of Turnaround Strategy • Human Resources Development Approach: It involves– Chief Executive conducts a series of meetings, encourages the managers to be open, understand each other, understand the problems and diagnose the root cause for poor performance of the firm – He encourages the employees to suggest methods of turning around – He encourages the managers and employees to implement the solutions offered by them in a highly coordinated, committed team spirit

Rehabilitation package for Metal Box India Ltd. Metal Box India Ltd. a reputed company in the packaging industry, turned sick due to its wrong strategic move of diversifying into bearings manufacture in the early eighties. Eight of its nine units closed down as a results of which the BIFR and the ICICI formulated a rehabilitation package for the turnaround of the company

Rehabilitation package for Metal Box India Ltd. The BIFR-ICICI package covers the following: • Closure of three unprofitable units at Calcutta, Bombay and Cochin • Retrenchment of 3000 workers drawn from all the nine through compensation • A flat 20 percent cut in wages for the remaining workers • Write-off or conversion of outstanding loans from financial institutions and banks • Concessions and relief of up to 50 percent in sales, octroi, and turnover taxes, among others from the state governments • Introduction of a new promoter in place of the parent multinational Metal Box,plc, of UK which wanted to divest its 33.02 % shareholding

Types of Retrenchment Strategies • Captive Company strategy: This strategy is pursued when a firm sells the majority of its products to one customer (Wholesaler/retailer) who in turn perform some of the functions normally done by an independent firm. The customer, in this strategy, provides the product design to the captive manufacturer, who in turn produces according to the design and supplies the product to the customer. The firm need not involve the cost o product design and marketing.

Types of Retrenchment Strategies • Divestment Strategy: It involves the sale or liquidation of a portion of business, or a major division, profit centre or SBU. This strategy is usually adopted when the company is performing poorly or when it no longer fits the company’s strategic profile.

Divestment of TOMCO Tata group is a highly-diversified entity with a range of businesses under its fold. They identified their non core businesses for divestment. TOMCO was divested and sold to Hindustan Levers as soaps and detergents was not considered a core business for the Tatas.

Divestment of VST ‘VST Natural Products’, the food business company of ‘VST’, the tobacco firm, was divested to the ‘Global Green Company’ of the ‘Thapar group’. The reasons for divestment were: non availability of raw materials and inadequate working capital infusion. ‘VST’, the parent company, could not invest more as it was itself running under a loss.

Types of Retrenchment Strategies • Liquidation Strategies: This involves closing down a firm and selling its assets. It is considered as a last resort because it leads to serious consequences such as loss of employment for workers and other employees, termination of opportunities where a firm could pursue any future activities, and stigma of failure

Liquidation at Empress Mills On May 14, 1986, the Bombay High Court appointed a provisional liquidator in the petition for the voluntary liquidation of Empress Mills at Nagpur. Empress Mills was a 113-years-old mill owned by the Tatas. Behind the liquidation petition lay a host of reasons.

Liquidation at Empress Mills The major strategic cause for liquidation lies in the fact that for nearly 50 years, Empress Mills did not invest in modernization or keep pace with competition. In the wider context, the government policies did not prove favourable for the cotton textile industry. The management of the mill carried the blame for neglect and delayed action.

Liquidation at Empress Mills After Mr.Ratan Tata took over as chairman of the company in 1977, some efforts were made for modernization but these proved to be grossly insufficient. A proposal to merge the mill with other textile units of the Tatas could not materialize. Rationalization of the product-mix across these units also proved to be a non-starer owing to resistance offered by executives.

Liquidation at Empress Mills Efforts to negotiate a voluntary retirement scheme to cut down on the 6000 workersemployees strength also failed. Ultimately, the banks and financial institutions delayed the formulation of a rehabilitation package that could turn the mill around. The state government apparently did not provide the much needed political support that could have helped save the jobs of the workers.

Conclusion: Liquidation at Empress Mills The case of Empress Mills provides the important lesson that if timely strategic action is not taken and the situation is allowed to drift, even the largest business group of India, such as the Tatas, cannot save a company from inevitable death.

Combination Strategies • Combination Strategies are a mixture of stability, expansion or retrenchment strategies applied either simultaneously (at the same time in different businesses) or sequentially (at different times in the same business). • It would be difficult to find any organization that has survived and grown by adopting a single ‘pure’ strategy. The complexity of doing business demands that different strategies be adopted to suit the situational demands made upon the organization.

Company adopted Combination Strategies to deal with the complexity of the environment • The Tube Investments of India (TI), a Murugappa group company, has created strategic alliances in its three major businesses: tubes, cycles, and strips. In cycles, it has entered into regional outsourcing arrangements with the UP-based Avon (which we could term as co-opetition, as Avon is TI’s competitor in the cycle industry) and Hamilton Cycles in the western region. In steel strips, TI has entered into a manufacturing contract with Steel Tubes of India, Steel Authority of India, and the Jindals.

ASSIGNMENT for PGP-II Pick up several business magazines. Locate the corporate reports of different types of companies according to different factors such as industry, size or type. Analyze these reports to identify the types of corporate-level strategies the companies chosen by you are employing.