Generic and Grand Strategies


Many businesses explicitly and all implicitly adopt one or more generic strategies characterizing their competitive orientation in the marketplace. Low cost, differentiation, or focus strategies define the three fundamental options. Enlightened managers seek to create ways their firm possesses both low cost and differentiation competitive advantages as part of their overall generic strategy. They usually combine these capabilities with a comprehensive, general plan of major actions through which their firm intends to achieve its long-term objectives in a dynamic environment. Called the grand strategy, this statement of means indicates how the objectives are to be achieved. Although every grand strategy is, in fact, a unique package of long-term strategies, some basic approaches can be identified: concentration, market development, product development, innovation, horizontal integration, vertical integration, joint venture, strategic alliances, consortia, concentric diversification, conglomerate diversification, turnaround, divesture, and liquidation.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Facing the Harsh Facts


Many companies that have lost profits or market share have managers who are still waiting patiently for their business to “get back to normal.” Others are looking for government help for their declining market and profit positions. Neither of these approaches is a viable situation. What is needed is less wishful thinking and rhetoric and greater willingness to squarely face the true facts about their markets and competitive positions. The demand changes that have occurred in many markets are structural, not cyclical, and it is unrealistic to expect any kind of a dramatic recovery or turnaround that will restore demand to former levels.

It is extremely difficult for managers who have built their entire careers around specific products and technology to accept the fact that their former business base has now leveled out from prior peaks, or worse yet, become obsolete or irretrievably lost to new competitors or technology. Obviously, many old-line steel managers could not imagine today’s world of aluminum cans, plastic auto parts and bodies, or Japanese, Korean, and small regional producers who constantly “beat their pants off.” Nor could managers in the high flying semiconductor business foresee the situation where their markets have not only ceased to gallop ahead, but decline dramatically, and where foreign sources, including Brazil, Korea, and Taiwan, have captured the bulk of the remaining business. Unfortunately, these are the facts, and an equally discouraging set of forces applies in many other markets.

It is understandable that managers who have grown up and lived through the growth years in any of these industries find today’s conditions difficult to accept. But they must change their myopic or unrealistic views of their business so they can tackle the hard work required to regain a profitable competitive footing. Otherwise, their situations will not improve and will most likely deteriorate further.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Strategies for Weak Businesses


A firm in an also-ran or declining competitive position has four basic strategic options. If it can come up with the financial resources, it can launch an offensive turnaround strategy keyed either to low-cost or “new” differentiation themes, pouring enough money and talent into the effort to move up a notch or two in the industry rankings and become a respectable market contender within five years or so. It can employ a fortify-and defend strategy, using variations of its present strategy and fighting hard to keep sales, market share, profitability, and competitive position at current levels. It can opt for an immediate abandonment strategy and get out of the business, either by selling out to another firm or by closing down operations if a buyer cannot be found. Or it can employ a harvest strategy, keeping reinvestment to a bare-bones minimum and taking actions to maximize short-term cash flows in preparation for an orderly market exit. The gist of the first three options is self-explanatory. The fourth merits more discussion.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Reproduction of Change Agents


A large force of change agents can quickly bring in not only many innovations but also a culture of innovation. A number of companies that successfully attempted turnaround from sickness showed how this can be done.

 

One strategy for creating numerous change agents is to identify those with fire in their belly, give them training and exposure, and empower them to innovate. Another strategy is to shock the stolid into the recognition of the need for innovations and changes, provide them with a vision of change, and provide opportunities to them to contribute innovative ideas and actions. When orchestrated, the two strategies may give excellent results in terms of yielding not only numerous innovations but also an innovationist organizational culture.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight

Recovery of Loss-making Companies


A surprising number of large companies have one or more subsidiaries making losses at any time. The number of private companies which fail is further ample proof of loss-making businesses. One response is a desire to sell the loss-making business, which is really an attempt to walk away from a situation which is both a problem and an opportunity. Even if a buyer is found, the purchase price is likely to be lower than net asset value. If loss-making business is sold to the existing management interesting questions are raised. What will they do as owners of the business different from before? Why was this not done at the direction of the group previously? The opportunity is to turn the business into profit before considering selling it, because even if a sale makes sense, it will be easier to achieve and a much higher price should be obtained.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight

Turning Crises into Opportunities


People tend to deal with crises only in terms of their potential for disaster. And yet in a crises people are more on edge and agitated than they might otherwise be, and their vulnerability can be turned into a great advantage. My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact Asif J. Mir.

Weak Businesses


Some industrial units in developing countries have either been closed down or are going through a phase of poor performance and heading towards closing down. I have a turnaround program for an incremental impact on performance and thus turn the wheel in motion once again. My Consultancy–Asif J. Mir – Management Consultant–transforms organizations, makes them relevant, and suggests solutions for succes. For details please contact Asif J. Mir