Stability Strategies:
A company may choose to
continue its current operations without significant change in the
company's direction. A stability strategy is a corporate level
strategy,which means it is a strategy formed that determines the
overall scope and direction of the corporation as a whole, and
the way in which its various business operations work together
to achieve particular goals. This type of strategy is
particularly popular with small business owners that have found a
niche and are satisfied with their success and have no immediate
plans to grow their business. It is also popular with firms that are
in a mature state of development.A firm is said to be following
a stability strategy if it is satisfied with the same consumer groups
and maintaining the same market share, satisfied with incremental
improvements of functional performance and the management does not
want to take any risks that might be associated with expansion or
growth.
When is stability
strategy an appropriate strategy:
A) When an industry is
facing slow or no growth opportunities
B) When many small
business owners follow stability strategy indefinitely
C) When an organization
has just experienced a prolonged rapid period of growth and needs to
"cool down" in order for its resources and capabilities to
build up strength again.
D).When an organization
as reached its maturity stage and there is little or no room for
growth.
E) The firm’s growth
ambitions are very modest and it is content with incremental growth
Implementation of
Stability Strategy:
A) Not expanding
organization's level of operation
B) Should be a
short-run strategy.
Types of Stability
strategies:
- Proceed with caution: it is a timeout, an opportunity to rest before continuing a growth or retrenchment strategy. It may be used for a temporary period of time till the environmental situation changes especially if they have been growing too fast in previous years.it may be used by companies as a test strategy before going into a full fledged grand strategy.
- No change strategy: It is a decision to do nothing new, a choice to continue current operations and policies for the forseeable future.if when analysing an environment,it is seen that there are no new significant opportunities and threats or if they are no major strengths and weaknesses within the organization or they are no new competitors or threats of substitute goods, the organization may decide to do nothing.
- Profit Strategy: A profit strategy is a decision to do nothing new in a worsening situation but instead to act as the company's problems are only temporary and attempt to create profits even in a case of declining sales by primarily reducing investments and short term discretionary expenditures. Rather than announcing the company’s poor position to shareholders and other investors at large, top management may be tempted to follow this strategy. Obviously, the profit strategy is useful to get over a temporary difficulty, but if continued for long, it will lead to a serious deterioration in the company’s competitive position.
Recommended Reading
very informative post!! A week before I was preparing a presentation on the topic grand strategies adopted by firms to facilitate the business operations, I found a very good and an detailed information about it over here Grand Strategies .
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