1

A
PROJECT REPORT
ON

Business strategy
S.K. School of Business Management
Hemchandracharya North Gujarat University, Patan

Submitted To: - Ms. Jyoti Ghanchi

Submitted By: Minakshi Hirani (10)
Jalpesh Mehta (15)
Amit Prajapati (40)

Types of
strategy

1.Business strategy

Business strategy is primarily concerned with how a company will

approach the marketplace - where to play and how to win. Where
to play answers questions like, which customer segments will we
target, which geographies will we cover, and what products and
services will we bring to market. How to win answers questions
like, how will we position ourselves against our competitors, what
capabilities will we employ to differentiate us from the
competition, and what unique approaches will we apply to create
new markets.
Senior managers typically create business strategy. After it is
created, business architects play an important role in clarifying
the strategy, creating tighter alignment among different

strategies, and communicating the business strategy across and

down the organization in a clear and consistent fashion.
Executives are just beginning to bring advanced, highly credible
business architecture practices into the strategy discussions early
to provide tools, models, and facilitation that enable better
strategy development.

2.Operational strategy
Operational strategy is primarily concerned with accurately
translating the business strategy into a cohesive and actionable
implementation plan. This strategy answers the questions, which
capabilities need to be created or enhanced, what technologies
do we need, which processes need improvement, and do we have
the people we need.
The vast majority of business architects are currently working in
the operational strategy domain reaching up into the business
strategy domain for direction. They work from the middle out to
bring clarity and cohesiveness to the organizations operating
model typically working vertically within a single business unit
while resolving issues at the business unit boundaries. More
mature business architecture practices work in multiple verticals
or move from one vertical to another creating common business
architecture patterns.

3.Transformational strategy
Transformational strategy is seen less often as it represents the
wholesale transformation of an entire business or organization.
This type of strategy goes beyond typical business strategy in
that it requires radical and highly disruptive changes in people,

process, and technology. Few organizations go down this path

willingly.
Transformational strategy is generally the domain of Human
Resources, organizational development, and consultants. These
efforts are incredibly complex and can experience significant
benefit from applying business architecture discipline though it is
rare to see business architects playing a significant role here.

Different Types of Strategies in

Business
A small business starts out as a newcomer to its market, either
trying to take some market share from other competitors or to
carve out a new market in which it can dominate. In an existing
market, this requires a business owner to astutely assess market
conditions. Then a company will either try to differentiate from
competitors or achieve costs that are below those of competitors
to secure a competitive advantage. There are different strategies
a business owner can try to these goals.
1.Structuralist Strategies
You can build the strategy for your small business by arranging
operations so they fit existing market conditions.
For example,
you might structure the way you order products or materials using
existing supply chains, adopting the ways that suppliers already
send products to your competitors. This is a more rigid model,
which may not be desired if you want to experiment with how
best to create the infrastructure for your company.
2.Cost Leadership Strategies
Cost leadership means establishing a business network so that
your cost for producing a product is less than the product cost of
all competitors. You become a cost leader. However, this strategy
may not work in markets in which many consumers pay more for
a preferred brand.
For example,

consumers may prefer to pay hundreds of dollars for an iPhone,

rather than less for an inexpensive but less well-known brand.
3.Differentiation Strategies
There are ways to differentiate your product from competitors'
products so that your business can create a competitive
advantage. You can try to differentiate at least one characteristic
of a product that is known to be important to most buyers while
keeping the other characteristics of a product -- and their costs -controlled or in line with competitors' costs for those same
characteristics.

For example,
You also can determine whether you will reduce costs in your
primary activities, such as production or delivery of products, or in
your secondary activities, such as purchasing or human resources
functions.
4.Focused Approaches Strategies
There are focused approaches for either product differentiation or
cost leadership that target a smaller section of a market. This
must be a market big enough for companies to compete in
different price ranges.
For example,
This might be the difference between targeting a coffee shop to
attract customers who pay more than $3 for a cup of coffee, like
Starbucks, or in a budget range, like Dunkin' Donuts and
McDonald's. Some local coffee shop owners might believe they
are focused on lowering their costs below Starbucks in the higherpriced coffee market, but they won't be able to use the same
economy of scale to keep their costs down. However, they could

differentiate by giving their coffee shop a decidedly more local

feel than a Starbucks store can achieve.

Internal Growth and External

Growth Strategies

I. Internal Growth Strategies

A. Expansion:
Business expansion refers to raising the market share, sales
revenue and profit of the present product or services. The
business can be expanded through product development, market
development, expanding the line of product etc.

Expansion leads to better utilisation of the resources and to face

the competition efficiently. Business expansion provides
economics of large-scale operations.

Business can be expanded through:-

a. Market penetration strategy:

This strategy involves selling existing products to existing
markets. To penetrate and capture the market, a firm may cut
prices, improve distribution network, increase promotional
activities etc.
Examples:
RIL in textile yarn& intermediates,
Itc in cigarettes etc.
b. Market Development strategy:
This strategy involves extending existing products to new market.
This strategy aims at reaching new customer segments or
expansion into new geographic areas. Market development aims
to increase sales by capturing new market area.

Examples:
Mcd in Mahesana
c. Product Development strategy:

This strategy involves developing new products for existing

markets or for new markets. Product development means making
some modifications in the existing product to give value to the
customers for their purchase.
Examples:
ITC Bhadrachalam Paper mill devloped specially

B. Diversification Strategies:
Diversification is another form of internal growth strategy. The
purpose of diversification is to allow the company to enter new
lines of business that are different from current operations.
There are four types of diversification:
a) Vertical diversification
b) Horizontal diversification
c) Concentric diversification
d) Conglomerate diversification

A) Vertical Diversification
Vertical diversification is also called as vertical integration. In
vertical integration new products or services are added which are
complementary to the present product line or service. The
purpose of vertical diversification is to improve economic and
marketing ability of the firm. Vertical diversification includes:
i. Backward integration:

In backward integration, the company expands its business

activities in such a way that it moves backward of its present line
of business.

Example:
Despite of being the leaders in Textiles, to strengthen his Position,
Dhirubhai Ambani decided to integrate backwards and produce
fibres. PSF ( Polyester staple fiber)

ii. Forward integration:

In forward integration, the company expands its activities in such
a way that it moves ahead of its present line of business.
Example:
New Zealand based Natural health care products company
Comvita purchased its Hong Kong distributor Green Life Ltd. And
thus achieved forward integration by having access to greenlifes
retail stores, sales staff and in store promoters.

B) Horizontal Diversification:
Horizontal diversification involves addition of parallel products to
the existing product line. For example: A company, manufacturing
refrigerator may enter into manufacturing air conditioners. The
purpose of horizontal diversification is to expand market area and
to cut down competition.
Example:

Manufacturing firm with work shop

C) Concentric diversification:
When a firm diversifies into business, which is related with its
present business it is called concentric diversification. It is an
extreme form of horizontal diversification. For example: Car
dealer may start a finance company to finance hire purchase of
cars.

D) Conglomerate diversification:
When a firm diversifies into business, which is not related to its
existing business both in terms of marketing and technology it is
called conglomerate diversification.
For example,
It involves totally a new area of business. There is no relation
between the new product and the existing product.

II. External Growth Strategies:

1.Foreign Collaboration:
Collaboration means cooperation. It means coming together.
Collaboration is the act of working jointly. It is a process where
two people or organisation comes together for the achievement of
common goal.
With the advent of globalisation, foreign trade and foreign
investments are encouraged to increase the volume of trade. This
concept gave rise to foreign collaboration to acquire expertise in
the manufacturing process, gain technical know-how and market
or promote the products or services to the foreign countries.

For example,
Foreign collaboration is an agreement or contract between
companies or government of domestic country and foreign
country to achieve a common objective. Foreign collaboration is a
business structure formed by two or more parties for a specific
purpose.
It is collaboration where the domestic firm and the foreign firm
join hands together to achieve a common goal. Foreign
collaboration helps in removing financial, technological and
managerial gap in the developing countries. It is recognised as an
important supplement for development of the country and for
securing scientific and technical know-how.

2.New Markets
An effective idea for growth is entering new markets. If you have
access to more customers, you can sell more products. You can
target new markets by opening additional retail locations, adding

an online presence, selling internationally or reaching new types

of customers.

For example,
In each case, you have to define the segments of the new
markets you intend to target, identify the needs of the potential
customers as they relate to what you are selling, promote your
products to them and make it convenient for them to buy your
products.
2.1.Market Penetration
Market penetration is another of the four growth strategies of the
Product-Market Growth Matrix as defined by Ansoff. Market
penetration occurs when a company penetrates a market in which
current products already exist.
2.2.Market Development Strategy
Market development strategy entails expanding the potential
market through new users or new uses for a product. New users
can be defined as new geographic segments, new demographic
segments, new institutional segments, or new psychographic
segments. Another way to expand sales is through new uses for
the product.
3.New Products
Another way to increase business volume is to focus on your
products. If you have many different products for sale, you can
increase total sales. Sales growth is based on a broadening of
your product lines and on product diversification. Broadening a
line means you can offer related products to each customer.
Product diversification lets you offer different products to different
customers,
depending
on
customer
preferences
and
characteristics.

3.1New Product Development

In business and engineering, new product development (NPD) is
the complete process of bringing a new product to market. A
product is a set of benefits offered for exchange and can be
tangible (that is, something physical you can touch) or intangible
(like a service, experience, or belief).

3.2Acquisition
Sometimes the fastest way to gain new markets or diversify your
product range is to buy a company that competes with you or is
active in a related field. Company acquisition is risky because it
means making a large investment; the benefits depend on how
well you can integrate the new business into your own operations.
It can be an effective growth strategy if your acquisition target
occupies the markets into which you want to diversify.
3.3Merger
An equally risky but less costly growth strategy is a merger with a
related or competing business. Ideally, the merger takes place
between companies that bring equal value to the table and
results in a larger, more competitive business that has the
potential for improved performance. The lower financial cost of a
merger comes with a corresponding loss of control: You share
ownership with others after a merger.

3.4Partnership
A growth strategy based on entering into partnerships with
qualified companies brings with it the advantages of a merger or
acquisition without the high cost or loss of control. You might
partner with a foreign distributor to access the market where he is

based or partner with a company making accessories for your

own products. The partnership agreement specifies the areas
where you intend to cooperate,
For example,
In a promotional campaign or shared sales channels. While the
risks and costs are lower, partnership also means you have to
share the benefits.

4.Strategies with High Strategic Value

4.1People Strategies
Recruiting and hiring the best people is usually a Critical strategy
(because it forecloses the opportunity to hire someone else),
though some hires have greater potential to impact an
organization than others. For instance, hiring a new CEO will
likely be a Board of Directors most Critical strategy of the year;
hiring additional members of the leadership team might still be a
Critical strategy. Hiring a new payroll manager, however, at best
is more of a Cumulative strategy as the potential payoff of such
strategy is not nearly as high.
One common mistake of organizations is that often over-emphasis
resume or technical skills over interpersonal skills, character, and
general likeability. An organization will never be great if
employees dont like the other employees that work there.
In addition to hiring the best people, organizations should be
committed to developing their people (through mentoring,

training, education, delegation of good assignment, development

plans, etc.), doubly so in respect to their current and future
leaders and triply so in regards to a few hand-selected Critical
leaders.
Sometimes overlooked, though equally important to hiring the
best, is actually firing the worst performers in an organization.
Too often leaders put off having honest and frank conversations
with a few bad egg individuals. While people should be given
some chance to correct behavior, they need not be given many
chances. You cannot overestimate the damage one individual can
do to an organization. Even if they arent causing major
problems, they are taking a space that could be filled by a
problem-free contributor or even a star performer.
By identifying and progressively moving the weakest performers
out the organization, the organization strengthens its key assets
its people. Incidentally, this is why governments are totally
inefficient, instead of firing people that should be fired, they give
them jobs and pensions.
While the following statements border on flippancy, Mitt Romneys
quote is actually part of the reason he is an effective executive
leader: I like being able to fire people who provide services to
me You know, if someone doesnt give me a good service that I
need, I want to say, Im going to go get someone else to provide
that service to me.

4.2Managing Resources Strategies

Critical or Cumulative strategies usually involve obtaining,
preserving, and deploying resources effectively. Obtaining
additional resources is usually an important strategy, which is
why college president and politicians must be excellent fundraisers. In addition, resources must be obtained regardless of
whether they come from within (budget and head count
allocations) or without (grants, revenue, contributions) the

organization. The failure to obtain resources can lead to disaster

or stagnation within an organization or department.