STABILITY STRATEGY Another type of corporate strategy is stability strategy. In this strategy, a company plans to continue its current activities without substantial change in its direction. It is effective for short-term planning but may be detrimental if used for long-term planning. Small businesses can benefit using this strategy because they usually belong to a predictable environment. The common types of stability strategies are the following: 1. Pause or proceed-with-caution strategy 2. No-change strategy 3. Profit strategy Pause or Proceed-with-Caution Strategy In a pause or proceed-with-caution strategy, a company takes a temporary timeout from its major activities while observing changes in its external environment. It is a temporary strategy. In such a situation, a company does not make significant moves until the environment becomes favorable to them. This is the strategy adopted by most companies when there is a financial crackdown and a pessimistic economic outlook. The pause or proceed-with-caution strategy does not imply that a company will shut down its operations. It only temporarily stops major critical activities before shifting to the growth or retrenchment strategy. The company makes a deeper critical analysis of the environment before making any bold steps. This will enable the company to consolidate its resources for a competitive position before moving to the growth strategy. No-Change Strategy When an industry is not facing turbulent variables and a company is enjoying the fruits of its continued successful activities, it may adopt the no-change strategy as its corporate strategy. This indicates that the company, which has a dominant position in the market, will not take anything new; rather, it will continue implementing its current activities in the near future. The no-change strategy is effective when an industry is relatively stable with little expected growth, and consolidation is not expected to occur in the foreseeable future. However, businesses that are not maintaining successful operations may find this strategy detrimental. Scanned with CamScanner 84 Unit 2 | Strategy Formulation Profit Strategy As a corporate strategy, the profit strategy is a temporary plan for a company in its desire increase its profits when revenues are declining. It is a cost-cutting mechanism to address a dec; to in profit because of a decrease in sales. Companies may reduce their discretionary expenditure Perating expenses on advertising, research and development expenditures, and investments ;es, way of supporting the profits. in a profit strategy, a company usually has a disadvantaged position in an industry. The management blames their company's poor position in relation to the external factors of me environment such as the lack of government support, unethical competition, financial crackd or unfavorable market conditions. This strategy may not be beneficial for a company if adopted as long-term strategy.Competitive Position Strategies A competitive position strategy dictates the marketing strategy that is adopted by a company based on its competitive position in a market. The following are the broad classifications of this strategy: 1. Market leader strategy 2. Market challenger strategy 3 / 24 . . 3. Market follower strategy 4. Market nicher strategy Market Leader Strategies The considered market leader is the company that has the largest share in a market. The following are the variations of market leader strategies: 1. Expand total demand strategy 2. Protect market share strategy 3. Expand market share strategy Expand total demand strategy. In this strategy, the market leader expands the demand by developing new users or promoting new usage of a product. Protect market share strategy. The protect market share strategy is adopted by the market leader when it continuously innovates and fixes its weaknesses to avoid competitors from taking. opportunities. Expand market share strategy. It is the desire of the market leader to expand its market share when it offers superior-quality products, builds close customer relationships, and creates good service experiences with customers.Market Follower Strategies The market follower is a company that simply follows the market leader of challenger instead attacking them. It holds a market share lower than that of the market challenger. It can maintain market share by adopting the following strategies: 1. Follow closely strategy 2. Follow at a distance strategy Follow closely strategy. In this strategy, the market follower studies and learns from experiences of the market leader by improving the market leader's products and programs at a lowe cost. Follow at a distance strategy. The market follower in this strategy simply holds on to its current customers and tries to win new customers fairly as a way of avoiding retaliation from the mark challenger.PROGRAMS A strategic program is a plan embodying the different activities that must be accomplished . achieve the objectives of a company through the efficient utilization of its resources. Programs vato in content and structure across business and functional units. However, all programs are an re anchored on the general business objective (e.g., to increase the revenue by 50% this year). Each business and functional unit prepares a program distinct, to a certain extent, from the other units. At the business level, the setting of a program is spearheaded by a business level manager. It is participated by different functional level managers and other key personnel of a particular division At the functional level, the setting of a program is spearheaded by a functional level manager with the participation of important, lead employees of different subunits. For example, in the productich and operation functional unit, representatives may come separately from the purchasing, shipping and quality control units. The following steps are to be observed in the preparation of a program: 1. Define the business or functional objective. 2. Set the key performance indicator (KPI) 3. Identify the people involved, dates for program review, and completion time. 4. Prepare the program report. Define the Business or Functional Objective The first step in setting the business or functional level program is to define the objective. The objective must be vertically consistent with the corporate level objective. It must also be horizontally consistent with the objectives of other business and functional units. Figure 11.1 illustrates how the business and functional level objectives are aligned with the corporate objective, which is to increase the company's revenue by 50% over the past year's performance. In setting an objective, one must follow the SMART (specific, measurable, attainable, realistic, and time-bound) principle. Usually, the objective is expressed in quantifiable figures to be specific and measurable. In crafting the objective, the resources of a company should be considered for it to become realistic and attainable. Set the Key Performance Indicator The key performance indicator (KPI) is a quantifiable form of measurement used to determine how a company effectively achieves its objectives. The KPI varies among businesses, processes, and functional units. An effective KPI must be based on reliable data and should fit to the particular program, process, or activity being measured. Information collected from KPI results is commonly used in strategy evaluation and control. When using the KPI, it must be based on the objective of the business or functional unit concerned. The KPI varies considerably among companies and business and functional units because every company has its own unique operating processes, nature, and objectives. Most KPIs fall under the following broad classifications: 1. Increased customer value (e.g., number of complaints) 2. Improved production processes (e.g., average processing time)3. Reduced manufacturing cost (e.g., number of waste or spoilage) 4. Increased sales revenue (e.g., increase of new customers) Identify the People Involved, Dates for Program Review, and Completion Time The strategic program for a project, activity, or process requires people who are going to execute the strategic activities to pinpoint responsibilities and accountabilities. These people must have the necessary knowledge, skills, and competency to efficiently achieve the desired output. The program must also include the probable dates for conducting reviews about the progress of different activities. This will provide relevant information about the status of the process, project, or activity. The expected completion time of every process or activity, which matches the specified time in the objective, must also be spelled out in the program. Prepare the Program Report Every business and functional unit prepares its own program report at the end of a project, process, or activity. The report varies in structure and content, but it must not fail to include the objective of the program and the significant actions taken to realize it. The program report should include information about the expected business risk, the problems encountered, the hindrances and limitations faced, and some recommendations to facilitate the completion of the program and the achievement of the objective. After being finalized, a program is, then, communicated to all members of the business and functional units. In general, the language of the program must be clear, concise, and simple. It must lead to understanding, not doubts and confusion