Dimensions of grand strategies, (STRATEGY VARIATIONS)

1. Dimensions of grand strategies
(STRATEGY VARIATIONS)
• The four grand strategies are pure strategies and it is
possible to have a large variety of mixed strategies
• GLUECK has Proposed 4 dimensions along which grand
strategies could be defined.
1) Internal/External dimension
2) Related/Unrelated dimension
3) Horizontal/Vertical dimension
4) Active/Passive dimension

3. Internal/External Dimension
• Usually applies to expansion – sometimes apply to
retrenchment
• Independently (Internal) or In conjunction with other
parties(External) ?
• Internal Dimension
The internal dimension operates when an organization adopts
a strategy independent of any other entity
A firm can use this strategy throughout product life cycle
even though the main line is declining

4. Internal expansion through products and markets
Penetrate existing markets with existing products
Add new markets
Add new products
Add new products and new markets

5. External Dimension
• The external dimension operates when an organization adopts
a strategy in association with other entity
Internal and external combinations
• A firm may decide to cooperate with other firm/s in a
contractual agreement which allows each to remain
independent, but which leads to gains for both. In effect, firm
pursues both an internal (independent) and external
(cooperative ) strategy simultaneously
• Subcontracting, Cross licensing or technology sharing, R&D,
franchising
• E.g. 1. Nokia + Airtel 2. Laptop + Anti virus 3. Car + Tyre

6. • Joint venture strategies – Also called strategic alliances
• Spider web (series of joint ventures, joint bidding) - Oil firms
bid for drilling rights
• Go together-split (JV for specific project or length of time then
split) – Construction project (Design , build, peer review, VA)
• Successive integration (Begin with a relationship that is weak
and then develops several joint ventures and then lead to
merger )

7. Related/Unrelated Dimension
• These approaches are usually found with expansion of the
business definition either internally or externally.
• Related Dimension
The related dimension operates when an organization adopts a
strategy that is related to its existing business definition of one or
more of its businesses either in terms of their respective customer
groups, customer functions, or alternative technologies
E.g. Cricket bat maker – start making balls
Gear producer – start production of coupling

8. • Sales synergy
Many products having the same sales people, warehouses,
distribution channels and advertising
• Investment synergy
Many products having the same plant, inventories, R&D,
and machinery
• Operating synergy
Many products making possible a higher utilization of
facilities and personnel and spreading of overhead
• Management synergy
Management experience in handling problems in one
location or industry that helps to solve problems in another

9. Unrelated Dimension
• The unrelated approach is usually termed a
conglomerate diversification
• The unrelated dimension operates when an
organization adopts a strategy that is unrelated to its
existing business definition of one or more of its
businesses either in terms of their respective customer
groups, customer functions, or alternative
technologies

10. Horizontal/Vertical dimension
• Horizontal Dimension
The horizontal dimension operates when an organization adopts a
strategy which results in serving in additional customer groups and/or
satisfying other customer functions in such a way that they complement
the existing business definition of one or more of its businesses
• Vertical Dimension
The vertical dimension operates when an organization adopts a
strategy which results in the expansion or contraction of existing
business definition of one or more of its businesses in terms of
utilization of its alternative technologies

11. Horizontal Integration
• One example of a horizontally integrated company is
AT&T. AT&T is a telecommunications company that has
acquired other firms in that industry, such as T-Mobile
and BellSouth. While the firms operate in some of the
same areas, there are areas that AT&T did not operate in
until acquiring those companies. AT&T was able to
increase its market share by acquiring the customers of T-
Mobile and BellSouth.
• Facebook – Whatsapp

12. Backward vertical Integration
• Starbucks - chain of coffee shops.
• It has various suppliers and inputs -- it buys coffee beans to make coffee
• It backward vertically integrated when it bought a coffee farm and make
coffee from it
Forward vertical Integration
• If Intel acquires Dell, it is a forward integration because it is an
acquisition of manufacturer by a supplier
• If Dell acquires a distributor of computers such as BestBuy it will
be a forward integration too since it is an acquisition of a
distributor by a manufacturer

13. Active/Passive dimension
• The last dimension refers to management attitude and timing
with regard to pursuing its strategy alternatives
Active Dimension
The active dimension operates when an organization adopts an
offensive strategy in anticipation of environmental threats and
opportunities
An active or offensive strategy is one in which strategists act
before they are forced to react to environmental threats or
opportunities

14. Passive Dimension
• The passive dimension operates when an organization
adopts a defensive strategy as a reaction to
environmental threats and opportunities
• A passive or defensive strategy is one whose major
characteristics is that strategists react to
environmental pressures only when forced to do so by
circumstances

15. • In general, large and dominant firms will be effective
if they develop active strategic alternatives in their
major market segments
• Small firms will survive if they have passive
strategies concerning large firms major market and if
they have active strategies concerning market
segment which are ignored by the dominant firms and
which they can develop

16. • Being innovative- the first to market - Active approach to both
research and development ( Sometimes Firm strong in research but
weak in marketing products ) - Apple
• Being a fast second - Active in development but passive in research
(Gaps between them and innovators don’t become too large) –
Pharma Company, Samsung mobile – Apple
• Being an imitator- a slow third ( Emphasize applications engineering
based on product modifications to fit particular customer segments)
• Grows-to-sell-out Strategy – A good example of an active approach
to a sequential combination of expansion and retrenchment is known
as a grow to sell out strategy.
• E.g. Entrepreneur who plan from the start of their business to
expand. But when it get to the high growth rate apex of the products
life cycle, they will sell out to a larger firm

17. Possible strategy
• 32 strategies possible
• 4 (grand strategies ) * 4 (dimensions ) * 2 (types of each
dimension) = 32
• So we have 32 different types of mixed strategies
• 32 * 3 (dimensions of business definition) = 96
• They provide comprehensive view of the choice that
strategists have with regard to strategy formulation
• Of course, not all alternatives are feasible or even
possible
• The strategists have to narrow down their choice to a few
major strategic alternatives

18. The Major Types of Strategies
• The major types of strategies that organization usually adopt
1. Stability Strategies
a) No change strategies
b) Profit strategies
c) Pause/ proceed with caution strategy
2. Expansion Strategies
a) Expansion through concentration
b) Expansion through integration
c) Expansion through diversification
d) Expansion through cooperation
e) Expansion through internationalization

19. 3. Retrenchment Strategies
a) Turnaround strategies
b) Divestment strategies
c) Liquidation strategies
4. Combination Strategies
a) Simultaneous combination
b) Sequential combination
c) Combination of simultaneous and sequential strategies