Organizational Strategies

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ESP Educational Class
Mrs.ET Sopheak
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Marketing Strategies

The organizations formulate its broad strategies including growth market strategies or consolidation strategies. With growth market strategies, the organization is attempting to gain more sale form an existing business line or penetrate new markets by developing a new product or service for existing customers. An organization implements a consolidation strategy is paring either the services it offers or the market it serves.

Broad strategies of organization strategy are classified in 2 such as growth market strategies and consolidation strategies. Growth Market Strategies are market penetrations, market development, product development, diversification and strategic Alliances. Consolidation Strategies are divestment, pruning, retrenchment and harvesting.

Growth Market Strategies

• Market penetrations: Market penetration strategy involves the sale of present products and service in present market. It is a useful approach when the current market is strong and is growing.
• Market development: Market development strategy involves initiating sale of existing product and service in new markets. This strategy is followed when existing markets are stagnant in term of growth and market share gains being difficult to achieve because of strong, dominant competitors.
• Product development: Product development involves providing new products to existing markets. Health system has a strong customer by offering new services or quality improvements. Organization pursue this strategy to meet changing customer needs, to take advantage of new technologies, or to meet the needs of some specific segment of the market. They are horizontal integration, vertical integration, backward integration and forward integration.
• Diversification: Diversification entails developing new products or services for new market. This strategy is followed when the growth in existing markets is slowing or when environmental changes related to social, technological, economic, regulatory or competitive in present markets.
• Strategic Alliances: Strategic alliances are formal arrangements with other companies to operate in a particular market. Strategic alliances can assume many forms such as joint- venture business (A new corporate entities in which both partners hold an equity position).

Consolidation Strategies

• Divestment: Divestment is selling off a business or product line. This strategy is often followed when an organization believes that there is a weak fit between its major core business and a particular product line. The lack of fit may be due to the management resources required or the result of a product whose market differs form the core market being pursed by the company. Moreover, divestment is the result of an unsuccessful diversification growth strategy.
• Pruning: Pruning occurs when a firm prunes or reduce the number of products or services offering to the market. The organization continues to serve the market, but it reduces set of products in the market.
• Retrenchment: Retrenchment strategy is followed when  a company decides to withdraw form certain market. This strategy might be considered the opposite of the market development growth strategy. Moreover, the organization follows this strategy when certain market areas do not perform well or meet overall corporate objectives.
• Harvesting: Harvesting strategy involves withdrawing support from a product until there is little or no market demand. In these instance, an organization continues to support a product, but a decreasing level. A business would follow this strategy as long as the service had some level of profitability or had a loyal customer, but the business want to generate additional revenues through purchases of other services.

Thanks,

Mrs.ET Sopheak

Lecturer in Economics