This document discusses different types of diversification and business level strategies. It describes reasons for pursuing a diversification strategy, including better use of resources and increasing organizational capabilities. There are three main types of diversification: concentric, horizontal, and conglomerate. The document also outlines generic competitive strategies such as cost leadership, differentiation, and focus strategies. It discusses the risks and benefits of each strategy in relation to Porter's five forces. Finally, it covers strategic analysis tools like BCG matrix and the roles and styles of corporate parenting.

3. REASONS OF DIVERSIFICATION STRATEGY
 Better use of Resources:-Diversification
provides opportunities for better use of
resources by offering synergistic effect. Some
organization may have synergistic effects in any
area of business operations, namely
organization & management etc.
 Increasing organizational
capability:Diversification provides opportunity
for increasing organizational capability for
adapting to a rapidly changing & increasing

5. TYPES OF DIVERSIFICATION STRATEGY

21. BUSINESS LEVEL STRATEGY
 Strategy:- Increasingly important to a firm’s
success and concerned with making choices
among two or more alternatives.
 Choices dictated by
 External environment (O and T)
 Internal resources, capabilities and core competencies (S
and W)
 Business level-strategy:- Integrated and
coordinated set of commitments and actions the
firm uses to gain a competitive advantage by
exploiting core competencies in specific product
markets/industry.

23. BUSINESS LEVEL STRATEGY
Purpose:
 To create differences between position of a
firm and its competitors.
 Firm must make a deliberate choice to:-
 Perform activities differently
 Perform different activities
 Impacts how value chain activities will be
performed to create unique value.
 No strategy better than others.

25. BUSINESS LEVEL STRATEGY
 Two types of competitive advantage firms must
choose between
 Cost (Are our costs LOWER than rivals costs?)
 Uniqueness (Are we DIFFERENT than rivals?)
 Two types of ‘competitive scope’ firms must
choose between
 Broad target
 Narrow target

26. TYPES OF BUSINESS STRATEGY
1. Generic Competitive Strategies
2. Competitive Tactics

27. 1. GENERIC COMPETITIVE STRATEGIES
 Cost Leadership Strategy:-
1. Competitive advantage: The low-cost leader
and operates with margins greater than
competitors.
 Integrated set of actions designed to produce or
deliver goods or services with features that are
acceptable to customers at the lowest cost, relative
to competitors.
 Must have competitive levels of quality, service, and
other features and lowest overall costs.
 Continuously reduce the costs/ increase the
efficiency of value chain activities.

28. COST LEADERSHIP STRATEGY
2. In relationship to the 5 Forces:-
Existing Rivalry
-Rivals hesitate to compete on the basis of price
Bargaining Power of Buyers (Customers)
-Powerful buyers can force cost leader to reduce
prices up to a point
Bargaining Power of Suppliers
-Cost leaders can absorb suppliers price increases
Potential Entrants
-Efficiency can serve as a barrier to entry
Product Substitutes
-Can reduce prices when faced with substitutes

29. COST LEADERSHIP STRATEGY
3. Competitive Risks:-
Too much focus on cost reduction versus competitive
levels of differentiation
Competitors may learn how to successfully imitate a
cost leader’s strategy

30.  Differentiation
1. Competitive advantage:
Differentiation/uniqueness
 Integrated set of actions designed by a firm to
produce or deliver goods or services at an
acceptable cost that customers perceive as being
different/unique in ways that are important to them.
 Customized products– differentiating on as many
features as possible Can differentiate in many ways
and in many value chain areas.

31.  Differentiation
2. In relationship to the 5 Forces:-
 Existing Rivalry
-Customers are loyal purchasers of differentiated products
 Bargaining Power of Buyers (Customers)
-Uniqueness and loyalty reduces customer’s sensitivity to price
increases
 Bargaining Power of Suppliers
-Provide high quality components, driving up firm’s costs
 Cost may be passed on to customer
 Potential Entrants
-Substantial barriers (see above) and would require significant
resource investment
 Product Substitutes
-Customer loyalty effectively positions firm against product
substitutes

32.  Differentiation
3. Risks:-
Can charge too high of a price premium.
Over-differentiating.
Customer experience shows differentiation not
worth the cost.

33.  Focus strategies
 Competitive advantage:- Cost Leadership or
Differentiation
 An integrated set of actions taken to produce
goods or services that serve the needs of a
particular competitive segment.
 Attractive when:
 Firm lacks resources to compete in the broader market
 Firm may be able to more effectively serve a narrow
market segment than larger industry-wide competitors

34.  Focused Cost Leadership
 Competitive advantage: Low-cost
product/Services
 Competitive scope: Narrow target industry
segment
 Focused Differentiation
 Competitive advantage: Differentiated
product/services
 Competitive scope: Narrow target industry
segment

35. 2. COMPETITIVE TACTICS
DIFFERENCE BETWEEN STRATEGY &TACTICS

36. DIFFERENCE BETWEEN STRATEGY &TACTICS

37. FUNCTIONAL LEVEL STRATEGY

40. TYPES OF FUNCTIONAL LEVEL STRATEGY

56. BENEFITS OF STRATEGIC ANALYSIS
 Sustainability
 Funding
 Whole organization approach
 Sound goals
 External Focus
 Clear Expectations
 Effectiveness

59. PROCESS OF STRATEGIC CHOICE

66. TOOLS & TECHNIQUES OF STRATEGIC ANALYSIS
&CHOICE
 BCG Matrix (Boston’s Consultancy Model)
 GEC Matrix (General Electrical Company)
 Corporate Parenting Analysis

85. WHAT IS CORPORATE PARENTING ?
It views a corporation in terms of resources and
capabilities that can be used to build business unit
value as well as generate synergies across it units.
Generates corporate strategy by focusing on the
core competencies of the parent corporation and
the value created from the relationship between
the parent(originate) and its businesses.

86. ROLE OF CORPORATE PARENT
 The corporate parent is responsible for making
overarching(influencing every part of s/th)
corporate strategy decision.
 It is a parent which decide what business to
support, what acquisition to make, or whether
to form joint venture or alliance.
 It is a parent which determine the structure of
the corporation, defies(disobey) budgeting and
capital expenditure process and sets the tone
for corporate values and attitudes

87. STYLES OF CORPORATE PARENTING
There are basically three styles of corporate
parenting as follows:-
 Financial Control,
 Strategic Planning and,
 Strategic Control.