Nathalie Escobar
Principles of Mgmt
Professor Moy
May 20, 2008
What are growth, stability, and defensive strategies, and when should a company use each of
them?
The strategies of growth, stability, and defensive all fall under the category of corporate
strategies. Out of the three strategies, growth and defensive strategies contain subcategories.
Growth, stability and defensive strategies are used in different ways because one can bring either
positive or negative effects towards the company or an organization.
The first strategy is growth which is used when an organization tries to expand sales,
product lines, number of employees, or similar measures. In this case, growth is used by a
company or organization that wants to increase their profitability slowly. Growth also has
alternatives ways to expanding an organization by the use of substrategies. The substrategies of
growth are concentration, vertical integration, and diversification. In order to increase the
growth, the company can focus on expanding the sales of their products and services which is
called concentration. For example, the iphone from Apple is a popular new product on the
market. Another alternative the company can do is by moving into areas to where there was
previously a supplier or vendor, become directly involved, in other terms taking out the
“middleman.” For example, oil industries refine oil, distribute the fuel to company-owned retail
stations such as ExxonMobil, and sell it to the leading customers. Lastly of the substrategies is
diversification. It is used to broaden or add to what a company does. For example, Walt Disney
went from animated movies to making theme parks and vacation sites.
The second strategy is stability which is when an organization is satisfied with its
position and wants to maintain its present course. It is also known as the status quo strategy.
Stability is most likely to be safe and successful because it has no major changes and has slow
environment changes. However, in this case of growth wise, stability can be very slow and
steady. With stability, companies can use this strategy if they don’t want to take risks or make
any sudden plans of the organization.
Last of all, is the defensive strategy where a company is unsatisfied. This strategy is used
if a company has no other alternatives to overcome a crisis or problem. Defensive strategy also
has substrategies which are turnaround, divestiture and liquidation. Turnaround focuses on
changing course in order to reverse a negative trend. For example, Apple made a new product
called the MacBook Air which expected to be a really surprising product such as the iphone but
instead it became a turnaround. The second substrategy is called divestiture which is where the
company sells off or eliminates areas or products that are not doing well. For example is Bell
Atlantic, they had to divest their services as a phone provider because of past dilemmas.
Liquidation is the last substrategy which is where the company either sells or dissolves to end the
existence of a company. Before liquidation is established, the company must pay all creditors
and taxes to the best of their ability.
The three strategies of growth, stability, and defensive can bring a positive or negative
outcome for any company. These strategies are very risky to the company because it can make or
break their future. Companies should be able to plan everything first before applying the use of
strategies but these strategies can help as alternatives towards the direction of the company or
organization.