Specifies what businesses to be in and what to do with those businesses.

1. 1 Growth Strategy. Organization expands the number of markets served or products offered, either through its current business(es) or through new business(es).

   WAYS to grow:

   • Concentration: Growing by focusing on primary line of business and increasing the number of products offered or markets served in this primary business.

   • Vertical integration: Growing by gaining control of inputs or outputs or both.

     • Backward vertical integration—organization gains control of inputs by becoming its own supplier.

     • Forward vertical integration—organization gains control of outputs by becoming its own distributor.

   • Horizontal integration: Growing by combining with competitors.

   • Diversification: Growing by moving into a different industry.

     • Related diversification—different, but related, industries. “Strategic fit.”

     • Unrelated diversification—different and unrelated industries. “No strategic fit.”

2. 2 Stability Strategy. Organization continues—often during periods of uncertainty—to do what it is currently doing; to maintain things as they are.

   • Examples: continuing to serve the same clients by offering the same product or service, maintaining market share, and sustaining current business operations.

3. 3 Renewal Strategy. Organization is in trouble and needs to address declining performance.

   • Retrenchment strategy: Minor performance problems—need to stabilize operations, revitalize organizational resources and capabilities, and prepare organization to compete once again.

   • Turnaround strategy: More serious performance problems requiring more drastic action.

   

   In both renewal strategies, managers can (1) cut costs and (2) restructure organizational operations, but actions are more extensive in turnaround strategy.