Introduction
Business restructuring refers to the process of reorganizing or reshuffling the ownership, management, the operational, legal, administrative, technical, and financial structure of a company. The restructuring may stem from the need to enhance the profitability, competitiveness, and placement of the organization in a particular industry. Restructuring usually takes place before the sale, merger, and acquisition of the business but there are several other motives of restructuring. Competitive advantage and financial gains are the two most prominent causes of restructuring apart from mergers and acquisitions. Organizations have to plan in the context of restructuring and devise a grand strategic plan to identify and analyze various strategies relevant to the restructured entity. Restructuring involves the elimination of previous policies and development or implementation of new approaches in almost all aspects of business. This paper explains the grand strategy plan of ABC Company in the context of restructuring and the most appropriate business strategy for the company.
1. ABC Company and Purpose of Restructuring
2. Grand Strategy Plan
The grand strategy of the organization focuses the accomplishment of strategic objectives through the optimal utilization of resources. The strategy plan illustrates the alternatives, courses, methods, processes, and strategies that the business will use to achieve strategic and competitive advantage. The grand strategic plan focuses on perspectives like stability strategies, growth strategies, retrenchment strategies and combination strategies. The restructuring plan can comprise any details or information relevant to the intended changes or transformations in the organization. The grand strategy plan should identify and explain the various aspects of the elements in the strategy for achieving the primary objective.
a. Concentrated Growth
Concentrated growth involves profit maximization by focusing the development and growth of a particular product with a single principal technology in a single market. The concentrated growth strategy allows the organization to develop and enhance a unique product by utilizing all resources rather than allocating resources to various goods or services. ABC can focus the development and growth of a single retail segment in a particular market through a distinct technology. ABC can focus the development and growth of the fresh produce sector in the urban regions by utilizing techniques for organic food.
b. Market Development
The market growth or development strategy calls for the identification and development of new market segments for existing products. The market growth or development strategy focuses new market segments or target audiences for existing products rather than developing new products. The market development strategy can target new customers in new segments or existing consumers in current sectors. ABC Company can target new audiences in the fresh produce or home retail sectors by highlighting benefits to the target audience. For example, ABC may portray the benefits of organic food in the fresh produce segment to existing and new consumers with an inclination towards healthy food.
c. Product Development
The product development strategy entails the development of new products through a series of intricate processes, including concept, design, development, and marketing of goods. The product development strategy may involve new products or services or existing merchandise rebranded to achieve competitive advantage. Product development will enable ABC Company to launch new and existing products to compete with large multinational organizations and online retailers. The strategy will also allow the company to create differentiation through new goods or services for consumers. ABC Company can develop new products in various segments or rebrand existing products to compete with online retailers and large multinational corporations.
d. Innovation
Innovation is one of the most important strategies in the modern world, especially in the context of the grand strategy plan. Innovation comprises the development of new methods, processes, products, ideas, and services in the business to achieve strategic advantage or maximize profits. However, innovation involves the development of new and improved processes or solutions that allow organizations to meet rapidly changing consumer demands and unanticipated shifts in the market. Innovation calls for inventive, unique, and novel ideas in the context of products and services to enhance organizational performance. ABC Company can develop new goods or services through innovation and improve consumer experience or organizational efficiency. For example, the company can develop an application for customers to purchase their required items through smartphones rather than physically visiting the retail outlet. ABC Company should focus on different innovative developments with respect to mobile applications and online order delivery system to benefit the clients in the longer-run.
e. Horizontal Acquisition
Horizontal acquisition or Horizontal integration refers to the acquisition or merger of similar organizations in the same market sectors. The primary objective of the strategy is to enlarge market share or increase consumer offerings through the purchase of new products or services. Organizations merge or acquire other entities in the sector under horizontal integration to reduce competition and increase market share. ABC Company can acquire or merge with other retailers in the industry to increase market share and lessen the influence of competitors. The presence of gigantic firms depict that ABC should coordinate with small retailers in the market just to enjoy a suitable chunk of the market.
f. Vertical Acquisition
Vertical integration or vertical acquisition involves the purchase of a particular element of the supply chain. The organization acquires or obtains another entity in the supply chain to reduce costs and enhance the quality of products and services. For example, the manufacturer of a product can acquire the supplier of particular components of the product to reduce costs and improve the quality of goods. ABC Company can buy individual entities in the supply chain, including logistics or specific suppliers to lower costs and ensure product availability at all times. This lowering of cost would benefit them in the longer-run and help them attain their strategic objectives.
g. Concentric Diversification
Concentric diversification refers to the acquisition or development of new goods or services for increasing consumer base and market share. Concentric diversification involves the purchase of goods or services that are usually similar or related to the existing offerings of the organization. ABC Company can buy particular products to increase footfall in stores and improve consumer base through the attraction or interest of the new products. For example, the organization can acquire a particular product in the home goods or electronic products segments according to popularity or demand to improve the consumer base. Similarly, ABC Company can offer packaged discount with a combination of different products just to balance out the overall sale process.
h. Conglomerate Diversification
Conglomerate diversification is similar to the concentric diversification strategy except different goods or services. Concentric diversification involves the acquisition of goods similar to the existing products of the organization, but conglomerate diversification comprises the purchase of unique products. ABC Company can acquire new goods or services that are different from the existing merchandise or services of the organization. The acquisition of the new products will allow the company to attract new customers and increase the footfall and sales of the retail business.
i. Turnaround
Turnaround is one of the most prominent strategies in the context of the grand strategy and restructuring. Turnaround involves the refurbishing or overhaul of products, services, business process, and functions to reform the performance of the organization. Effective change management is one of the primary aspects of turnaround, and the ABC Company can overhaul or renovate particular aspects of the business to meet competitive challenges. The organization can renew or change business processes to compete in the market due to the rapidly increasing influence of online and large multinational retailers.
j. Divestiture
The divestiture strategy is the opposite of the integration or acquisition strategies and involves the sale or disposal of particular components or elements of the organization. Most organizations divest or sell unprofitable or unrelated segments of the business that adversely affect efficiency or corporate performance. ABC Company can sell particular subsidiaries, products, and services of the firm to enhance profitability and competitive advantage. For example, the company can sell or divest any non-retail components of the organization to concentrate efforts and resources towards the primary retail business. However, ABC Company should make sure that a particular component would not add value to their organization and this would result in selling of that component.
k. Liquidation
Liquidation is an unpleasant strategy that includes selling off the major assets of the organization and closing the entire business. Liquidation is one of the worst strategies an organization can experience mainly because of the fact that it results in the winding up of the business. It is the last retrenchment strategies and involves different reasons including failure of corporate structure, continuous losses, obsolete technology, poor management, etc. ABC Company might evaluate their strategy initially and then after continuous poor performance liquidation would remain the final resort of this organization. However, this retrenchment strategy would not occur in the overall life span of ABC Company because of the overall performance of this organization.
l. Bankruptcy
Bankruptcy is the final strategic move an organization can make in the corporate arena. Organizations that suffer from deep long-term debts and they do not have profitable resources to pay out these debts file bankruptcy. ABC Company is not currently in a position to opt for bankruptcy or liquidation strategy. The performance of this organization is of mediocre nature, but it is not that worst that their organization would opt for a bankruptcy strategies.
m. Joint Ventures
A joint venture is an important strategic option these days and it works well in a highly competitive environment. Through this strategy, companies can benefit with respect to each other’s strategic strengths. They can form a new venture and combine their strategic resources to attain a favorable result that would benefit both of them. ABC Company can develop a new brand and opt for progressive marketing strategy with respect to that particular brand. The can opt for the development skills and marketing skills of another organization and through the perspective of joint venturing they can focus on a particular brand.
n. Strategic Alliances
Strategic alliances are another objective based strategy that focuses on the completion of objectives while organizations maintain their individual entity. The strategic partners maintain coordination with each other and share the benefits with respect to a particular project. ABC Company can form a strategic alliance with major online stores like Amazon. This would help them towards the completion of a particular project with long-term success.
o. Consortia, Keiretsus, and Chaebols
Consortia, Keiretsus, and Chaebols include interlocking relationships and these relationships are required to enhance the coordination amongst the industry and to increase the bond between different industry players. This would also increase the training options for organizations through which they can attain beneficial results in the longer-run.
3. Different types of business strategies
Three business strategies are famous with respect to their implementation and benefits. However, these three strategic options vary with respect to their utilization. Low cost strategy as implied by the name focuses on the extremely low cost just to attain the market share. In a highly competitive market, keeping the cost low would ultimately result in higher profits. However, this strategy seems to be a tough strategy when working in a highly competitive market mainly because of the fact that other players would also opt for this strategy. Differentiation would focus on other attributes besides price. Customers most of the times prefer different and innovative items through which they feel different amongst the crowd. A new experience, an innovative approach, a different brand launch, etc. all comes under the scenario of differentiation. Certain organizations also focus on speed in terms of everything, and they consider that speed can also result in the attainment of competitive advantage. This would include perspectives like speed to market, speedy delivery, speed fulfillment of orders, etc.
4. Implementing and functional tactics
Planning a strategy is an important scenario, but implementing the strategy holds the key to success. Implementation of the strategy is one of the most critical factors an organization can experience. ABC Company while implementing this perspective would focus on scenarios like features of their strategies, common mistakes in their strategies, needs of the customers and finally implementation of their overall plan. The organization should consider the fact that theoretical models look fine, but practical approach plays an all-important role when it comes to the achievement of objectives.
References
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