Mansoor ul GhaniMBA

473-2014Strategies Used by Companies in Pakistan

Strategic Managementby

Dr. Faraz Aalam

Vertical Integration:Forward Integration:Forward Integration is a form of management control that involves companies in the

same supply chain belonging to one owner.

Example: Junaid Jamshed introduced J.

Horizontal Integration:Horizontal integration is a strategy where a company creates or acquires production units for outputs which are alike

Example: Uniliver bought Rafhan in 1998

Backward Integration:Backward integration refers to a company buying or internally producing parts of its supply chain.

Example: Adamjee Group introduced Adamjee Insurance for its own insurance.

Intensive Strategies:Market Penetration:A market penetration strategy involves focusing on selling your existing products or services into your existing markets to gain a higher market share.

Example: Market penetration in mobile industry. Lenovo, Huawei and other brands introduced their mobiles in Pakistan

Market Development: A market development strategy involves selling your existing products into new markets.

Example: Shan Masala explored new markets of Europe.

Product Development:Product development is the process of designing, creating and marketing new products or services to benefit customers.

Example: Pizza Hut introduced Tikka Flavor in Pakistan

Diversification Strategies:Related Diversification:A process that takes place when a business expands its activities into product lines that are similar to those it currently offers.

Example: Bank Islami bought KASBL.

Unrelated Diversification:Unrelated Diversification is a form of diversification when the business adds new or unrelated product lines and penetrates new markets

Example: Engro went into various diverse Products e.g. Power Sector, Food etc. Though its main business was fertilizers.

Defensive Strategies:Retrenchment:A strategy used by corporations to reduce the diversity or the overall size of the operations of the company.

Example: In times of crisis, difficult decisions must be made and, given the severity of the energy sector’s difficulties, measures such as the sacking of 4,000 employees at the KESC may be understandable, if somewhat regrettable.

Divestiture:Divestiture is when a company, government or other organization sells, shuts down or otherwise eliminates a division or operating unit.

Example: It is long since known that Unilever Pakistan, would follow the Hindustan Lever's way: divest the Dalda business. “Dawn”

Liquidation:Liquidation is the process by which a company (or part of a company) is brought to an end, and the assets and property of the company are redistributed

Example: Carvan East Fabrics Limited liquidated on 14/Sep/2015

Generic Strategies:Low Cost Leadership:Low Cost Leadership can be adopted by any company, and is usually employed where the product has few or no competitive advantage or where economies of scale are achievable with higher production volumes.

Example: Colgate toothpastes are focusing on low cost leadership.

Best Cost Leadership:Best Cost Strategy is giving customers more value for the money by emphasizing both low cost and upscale difference, the goal being to keep costs and prices lower than those of other providers of comparable quality and features.

Example: Suzuki provides with customer satisfaction ratings that rival those of much more expensive cars

Differentiation:

A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition.

Example: Ufone introduced Many Offers to retain its customers.

Low Cost Focus:A low cost focused strategy requires competing based on low price to target a narrow market.

Example: China Mobiles focuses rural population of Pakistan.

Best Cost Focus:A Best cost focused strategy requires competing based on best price to target a narrow market.

Example: Samsung focuses middle class population.

Achieving Strategies:Joint Venture:A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity.

Example: joint venture between the telecom operator and Tameer Microfinance Bank 

Cooperative Arrangement:A grant, as opposed to a cooperative agreement, is used whenever the awarding office anticipates no substantial programmatic involvement with the recipient during the performance of the activities.

Example: SSGC and USAID exchange internees.