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Methods of pursuing strategy - Coggle Diagram
Methods of pursuing strategy
Organic growth
Develops from within the organisation
Champtions the existing unique competencies and resources of the organisation and developmentally builds upon them
By taking the existing capabilities, the organisation can pursue growth at a time of its own choosing, leading to the development of deeply embedded organisational knowledge and learning
One of the benefits is that it is not dependent upon a third party
Can take a long time to achieve
Dependent upon having the required unique competencies and resources or being able to achieve them internally
Time may be an issue in competitive environments
Mergers & Acqusitions
Offer an organisation the chance to increase its capabilities, its resources and competencies without having to develop them for itself
Can occur between complementary organisations or where industries are converging to extend the organisation in terms of products or markets
Can occur between competition organisations and in such a case M&A act to consolidate industry and therefore have an impact on the competitive environment and alter Porters Fie Forces
This may allow the new organisation raise prices or bargain for lower prices with suppliers
Consolidation can increase efficiency and decrease costs but also leads to rationalisation and redundancies
Strategic alliances
Collaboration among organisations ranging from firms to intermediaries
Several types of alliance are possible
Ad hoc partnership formed to solve a specific problem
Complex alliances
Joint ventures - cooperating firms create a legally interdependent firm in which they invest and form which they share any profits that are created
Occur in many ways, some involve organisations taking equity stakes but without the intention of a full merger
Other alliances do not involve an exchange of equity and are often looser alliances based on shared trust and contracts
Allances may form because organisations complementary products or services to the same client group
Organisations may complement each other in terms of their strengths and weaknesses and work together to combine their strengths
Organisations may work together to achieve economies of sale they could not achieve alone