Bacha log, in this module we are going to see concentric and conglomerate, right, strategy.
Now, let’s see concentric, what is concentric diversification amounts to related
diversification.
Let’s take an example, provided a coaching class, it’s running coaching for school level, and
then they can use the same premises for commerce section, yes or no. The same classroom
can be utilised for even science coaching. Now what is this, an example of concentric
diversification, right. Investment is the same, same classroom, same benches can be utilised
for school section, same thing can be utilised for commerce section and same thing can be
utilised for science section. So, that’s an example of concentric diversification, related
diversification, right. So, you can see everywhere coaching going on in all the three different
sections, right. So, amount to what, related diversification. In concentric diversification new
business is linked to the existing through process, technology or marketing. Concentric

Bacha log, in this module let’s check Grand strategy or Directional strategy. Under which we
have stability strategy, expansion strategy, retrenchment strategy, combination strategy.
Right, you have done this in chapter 2, right. Again under expansion, we have intensification
and diversification, right and under retrenchment we have turnaround strategy.
Let’s check under intensification, we have market penetration, right and next is market
development new markets and lastly product development. Under diversification, first we
have vertically integrated, next is horizontally integrated, next concentric diversification,
next is conglomerate diversification. Under turnaround we have divestment, under
divestment we have liquidation. All these strategies, right, are under grand strategies or
directional strategies.
Let’s check stability strategy, expansion strategy that is expansion, retrench, a step back,
right or a pull back. Combo of all the above, is combination strategy, right. Under stability
strategy, it’s a basically safety oriented strategy.

Let’s check the next module, BCPS. That is Best cost provider strategy, very interesting. The
firms using best cost provider strategy either under price the rival brands with comparable
features or match the price of rivals and provide better features to build reputation for
delivering the best values. Hence, there is more value for money. Here the best example
would be Ziomee phones, right from China. Mi3, right, they started selling their cell phones
with Flipkart in India and last year in August, in few minutes they sold somewhere on
approximately 20000 handsets, right, under flash sales. So, what was that more value for
money. So, even this is a strategy, best cost provider. Even you can take example of Hyundai,
right. They give you more and better features as compared to others. But the pricing is more
or less, less as compared to other brands. This strategy aimed at

Kids, in this module we are going to see, differentiation strategies, right. Given by, Michael
Porter under Generic Strategies. Now, in this particular strategy, we take an example of
Honda. Now, Honda is a believer of given superior quality. So they practice or implement
differentiation strategies. Let’s check what it is. Different strategies offer different degree of
differentiation. Successful differentiation can mean greater product flexibility, greater
compatibility and lower costs, improved service, less maintenance, greater convenience or
more features. A product development is an example of strategy that offers advantages of
differentiation. This strategy should be pursued only after careful study of the market and
the buyer’s needs and preferences. A successful differentiation strategy allows a firm to
charge higher price for its product and to gain customer loyalty because consumers may
become strongly attached to the differentiation features. Special features that differentiate
one’s product can include superior service, better spare parts availability, engineering
design, product performance, useful life or ease of use. A risk of pursuing a differentiation
strategy is that a unique product may not valued highly by the customers, right, to justify the
higher price. That’s the only biggest problem or the risk of this particular strategy. Another
risk is that, the competitors may copy, right, so again that is also a risk. Firms thus find
durable sources of uniqueness that cannot be imitated quickly by rivals.
Next we see, if a firm creates special features demanded by the customers who are willingly
to pay more, right, increases. 3 years warranty given by General Motor cars, longer life

Bacha log, let’s see Michael Porter’s Generic Strategies. Right, now he suggests as Generic
Strategies the reason being he is giving us three strategies under it. According to Porter,
strategies allow organisation to gain competitive advantage from three different bases cost
leadership, differentiation and focus. Porter calls these base, Generic Strategies.
Now cost leadership emphasizes producing standardized products at a very low per unit
cost for consumers who are price-sensitive. Example, Hamara Bajaj, two wheelers.
Remember, bacha log. They follow cost leadership, try to minimize cost of production.
Differentiation is a strategy aimed at producing products and services considering unique
industry wide and directed at consumers who are relatively price insensitive, does not
matter what the price tag is. Here you can say Honda Motors, right, they manufacture
according to their quality. They don’t take care or they don’t feel that we need to take care
of the pricing, right. Unlike your cost leadership emphasise, remember. Focus means
producing products and services that fulfil the needs of small groups of consumers, we call it
as Niche Market, right, a particular small segment. So here you can say Ducati, right, two
wheelers they manufacture only and only Ducati Motorcycles, right, for niche segment, for
small group of consumers. Larger firms with greater access to resources typically compete
on a cost leadership and or differentiation basis, whereas smaller firms often compete on a
focus basis. They have a target market.
Porter stresses the need for strategists to perform cost benefit analysis to evaluate sharing
opportunities among a firm’s existing and potential business units. Porter stresses the need
for firms to transfer skills and expertise among business units effectively in order to gain
competitive advantage.
Cost leadership strategies, right, bacha log, now this strategy is followed by Bajaj
Motorcycles, right. They give us very much cheap or you can call it as

Kids , we see Strategic Planning first, right in this Module, now we need to know answers to
few questions. Like what we are doing, for whom we are doing, how to excel in that
particular process, right, our objectives, now for that we need to formulate some good
strategies. Now the key component in strategy formulations. Let’s check all that. We
need to check out the external analysis, right we need to know what is going on in and
around our organisation. Right, so it all comes under strategic uncertainties, which we
cannot predict. So, strategic totally depends upon uncertainties, right, in and around us.
Our growth is totally depended on it. Future event, inherent unpredictable, what is going to
happen you are not aware in future. So based on that decision must be taken in Strategic
formulation. Right, for the future and for the growth of the organisation.
Scenario analysis can be employed for two or more scenarios, why, so that we can come
closer and closer to our objectives. So scenario analysis is must and that too for two or
more future scenarios. So we have an option always available and ready so that we can go
or march ahead towards our goal. Now let’s see further, each strategic uncertainty could
have an impact on present proposed and even on potential strategic business units, why
because everything is uncertain. For example natural resources, right. So usage, availability
of natural resources, you can’t say anything on that. (2.08)