The stability grand strategy is adopted by an organization when it attempts at an incremental improvement of its functional performance by marginally changing one or more of its businesses in terms of their respective customer groups, customer functions, and alternative technologies – either singly or collectively
E.g: A copier machine company provides better after sales service to its existing customer to improve its company product image, and increase the sale of accessories and consumables
This strategy may be relevant for a firm operating in a reasonably certain and predictable environment. Stability strategy can be of three types –No Change Strategy, Profit Strategy, Pause/ Proceed – with – caution Strategy.
1. No-Change Strategy
It is a conscious decision to do nothing new. The firm will continue with its present business definition. When a firm has a stable internal and external environment the firm will continue with its present strategy. The firm has no new strengths and weaknesses within the organization and there is no opportunities or threats in the external environment. Taking into account this situation the firm decides to maintain its strategy.
Several small and medium sized firm operating in a familiar market- more often a niche market that is limited in scope – and offering products or services through a time tested technology rely on the No – Change Strategy.
2. Profit Strategy
No firm can continue with the No – Change Strategy. Sometimes things do change and the firm is faced with the situation where it has to do something. A firm may assess the situation and assume that its problem are short lived and will go away with time. Till then a firm tries to sustain its profitability by adopting a profit strategy
For instance in a situation when the profit is becoming lower firm takes measures to reduce investments, cut costs, raise prices, increase productivity and adopt other measures to solve the temporary difficulties.
The problem arises due to unfavorable situation like economic recession, government attitude, and industry down turn, competitive pressures and like. During this kind of situation that the firm assumes to be temporary it would adopt profit strategies
Some firms to overcome these difficulties would sell off assets such as prime land in a commercial area and move to suburbs. Others have removed some of its non-core business to raise money, while others have decided to provide outsourcing service to other organizations.
3. Pause/ Proceed with Caution Strategy
It is employed by the firm that wish to test the ground before moving ahead with a full fledged grand strategy, or by firms that have an intense pace of expansion and wish to rest for a while before moving ahead. The purpose is to allow all the people in the organization to adapt to the changes. It is a deliberate and conscious attempt to postpone strategic changes to a more opportune time.
E.g: In the India shoe market dominated by Bata and Liberty, Hindustan Levers better known for soaps and detergents, produces substantial quantity of shoes and shoe uppers for the export market. In late 2000, it started selling a few thousand pairs in the cities to find out the market reaction. This is a pause proceed with caution strategy before it goes full steam into another FMCG sector that has a lot of potential