Business Combination Strategies

A combination strategy is the pursuit of two or more of the previous strategies simultaneously. For example, one business in the company may be pursuing growth while another in the same company is contracting. In the spring of 1989, for instance, Texas Air was rapidly expanding its Continental Airlines unit. But its Eastern Airlines operation was being consolidated. Eastern’s management was selling off routes and planes, cutting back the number of cities served, and making plans for operating a much smaller airline.

A combination strategy simultaneously employs more than one of the other strategies. This often reflects different strategic approaches among subsystems. For example, an M-form conglomerate like General Electric might seek growth overall, but it may do so by pursuing growth in some divisions, stability in others, and retrenchment in still others. Combination strategies are common, especially for complex organizations operating in dynamic and highly competitive environments.

Many,  if  not  most,  organizations  pursue  a  combination  of  two  or  more  strategies simultaneously, but a combination strategy can be exceptionally  risky if carried too far. No organization can afford to pursue all the strategies that might benefit the firm. Difficult decisions must be made.  Priorities must be established.  Organizations, like individuals, have limited resources. Both organizations and individuals must choose among alternative strategies and avoid excessive indebtedness.

Organizations cannot do too many things well because resources and talents get spread thin and competitors gain advantage. In large diversified companies, a combination strategy is commonly employed when different divisions pursue different strategies. Also, organizations struggling to survive may employ a combination of several defensive strategies, such as divestiture, liquidation, and retrenchment, simultaneously.