Five types of defensive business strategy you should care about?

Even a strong business has to adopt offensive business strategy if circumstances warrant it. If sales are dipping or dominance in the market is slipping a business has got to choose one or more ways to fight back. Here I am listing the commonly known and usually explored defensive business strategy:

1.        Innovation is ranked number one. Not only firms but even ordinary people are talking about innovation as survival tool. A brand new idea, method or product that comes out from the sharpest business minds can over take competitors in shortest time possible. Technology is the key input that makes innovation happens. Before innovating a firm must understand how the market will react and how its internal competence can make such innovation successful. Mobile technology is a case in point

2.        Re-engineering is considered as the second most important defensive strategy because a firm continues with the same product line but transform or alter in such a manner the product gets not only face-lift but offers different uses of the product. Often re-engineered items can be manufactured at lesser cost than previously done. This allows a firm to lower selling price or in some cases on the opposite side of premium price extolling the virtues of the new product. Laptop is a good example

3.         Expanding to overseas market is yet another defensive business strategy for a firm that experiences stiff competition and falling volumes of sale either due to its price is not tenable in the domestic market or technology used is higher or lower than the one sought after in domestic scene. Manual drive car as well as luxury car such as Lamborghini fit here

4.        Downsizing as a defensive business strategy is selected only by weak companies that have symptoms including spiralling cost of production and frequent gaps in the marketing chain. Once adopted this strategy can make the bottom line better but it also gives negative image to a firm. In order to make downsizing effective the firm must be able to invest cost savings in better alternatives to re-polish its image in market place

5.        Divesting the last one, though unpalatable to many firms in distress, can save the skin and allow cooler heads to prevail in the top management who can find avenues to invest proceeds of divesture in profitable ventures. It is a common fact that any delay in making decision on divesture adds more flesh to already existing cost overload. Hence, cutting loss at the earliest signs of failure is always advisable in competitive business environment.  

Cheers!

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist