Growth Strategy

This would help the firm to decide what kind of growth trajectory the organization
would follow. These could be growth (steep or slow), stability or retrenchment. In
keeping with the scope of the subject, let us look at the growth strategies only and
understand this by discussing what each of these growth strategies mean to different
organizations.
Growth strategies fall into two categories: concentration within existing industries and
diversification into other lines of business or industries. A firm can concentrate within the same
industry through vertical integration or horizontal integration and can diversify into either
related businesses or unrelated businesses. The petrochemical giant Reliance Industries is an
excellent example of vertical integration. It started from textiles and did backward integration
into polyester fibres. Then it entered petrochemicals from where it entered oil and gas. Now the
group's product portfolio ranges from the exploration of oil and gas to oil and gas production,
refining, petrochemicals, synthetic garments and retail outlets. An example of horizontal
integration could be a chain of hospitals diversifying into a chain of diagnostic centres too. ITC
is a model example of growth through diversification in unrelated businesses. Each of these four
growth strategy categories can be carried out internally or externally, through mergers, and
acquisitions and strategic alliances or a combination of both.

Portfolio Strategy
This strategy would help the firm to decide on the mix of businesses. This would mean
what extent of concentration or diversification the business would opt for. If the
company has decided to pursue vertical integration, then portfolio strategy decides to
what extent it would follow it. Would a pharmaceutical company in the business of
formulating prescription drugs foraying into bulk drugs be just enough for its own
requirement or would it also target at becoming suppliers for other pharmaceutical
formulation majors?

Competitive Strategy
Competitive strategy is about being different. It means deliberately choosing to
perform activities differently or to perform different activities than rivals to deliver a
unique mix of value.

For those organizations having multiple lines of business, each business has to possess a
separate strategy to deal with its set of internal strengths and weaknesses and external
opportunities and threats. These are known as the competitive strategy for the business.
Consider Reliance Industries Limitedthe Group's activities span the exploration and
production of oil and gas, petroleum refining and marketing, petrochemicals (polyester,
fibre intermediates, plastics and chemicals), textiles, retail and special economic zones.
Evidently,each of these businesses has to have a separate competitive strategy to create
and maintain a competitive position in the marketplace and each business would be
vastly different from the other. Michael Porter (1980) propounded a generic model for
competitive strategies. The model is called generic because it can be used for any
industry. His model is based on the assumption that a firm's competitiveness depends
on the attractiveness of the industry it operates in and the position of the firm in that
industry. He argued that a firm's strengths ultimately fall into two categories: cost
advantage and differentiation. Depending on how a firm uses it broadly or narrowly
(focused group), three strategies emerge. Cost advantage would mean the company
provides the optimum service at the lowest price available in the market. Differentiation
would mean that the firm has a uniqueness which it can offer to its customers that
would be otherwise unavailable to them. When the firm concentrates on a niche
segment and develops a cost-based proposition or a uniqueness-based proposition to
the customer depending on what would work, it is called focused strategy.

Functional Strategy
Strategic priorities at times need functions to have their own functional strategy.
Functional strategies have shorter time horizon, greater specificity and primary
involvement of the managers. The focus of these strategies is to improve the
organization's ability to attain superior efficiency, quality, innovation and customer
responsiveness.
HR functional strategies should have two kinds of alignments. First, they should be
aligned with the overall corporate strategy, which means that if an organization's
strategy is working towards low cost then the HR policies and practices should be such
that they elicit suitable behaviour from the employees to achieve the low-cost objective.

Second, all HR policies should also be aligned with one another. Let us understand this
through an example. Suppose an organization wants to reinforce a culture whose
hallmark is teamwork and now if the organization decides to design its incentive policy
to reward individuals, can this culture of teamwork be achieved?