What is Stability Strategy

Stability Strategy in Management 

The Concept:

A stable strategy arises out of a basic perception by the management that the firm should concentrate on using its present resources for developing its competitive strength in particular market areas. In simple words, stability strategy refers to the company’s policy of continuing the same business and with the same objectives.

Stability Strategy in Management

When a product is well accepted and has a brand value in the market, the company would want to expand its market base in that particular product segment to win over its competitors.

For example, ‘Old Cinthol’ from Godrej, continues to be the trusted choice of most customers and one of the top most brands in soaps. Especially in rural areas, people prefer Cinthol which comes in different sizes in lieu of customer preference.

Panneer Soda manufactured by Kalimark, a soft drink available only in southern parts of Tamilnadu is again a long-standing brand preferred by customers belonging to middle class and lower middle class. This indigenous brand is a direct competitor for coke and pepsi, the soft drink giants in the industry.

The same applies to “BOVONTO” again a kalimark product whose growth terrorised giants in the likes of COKE and PEPSI. It is said that some of the multi-national companies tried to crush this small but indigenous and successful company by buying all the glass bottles used for bottling the drink from small retailers.

All done by paying high price for old bottles and breaking them so that those bottles were not available for the kalimark manufacturers. Putting up a brave fight, Kalimark has introduced pet bottles (plastic containers) and for managing the dearth of containers they have erected a bottling plant also.

Recently Kalimark group has reinvented itself with modern technology for production. The shape of Bovonto pet bottle was redesigned and production was increased.

Related Posts:

1. TURNAROUND STRATEGY

2. STRATEGY EVALUATION

3. TACTICS OR STRATEGY

The Need for Stability Strategy:

• It continues to serve the customers in the same product or service, market and functional sectors.
• Its main strategic decisions  focus on incremental improvement of functional performance.’
• The focus is on maintaining and developing competitive advantages consistent with the present resources and market requirements.

Say, if your business is doing well and you are able to factorize the economies of scale with a fairly decent profit, you would not want to go for expansion in the immediate future; instead you would go for,

1. Sustenance
2. Competitor management and
3. Market share Maintenance

How to hold yourself?

Man has an inbuilt fear of change and only very few take that extra step to rage forward by being risk-aversive. Stability strategy suits medium-sized growing firms which have to first get well established in the market and wait for the right time to invest and divest.

Companies do not go beyond what they are presently doing; they serve the same market with the present products using the existing technology. The essence of stability strategy is, therefore, not doing anything but sustaining a moderate growth in line with the existing trends.

Advantages of Stability Strategy:

• The firm is successfully run and the objectives are achieved and there is satisfactory performance. Therefore, the management may want to continue with the same activities.
• A stability strategy is less risky. Unless the conditions are really bad, a firm need not take any additional risks.
• The management doesn’t foresee any change in the environment or opportunity in the market or any threat.
• When pursuing this strategy, there is no disruption in routine work.

The down side of this strategy may be “setting of boredom” where you tend to do routine stuff, but the brighter side is the continuous positive response to the product and profit.