Friday, August 28, 2009

Evaluate possible alternative strategies

Evaluate possible alternative strategies – substantive and limited growth, or retrenchment strategies for a chosen organisation (3 a)

Hints: What substantive growth, limited growth or retrenchment strategies are possible for the company under study? Evaluate the advantages and disadvantages of each strategy.

a. What are the possible alternative strategies available to Southwest:

Use Ansoff matrix to illustrate the alternative strategies available to SW.

i. Substantive growth strategies – horizontal and vertical integration, related and unrelated diversification

ii. Limited growth – Market penetration, product development and market development

iii. Retrenchment strategies – Divestment, cost reduction

b. Evaluation these alternative strategies

- Growth strategies offer SW opportunities to
* Gain efficiency
* Increase market power
* Spread risks
* Response to market decline
* Meet stakeholder's expectation

- Retrenchment strategies offer SW opportunities to
* Offload unprofitable SBU
* Reduce loss

c. Recommendation
- Given the information, it exists that three broad strategies are presently implementable: Market penetration, product development and market development strategies.
- Market penetration and product development strategies: SW continues to focuses on US market expansion by customer penetration and offering new services using its low cost strategy.
- Market development strategy: Since SW is now expanding to VN, this new market provides additional opportunities for SW to serve a new foreign market.