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Differences Between the Major Types of Strategies

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Whats the differences between the directional, portfolio, and parenting strategies? When you would use these major types of strategies.

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The solution discusses the differences between the directional, portfolio, and parenting strategies. References are included.

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Corporate strategy is concerned of the firm's choice of direction. It is also about managing business units for maximum value and its various product lines. It also includes decisions on financial and other resources to and from the company's product lines and business units. Corporate strategy deals with the following three key issues facing the organization as a whole:

1. Directional strategy is concerned of how the firm is oriented toward growth, stability and retrenchment. All corporations decide how it can grow by asking some questions such as the need to expand, cut back or continue operations; concentrate on current industry or diversify into other industries; and if it wants to grow through internal development or external acquisitions. An organization's directional strategy has three general orientations/grand strategies as follows:

(a) Growth strategies expand activities of company. This strategy is most commonly used and the external mechanisms used are mergers, acquisition and strategic alliance. The two basic growth strategies are concentration and diversification. Among the basic concentration strategies are vertical (vertical integration - full, taper & quasi; backward; and forward integration) and horizontal (horizontal ...

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