Stability Strategies

(i) No-Change Strategy:

Stability strategy is a conscious decision to do nothing new, that is to continue with the present work. It does not mean an absence of strategy, rather taking no-decision in itself is a strategy. When the external environment is the predictable and organizational environment is stable then a businessman may like to continue with the present situation. There may be major opportunities or threats operating in the environment.

There may be no new threat from competitors or no new competing product may be coming into the market, under these circumstances it will be prudent to continue the present strategies. The small and medium firms generally operate in a limited market and supply products and services with the use of time tested technology, such firms will prefer to continue with their present work. Unless otherwise there is a major threat in the environment or occurrence of some major upset in the market, the present strategy will serve the firms well.

(ii) Profit Strategy:

Sometimes things change in such a way that the firm has to adopt changes in its working. There may be unfavorable external factors such as an increase in competition, recession in the industry, government attitude, industry downturn, etc. Under these situations, it becomes difficult to sustain profitability.

A supposition is that the changed situation will be a temporary phase and the old situation will again return. The firm will try to sustain profitability by controlling expenses, reducing investments, raise prices, cut costs, increase productivity, etc. These measures will help the firm in sustaining current profitability in the short run.

With the opening of markets, the Indian industry is facing a lot of problems with the presence of multinationals and a reduction in tariff on imports. The firms will have to adjust their policies to the changing environment otherwise they will find it difficult to stay in the market.

The profit strategy will be successful for a short period only. In case things do not improve to the advantage of the firms then this strategy will only deteriorate their position. This strategy can work only if problems are temporary.

(iii) Proceed-With Caution Strategy:

Proceed with caution strategy is employed by firms that wish to test the ground before moving ahead with full-fledged grand strategy or by those firms which had a rapid pace of expansion and now wish to rest for a while before moving ahead. The pause is sometimes essential because the intervening period will allow consolidation before embracing further expansion strategies. The main objective is to let the strategic changes seep down the organizational levels, allow structural changes to take place, and let the system adapt to new strategies.