by The Stability Strategy is adopted when the organization attempts to maintain its current position and focuses only on the incremental improvement by merely changing one or more of its business operations in the perspective of customer groups, customer functions and technology alternatives, either individually or collectively.
Generally, the stability strategy is adopted by the firms that are risk averse, usually the small scale businesses or if the market conditions are not favorable, and the firm is satisfied with its performance, then it will not make any significant changes in its business operations. Also, the firms, which are slow and reluctant to change finds the stability strategy safe and do not look for any other options.
Under the Stability strategy, a company where stops the expenditure on expansion, do not introduce new products or venture into new markets rather decides to focus on the current portfolio and market share.
To put it simply, stability strategy is one of “taking stock of the situation.” Stability can be a bid time option. Stability allows an organization to plan for reorganization before growth.
Stability strategy is followed when the organization decides to maintain the current level of business.
It chooses not to be aggressive in its search and movement towards new markets or the development of new products. There is an incremental improvement in functional performance.
While pursuing stability, organizations need to draw up a plan to get moving either by investments in research and development or by divesting nonperforming areas to free capital for new promising areas.
Stability seems “a not-much-action-going-on” phase, but the organization in its functional areas is trying furtively to do something new.
Stability Strategies could be of three types:
- No-Change Strategy
- Profit Strategy
- Pause/Proceed with Caution Strategy
To have a better understanding of Stability Strategy go through the following examples in the context of customer groups, customer functions and technology alternatives.
- The publication house offers special services to the educational institutions apart from its consumer sale through the market intermediaries, with the intention to facilitate a bulk buying.
- The electronics company provides better after-sales services to its customers to make the customer happy and improve its product image.
- The biscuit manufacturing company improves its existing technology to have the efficient productivity.
In all the above examples, the companies are not making any significant changes in their operations, they are serving the same customers with the same products using the same technology.
Pathways to Stability Strategy
- Do Nothing Strategy
This is a stage when the organization finds itself in placid waters.
There is no appreciable change in its industry environment, and there is no area in which the organization would venture of its own, so it does what it has been doing without any significant change. The organization is reactive, and this strategy serves a small niche business.
- Profit Strategy
Organizations facing threats and reducing margins opt for this strategy by curtailing discretionary expenditure and investment. This is a short-term strategy as, in the long term curtailing investments also erodes the organization’s competitiveness.
It is a strategy to be followed only to give management a breather, not as a smokescreen to hide passivity or wrong decisions.
- Pause Strategy
What happens when you sprint 200 meters?
You feel breathless and sit down to recoup.
Similarly, organizations that grow rapidly in fast growing markets need to assess their operations, pause, and invest in developing resources commensurate with growth to grow further.
According to Michael Dell, the founder of Dell Computers, the company grew so rapidly after its e-retailing that it had to slow down to create an organization with systems for operations in 95 countries, sales of USD 2 billion, and approximately 5700 employees!
