UNIVERSITY IRAWAJI EJIT-OGUTEREG. NO.: APPL/2016/MSC/MGT/089COURSE TITLE: STRATEGY AND

UNIVERSITY OF PORT HARCOURT.MANAGEMENT SCIENCESASSIGNMENT ON STRATEGIC BEHAVIOUR OF SURVIVING FIRMS IN NIGER DELTANAME: ` IRAWAJI EJIT-OGUTEREG. NO.: APPL/2016/MSC/MGT/089COURSE TITLE: STRATEGY AND STRUCTURECOURSE CODE:  MGT. 801.2LECTURER: DR EKETUABSTRACTThere are certain strategies a firm could adopt, and it doesn’t help them achieve their objectives, this is because the firm hasn’t identified the best strategy fit. This study focused on the strategic behavior of firms in Niger delta. I studied two main types of strategic behavior. They are the grand strategy which include expansion, stability, growth, and combination, the second strategy which is the generic strategy by Michael porter was also studied, it include cost leadership, differentiation and focus. INTRODUCTIONThere are several categories of strategic behaviour that a firm can adopt at one time or another. The choice of behaviour is wide and much would depend on how the organisation perceives its strengths and weaknesses in relation to the opportunities and threats of its environment. A firms strategic behaviour revolve around the question of whether to continue or change the business the firm is currently in or improve its corporate objectives in its chosen business sector in order for its long term survival. LITERATURE REVIEWIn this section, two strategic behavior will be studied, the generic strategy by Michael porter and grand strategyCONCEPTUAL REVIEWThe strategy a firm adopts have an influence on its sales growth, profit and in the long run their survival. A firm that strives to survive can’t use differentiation strategy when its serving a market that are cost conscious, also a firm cant adopt cost leadership if its current market are seeking for unstandardized product. This will hamper with the firm’s sales and in turn its survival.EMPIRICAL REVIEWIn a study conducted by Moreno, R. (2005), to analyse the impact of the main strategies determining the competitive behaviour of firms on their survival rate. Its result showed that several aspects on the competitive advantage of the firms play an import role in the likelihood of firm survival. Jerome, R., & Anna, T. (2014), looked at the strategic behaviour of levered firms in a non-competitive and in a competitive environment. They found that regulation induces firms to increase their leverage; and that this has a double negative effect: first it reduces firm’s ability to invest during the regulated period, and second, it reduces the competitively of firms when deregulation takes place. Murat, K., (2008), studied the main strategy that helps some of companies to get them success in competitive world. For surviving we must achieve productivity while building new and responsive work providing all the workers opportunities for both high performance and high quality of work life. With theoretical analysis also have tackled global banking industry as a case in order to understand empiric world.DISCUSSIONStrategic behaviour refers to conduct which is not economically inevitable, but which is the outcome of a conscious attempt to shape the firm’s market environment to its own lasting advantage and to the competitive disadvantage of rivals. Carlton and Perloff (1994) refer to actions ‘to influence the market environment and so increase profits’; while Martin (1993) refers to ‘investment of resources for the purpose of limiting rivals’ choices’. GENERIC STRATEGYAccording to Glueck, there are four generic / grand strategies. They include stability strategy, expansion/growth strategy, retrenchment strategy and combination strategy.STABILITY STRATEGYThis is adopted when an organisation plans to maintain the same business with the equivalent level of effort. Gleuck and john (1976) opined that in an effective stability strategy, an organisation will concentrate its resources where it presently or can rapidly develop a meaningful competitive advantage in the narrowest possible product market function scope consistent with its resources and market requirements. A frim can pursue this strategy if its main strategic decisions focus on incremental improvement of functional performance.Types of Stability StrategyNo-Change Strategy: this is used when the environment does not present significant opportunities or threats and there is neither major strengths nor weakness. So it’s a case of business as usual.Profit Strategy: this is used when a firm tries to sustain its profitability by artificial measures of adopting a profit strategy. This is efficacious when the problem an organisation faces are temporalPause/Proceed-with Caution Strategy: this is used by firms who wish to test the ground before moving ahead with a full-fledged grand strategy.REASONS FOR ADOPTING STABILITY STRATEGYThe firm is doing wellThis strategy is less riskyIt’s easier and more comfortable to pursueThe environment is perceived to be stableEXPANSION STRATEGYThis is adopted by a frim when the need for adding new functions, products or market arises. The aim of this strategy is to improve performance by redefining the business through adding to the scope of activity or substantially increasing the effort of the current business. It may be applied through:Concentration: i.e. concentrating resources in one or more of its business in terms of their respective customer need, alternative technologies, or customer function either jointly or singly.Integration: it involves combination of activities related to the present activity of a firmDiversification: it may be in form of conglomerate diversification or concentric diversification. Concentric diversification occurs when a firm takes on activity in such a manner that it is related to existing business definition of one or more of the firms businesses. Conglomerate diversification occurs when an organisation takes on the activities which are unrelated to the existing business definitions of one or more of its businesses.Reasons for DiversificationIncreasing market powerSpreading riskRespinding to market declineStretching corporate parenting capabilities into markets and productsREASONS FOR EXPANSION STRATEGYThe business environment is volatileBelief that society benefits from expansionBelief in the experience curveBelief that growth will yield monopoly powerExternal pressure form stockholders or security analysisRETRENCHMENT STRATEGYThis is the hardest strategy for business executive to follow. This occurs when an organisation regroups through cost and asset reduction to reduce declining sales and profit. It implies that something has failed. It answers the question, should we go out of business entirely or some part of it. It could be achieved through:Turnaround Strategy: it focuses on ways and means to reverse the process of decline by shedding off some costs using any cost reduction mechanismDivestment Strategy: here, a firm cuts off it loss making units, divisions, or SBUs and keeps its product line, or reduces the functions performed. It deals with selling a part of the organisation, often to raise capital for further strategic actions.Liquidation Strategy: the firm abandons the activities completely, closes down the firm and sells its assets for their tangible worth.REASONS FOR RETRENCMENT STRATEGYThe firm isn’t doing wellThe environment is threatening and internal strengths aren’t sufficient enough to fight backThe firm has not met its objectivesCOMBINATION STRATEGYThis is used when an organisation adopts mixture of stability, expansion, and retrenchment: either at the same time in its different business or at different times in the same business applies several grand strategies to different parts of the firm or to different future periods. It’s adopted if there are plans to use several grand strategies at different future time (sequentially). Many firms pursue a combination of two or more strategies simultaneously. No firm can pursue all the strategies that might benefit the firm. Difficult business decision must be made, and priorities must be established.MICHAEL PORTER GENERIC STRATEGYPorter (1980), states that management can choose from among three strategies: cost leadership, differentiation and focusCOST-LEADERSHIP STRATEGYThis is when an organisation sets out to be low cost producer in its industry. It emphasizes producing standardized products at very low per unit cost for consumers and clients who are price conscious. In order to be successful with this strategy, the organisation should be the cost leader, not just one of the competitors of the position. The quality of the product should be comparable with related products by other competitors. There are ways of gaining cost advantage and they include, operational efficiency, low cost labour, technological, marketing and managerial innovation, etc. DIFFERENTIATION STRATEGYThis is used when a firm tries to distinct itself from its competitors. Its aimed at producing products and services considered unique industry wide and directed at consumers who are relatively price insensitive. It could be as a result of emphasis on high quality, excellent service, innovation in design, or unique positive brand image. The attributes chosen by a firm must be dissimilar from those offered by competitors and significant enough to attract customer patronage. This is what Ogundele (2000), refers to as “differentness” in his conceptualization of entrepreneurial innovative behaviour in Nigeria. FOCUS STRATEGYIt has both the cost advantage and differentiation advantage in a narrow segment.it deals with producing products and services that fulfil the needs of a small group of consumers. Here, the organisation will choose a group of segment in an industry and tailor the strategy to serve them to the exclusion of others. It could be in terms of end buyers, product variety, and geographical location of buyers or distribution channel. A successful focus strategy depends on a market there is of sufficient size, has a good growth potential, and is not crucial to the success of other major substantial focusing advantagesCONCLUSION AND IMPLICATIONThere are various strategic behavior a firm could adopt, however, most surviving firms in Niger-Delta makes use of growth strategy, this is because as the firm keeps on growing, it tends to diversify. Examples of firms in the Niger Delta include Chevron Oil Nigeria limited, NNPC, Minimi chin-chin, etc. REFERENCESCarlton, D. & Perloff, J. (1994). Modern Industrial Organisation, Harper Collins: New YorkJerome, R., & Anna, T. (2014). The Strategic Behaviour of Firms with DebtJovanovic, B. (1982). Selection and the Evolution of Industry,” Econometrica, vol. 50, pp. 649-670Moreno, R. (2005). Firms Competitive Strategies and the Likelihood of Survival, The Spanish Case. 45th Congress of the European Regional Science Association. Regional Quantitative Analysis Research Group (AQR), Department of Econometrics, Statistics and the Spanish Economy (University of Barcelona) Murat, K. (2008). Survival strategies for Companies in Global Business World. A Case Study. Department of Management. Canakkale University.Ogundele, O. J. K. (2000). Determinants of Entrepreneurial Emergence, Behaviour, and Performance in Nigeria, unpublished Ph.D Thesis, University of Lagos, Akoka.Porter, M. E. (1980). Competitive Strategy. Techniques for Analysing Industries and Competitors. New York: Free Press

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