As I read about the Corporate Single Industry Strategy, I got reminded of the adage, ‘less is more’ because it shows that in order for a corporation to be successful, focusing on a specific industry is a wise strategy to begin with. Being a risk taker is nice, but I think it can also be too risky to achieve success in return for a company to take so much risk at once. The strategy to focus on one industry is a smart move for a company who wants to reduce their size but operate with full potential. This corporate single industry strategy is all about focusing the income generating activity to a single business activity. The competitive advantage of this strategy is the simplicity yet delicate approach on the limited resources and turning it to something that would result to growth and stability of the company’s performance.
I learned that this is Corporate level strategy can be subdivided into three types based on what you want to do with your business. Earning money is the main purpose of having a business and so is the growth, stability, cost-cutting that comes after it. A company dealing with a single industry may sound as if they are playing safe, I could say that instead of playing safe, they are playing smart. Every business needs to start from the bottom to build their name, thus, their reputation usually comes from one specific item, product or service that business provides and so a single foundation of activity is a key driver to add more value to a business.
For example, a construction business usually deals with building establishments, but they may also venture into manufacturing of cement and other related tools because it will add more revenue generating activities, but it will also add more costs and more resources needed to function properly. Which is why it is wise to start from one specific product or services before any company would broaden up their exposure and budget.
I realized that some invests in horizontal or related industries because it is their specialty and that what makes them stand out in their chosen field. A corporate single industry strategy is also stability strategy because it is reasonable to pursue one industry you are particularly good at. Businesses make name or reputation through what they provide to the market and that means high quality and top of the line products and services that make up for their growth and stability. If company decides to apply the corporate level strategy, they can effectively do well in the long run through their expertise and specialization.
Dealing with a single industry does not equate to providing a nonsense and unimportant goods which means that single industry could have expansion strategy. For example, Pharmaceutical companies may deal with generic or brand medications which gives the public choices to pick that depends on their budget. A single corporation strategy deals with expanding their specific products that would cater more people. Additional products expand the target market which results to improvement.
The last type of corporate level strategy is the Retrenchment strategy. This is all about cutting cost and minimizing expenses by wisely redefining the activities in a single industry in a way they cut-off unnecessary expenses that do not add up to the market value of the business. For example, because they already focus on one generating revenue activity, it is easier to track down which helps the business to become profitable and which activities lead to out-of-pocket costs that do not improve the quality and performance of an entity. This topic opened my mind to the idea that if we start small and focus on one activity, there would be less communication and performance breakdown which also means greater return for the business.
