Multi-business organizations adopt the combination strategy. Their various businesses may operate under different environmental conditions; have varying industry profitability and life cycles.
Organizations must choose strategies that fit the environment, their resources, and their competitive position. It is possible to have different routes to growth within the broad grand strategy or have different strategies for different businesses.
For example, a shoe manufacturer may seek growth for fashion footwear in the domestic market, but for sports shoes, it may seek to be the dominant supplier to a more known global brand for sportswear.
A multi-business organization may decide to divest from unprofitable areas and focus on profitable ones, diverting funds from one business to another. An organization may pursue a combination strategy:
- When different businesses of a multi-business organization need a different level of resources, attention, and focus.
- To meet different managerial aspirations.
- To enable different businesses within the fold to contribute maximally to profitability.
- To balance the differing requirements for funds and other resources.
Pathways to combination strategy:
- Grow, stabilize, retrench
- Grow, retrench, stabilize
- Stabilise, retrench, grow
- Retrench, stabilize, grow.
Even among the broad strategies, an organization may choose many different options. Combination most often depends on how an organization perceives its balanced portfolio. It would need resources to grow that may come from businesses past their prime.