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CA IPCC | Intermediate Strategic Management Quick Revision Notes

Introduction of CA Intermediate | IPCC Strategic Management (SM) Quick Revision Notes

Strategic Management is a paper included both in CA Intermediate old and new syllabus.  Usually, the paper is easy to comprehend.  In this article, we are going to share invaluable notes that will be helpful for all inter students. This note is going to help you revise SM and keep all concepts at your fingertips.


Structure of the CA IPCC | Intermediate Strategic Management Syllabus notes

The following are the chapters covered in Strategic Management. In this article, you will be able to get revision notes for each of the chapters below.

  • Chapter 1: Introduction to Strategic Management
  • Chapter 2: Dynamics of Competitive Strategy
  • Chapter 3: Strategic Management Process
  • Chapter 4: Corporate Level Strategies
  • Chapter 5: Business Level Strategies
  • Chapter 6: Functional Level Strategies
  • Chapter 7: Organisation and Strategic Leadership
  • Chapter 8: Strategy Implementation and Control


Strategies are formulated at different levels of an organization– corporate, business and functional. Corporate level strategy
occupies the highest level of strategic decision making and covers actions dealing with the objective of the firm, acquisition and
allocation of resources and coordination of strategies of various  SBUs for optimal performance.

We can classify the different types of strategies on the basis of levels of an organisation, stages of business life cycle and

Basis of
LevelCorporate Level
Business Level
Functional Level
Stages of Business Life CycleEntry/Introduction Stage – Market
Penetration Strategy
Growth Stage – Growth/Expansion Strategy
Maturity Stage – Stability Strategy
Decline Stage – Retrenchment/Turnaround
CompetitionCompetitive Strategies – Cost Leadership,
Differentiation, Focus
Collaboration Strategies – Joint Venture,
Merger & Acquisition, Strategic Alliance


The corporate strategies a firm can adopt may be classified into four broad categories. The basic features of the corporate
strategies are as follows:

Strategy Basic Feature
StabilityThe firm stays with its current businesses
and product markets; maintains the
existing level of effort; and is satisfied with
incremental growth.
ExpansionHere, the firm seeks significant growthmaybe
within the current businesses; maybe
by entering new business that are related
to existing businesses; or by entering new
businesses that are unrelated to existing
RetrenchmentThe firm retrenches some of the activities in
some business (es), or drops the business as
such through sell-out or liquidation.
CombinationThe firm combines the above strategic
alternatives in some permutation/
combination so as to suit


Stability Strategy
A stability strategy is pursued by a firm when:
• It continues to serve in the same or similar markets and deals in same or similar products and services.
• The strategic decisions focus on incremental improvement of functional performance
Stability strategy is not a ‘do nothing’ strategy. It involves keeping track of new developments to ensure that the strategy
continues to make sense. This strategy is typical for those firms whose product have reached the maturity stage of product life
cycle. Small organizations may also follow stability strategy to consolidate their market position and prepare for the launch of
growth strategies.

Growth/Expansion Strategy
Growth/Expansion strategy is often characterised by significant reformulation of goals and directions, major initiatives and
moves involving investments, exploration and onslaught into new products, new technology and new markets, innovative
decisions and action programmes and so on. Expansion also includes diversifying, acquiring and merging businesses.
• Expansion through diversification
Diversification is defined as entry into new products or product lines, new services or new markets, involving substantially
different skills, technology and knowledge. For some firms, diversification is a means of utilising their existing facilities and
capabilities in a more effective and efficient manner.

Expansion or growth strategy can either be through intensification or diversification: Igor Ansoff gave a framework
as shown which describes the intensification options available to a firm.

  1. Market Penetration – 
    1. Increase market share
    2. Increase product usage
    3. Increase the frequency used
    4. Increase the quantity used
    5. Find new application for current users
  2. Basic Feature
    1. Add product features,
    2. product refinement
    3. Develop a new-generation product
    4. Develop new product for the same market
  3. Market Development
    1. Expand geographically
    2. target new segments
  4. Diversification involving new products and new market
    1. Related / Unrelated

(a) Intensification
• Market Penetration: Highly common expansion strategy is market penetration/concentration on the current business.
The firm directs its resources to the profitable growth of its existing product in the existing market.
• Market Development: It consists of marketing present products, to customers in related market areas by adding
different channels of distribution or by changing the content of advertising or the promotional media.
• Product Development: Product development involves substantial modification of existing products or creation
of new but related items that can be marketed to current customers through establish channels.

(b) Diversification
Diversification endeavours can be related or unrelated to existing businesses of the firm. Based on the nature and extent of their
relationship to existing businesses, diversification endeavours have been classified into four broad categories:
(i) Vertically integrated diversification
(ii) Horizontally integrated diversification
(iii) Concentric diversification
(iv) Conglomerate diversification

(i) Vertically integrated diversification: In vertically integrated diversification, firms opt to engage in businesses that are
related to the existing business of the firm. The firm remains vertically within the same process sequence moves forward
or backward in the chain and enters specific product/process steps with the intention of making them into new businesses
for the firm.
Forward and Backward Integration:
Forward integration is moving forward in the value chain and entering business lines that use existing products.
On the other hand, backward integration is a step towards creation of effective supply by entering business of input

(ii) Horizontal Integrated Diversification: Through the acquisition of one or more similar business operating at the
same stage of the production-marketing chain that is going into complementary products, by-products or taking over
competitors’ products.

(iii) Concentric Diversification: Concentric diversification too amounts to related diversification. In concentric
diversification, the new business is linked to the existing businesses through process, technology or marketing.

(iv) Conglomerate Diversification: In conglomerate diversification, no such linkages exist; the new businesses/ products are disjointed from the existing businesses/products in every way; it is a totally unrelated diversification.

Expansion through Mergers and Acquisitions
Acquisition or merger with an existing concern is an instant means of achieving the expansion. Merger and acquisition in
simple words are defined as a process of combining two or more organizations together.

 Merger is considered to be a process when two or more companies come together to expand their business
operations. In such a case the deal gets finalized on friendly terms and both the organizations share profits in the newly
created entity.
 When one organization takes over the other organization and controls all its business operations, it is known as
acquisitions. In this process of acquisition, one financially strong organization overpowers the weaker one.

Types of Mergers
1. Horizontal merger: Horizontal mergers are combinations of firms engaged in the same industry.
2. Vertical merger: It is a merger of two organizations that are operating in the same industry but at different stages of
production or distribution system.
3. Co-generic merger: In Co-generic merger two or more merging organizations are associated in some way or the
other related to the production processes, business markets, or basic required technologies.
4. Conglomerate merger: Conglomerate mergers are the combination of organizations that are unrelated to
each other. There are no linkages with respect to customer groups, customer functions and technologies being used.

Retrenchment/Turnaround Strategy
(i) Retrenchment Strategy: It is followed when an organization substantially reduces the scope of its activity.
(ii) Turnaround Strategy: Retrenchment may be done either internally or externally. For internal retrenchment to take
place, emphasis is laid on improving internal efficiency, known as turnaround strategy.
(iii) Divestment Strategy: Divestment strategy involves the sale or liquidation of a portion of business, or a major division, profit
centre or SBU. Divestment is usually a part of rehabilitation or restructuring plan and is adopted when a turnaround has been
attempted but has proved to be unsuccessful.
(iv) Liquidation Strategy: A retrenchment strategy considered the most extreme and unattractive is a liquidation strategy,
which involves closing down a firm and selling its assets. It is considered as the last resort because it leads to serious
consequences such as loss of employment for workers and other employees, termination of opportunities where a firm
could pursue any future activities and the stigma of failure.

Combination Strategy
The above strategies are not mutually exclusive. It is possible to adopt a mix of the above to suit particular situations. An enterprise
may seek stability in some areas of activity, expansion in some and retrenchment in the others. Retrenchment of ailing products
followed by stability and capped by expansion in some situations may be thought of. For some organizations, a strategy by diversification
and/or acquisition may call for a retrenchment in some obsolete product lines, production facilities and plant locations.

Other chapter notes are similarly available in the PDF file provided below.

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