What is Stability Strategy

A stability strategy refers to a strategy by a company where the company stops the expenditure on expansion, in other words it refers to situation where company do not venture into new markets or introduce new products. Stability strategy is adopted by company due to following reasons –

  1. When the company plans to consolidate its position in the industry in which company is operating.
  2. When the economy is in recession or there is a slowdown in the economy than companies want to have more cash in their balance sheet rather than investing that cash for expansion or other such expenses.
  3. When company has too much debt in the balance sheet than also company stops or postpones their expansion plans because if company takes more debt for expansion than it would not able to pay interest rate on such debt and it may create liquidity crunch for the company.
  4. When the company is operating in an industry which has reached maturity phase and there is no further scope for growth than also company adopts stability strategy.
  5. When the gains from expansion plans are less than the costs involved for such expansion than company follows the stability strategy.
0 comments… add one

Leave a Comment


Related pages


what is unearned income in accountingcarriage inwardsinferior goods and normal goodsvertical mergers examplesdisadvantages of delegationexamples of scarcity in economicsprepaid journal entryimplicit vs explicit costscurrent liabilities examples balance sheetbills receivablebranding advantages and disadvantagesexamples of skimmingmerits of cost accountingtypes of convenience goodsmarket skimming pricing examplecross exchange rate formuladifference between perfect competition and oligopolylearn bank reconciliation statementfluctuations définitionwhat is draft chequeskimming strategy definitiondisadvantages of profitability ratiosdifference between income and substitution effectexamples of cost push inflationexplain capmurbanisation advantagesdefinition of inferior goodsadvantages of centrally planned economyautocratic leadership characteristicsbenefits of jit productiontypes of demographic segmentationadvantage of decentralizationsubstitutes in economics definitioninterest rate subventionwhy is deflation a problemfeature of capitalismadvantages and disadvantages of earned value analysisbetdirectlaw of diminishing returns exampleprepaid accounting entriesfree market economy advantages and disadvantagesbank loan accounting entriesscarcity examples in economicsadvantages and disadvantages of communist economic systemfactoring in financial managementbenefits of cashless societycharacteristic of mixed economymixed economy advantagesdistinguish between assets and liabilitiessubstitute goods examples economicsbenefits of demat accountadvantage and disadvantage of joint ventureprivatisation definewhat is free market economy advantages and disadvantageswhat is the meaning of demand draftglobalization advantages disadvantagesoperating cycle in financewhat are the limitations of ratio analysiscibil bankwhat is sundry assetsdisadvantages of process costingmateriality principledistinguish between explicit and implicit costsprocess costing and job costingdifference between equity shares and debenturescapm in financial managementdurable and nondurable productsexplain difference between systematic unsystematic riskwhat are the differences between revenue expenditures and capital expendituresmerits of privatizationadvantages and disadvantages of social media advertisingtypes of cheque crossinginvestment appraisal payback periodordinary shares advantages and disadvantageswhat is durable and nondurable goodsdisadvantages of mergerindustrial goods examplesdirect investment advantages and disadvantages