Organizational Strategies

Introduction:
Strategies are the decisions and actions that determine the long-run performance of
an organization. Organizational strategies are the strategic plans that management
or leadership team develops and this plan gives details about how the resource
allocation for business will occur in order to support the business activities. These
resources can be inventory, time, or funding etc. If organizational strategies are
planned and executed effectively then it can improve the decisions making
procedure and can help to achieve the desired goals.
Types of organizational strategies:
 Growth strategies
 Stability strategies
 Renewal strategies
Growth strategies:
These strategies are used for the expansion into the new market or new products.
These strategies are important for the growth of the company, and with these
strategies the company will keep moving forward towards the goals despite of
what happens in the market.
Types of growth strategies:
 Concentration
 Horizontal integration
 Vertical integration
 Diversification
Concentration:
The concentration strategy focuses on a primary line of business and involves
increasing the no of products or markets served. By using this strategy, the
business focuses on a single niche while expanding the business. For example,
McDonald’s is a fast-food brand and its products are related to chicken and beef. If
McDonald’s uses concentration strategies it can introduce new fast-food items or
can serve a new market but it cannot change its niche.
Horizontal integration:
It involves combining operations with another competitor in the same industry to
increase competitive strengths and lower competition among industry rivals. For
example, one manufacturing company combining its operations with another
manufacturing company to enhance the production, labor force, or machinery etc.
in this way the competition between both of the companies will lower and both
will work together for growth of their businesses.
Vertical integration:
In this strategy the company handles several stages of its supply chain.
 Forward vertical integration:
In this the company starts controlling the next step of supply chain process
from where it lies now. The company attempts to gain control of output
through control of distribution channel or provide costumes service
activities. It eliminates intermediaries. For example, a company runs a
production line then by using forward vertical integration it will open its
own stores to sell its produced items and not through a retailer or any other
intermediate company or person.
 Backward vertical integration:
In this strategy the company attempts to gain the control of input of its
supply chain procedure. It becomes its self-supplier. For example, a
company runs a production line and by using backward vertical integration
the company will start handling the raw material provision itself instead of
through a raw material provider.
Diversification:
Diversification involves enhancing your supply chain to increase the profit. The
company introduces or develops new products and new markets.
 Related diversification:
The company expands by combining with firms in different, but related
industries. The company will develop a new product or will enter a new
market but in the same industrial niche. For example, a company is in the
textile industry it can introduce new textile designs or can start serving in the
new market but that needs to be related to the textile industry.
 Unrelated diversification:
It involves growing by combining with firms in unrelated industries. For
example, a company is currently serving in the food industry and for
growing its business it starts serving in the furniture or household industry
so here it is entering into a completely new field or new market niche.
Renewal strategies:
Renewal strategies involves developing strategies to counter the company’s
weaknesses that are leading to performance decline.
 Retrenchment:
It focuses on eliminating non critical or minor weaknesses and restoring
strengths to overcome current performance problems. For example, a
company has a weak advertising department which hinders its advertising
activities or weakens it’s marketing so it will focus on that particular
department to have a smooth advertising.
 Turnaround:
Addressing critical long performance problems through the use of strong
cost elimination measures and large-scale organizational restructuring
solutions. For example, a company has a product that is not making profits
but is just consuming the production cost so the company will stop the
manufacturing of that product.