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Types of Strategies

Types of Strategies in an Organization Kimberly Bartee, Kimberly Feller, Steven Gordon, Zogie Oyarebu, Teresa Tessier STR581- Strategic Planning and Implementation September 12th, 2011 Professor Timothy De Long

Types of Strategies

Types of Strategies Business strategy can be defined as the direction and scope of a business for the future. Business strategy attains advantages for the organization throughout its configuration of assets, capital, and resources in a demanding environment, to cater to the needs of markets and to accomplish stakeholder expectations (Johnson & Scholes, 1998). In other words, strategy encompasses where the business sees itself in the future. Strategy also identifies the businesss competition, how the business can perform better irrespective of the competitors, the resources needed to compete, the external environment that would affect the businesss competitiveness and the values and expectations of those managing the business. Strategic management is completely fundamental to any business organization. It can be an official, written plan of action or it can be a spoken, unofficial plan- that is usually decided by the kind and organization of the individual business. Business strategy is basically an ongoing procedure to assess how successful a company is and how to maintain or develop that success. Generic Strategies A generic strategy is a core idea about how a firm can best compete in the marketplace (Pearce & Robinson, 2011, p. 183). Generic strategy is what a long-term or grand strategy is based on. Most strategic planners agree that a firm should base their long-term strategy on one of three types of generic strategies. These three strategies are low-cost leadership, differentiation, and focus (Pearce & Robinson, 2011). A low-cost leadership strategy means that a company competes by keeping its costs at a minimum and therefore, can charge its customers lower prices and gain higher profit margins. In contrast, a company uses a differentiation strategy by focusing on a particular quality of their product and building brand loyalty. As a third choice, a firm may use a focus strategy and

Types of Strategies

attempt to satisfy the needs of a particular segment of the market. The segment focused on is usually one ignored by most other firms (Pearce & Robinson, 2011). Grand Strategies Grand strategies which are sometimes referred to as master or business strategies offer essential direction for strategic actions (Pearce & Robinson, 2011). These strategies are often the foundation of a companys coordinated effort in achieving their long-term goals. They provide basic direction for specific strategic actions and functional tactics. Some grand strategies are used together, reinforce each other and some are usually employed singly. With reference to grand strategies, there are 15 principals involved: growth, market development, product development, innovation, horizontal integration, vertical integration, concentric diversification, conglomerate diversification, turnaround, divestiture, liquidation, bankruptcy, joint ventures, strategic alliances, and consortia. Potentially, any of these principals could be the foundation for accomplishing a companys long-term goal. Additionally, firms involved with numerous businesses or industries tend to combine several grand strategies to be successful. Just with any other strategies, the fifteen principals that fall under grand strategies have individual strengths and weaknesses. Examples Apples continual introduction of newer generation products improving on past generations shows their innovation and viewing themselves as competition. An example of grand strategy would be, similar to product leadership, innovation. Apple does not simply introduce variations of old products but capitalize on the introduction of new products as in the first IPod, IPad, and IPhone. With the introduction of these products Apple can experience profit from both acceptance of the products and build brand loyalty as well. These examples demonstrate the

Types of Strategies

potential benefits a firm is able to achieve from employing the different strategies both generic and grand. Conclusion Business strategy is necessary in helping to define the future direction of an organization. Understanding the markets threats, competitive resources, the external environment and competitors are important components of business strategy. The generic strategy will define how the business will compete in the market; providing the foundation for defining an organizations grand strategy (long-term goals). Apples generic and grand strategies are apparent through their product offerings. The company constantly builds upon older products, but is frequently delivering new innovations to the market; thereby consistently maintaining competitive market advantage. Apple is a prime example of how business strategy helps build continual product acceptance and brand loyalty.

Types of Strategies

References Johnson, G. & Scholes, K. (1998). Exploring Corporate Strategy. Europe: Prentice Hall. Www.the-business-plan.com. (2009). What is Business Strategy. Retrieved from www.the-business-plan.com/what-is-business-strategy.html Pearce, J. A., II, Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin.