TYPES OF STRATEGIES

FAKULTAS EKONOMI & BISNIS

Types of Strategies
• Most organizations simultaneously pursue a combination of
two or more strategies, but a combination strategy can be
exceptionally risky if carried too far.
• No organization can afford to pursue all the strategies that
might benefit the firm.
• Difficult decisions must be made and priorities must be
established.
Alternative Strategies Defined and
Exemplified
Strategy Definition Example
Gaining ownership or increased control Amazon began rapid delivery
Forward Integration
over distributors or retailers services in some U.S. cities.
Seeking ownership or increased control Starbucks purchased a coffee farm.
Backward Integration
of a firm’s suppliers
Seeking ownership or increased control &T acquired Susquehanna
Horizontal Integration
over competitors Bancshares.
Seeking increased market share for Under Armour signed tennis
present products or services in present champion Andy Murray to a 4-year,
Market Penetration
markets through greater marketing $23 million marketing deal.
efforts
Introducing present products or Gap opened its first five stores in
Market Development
services into new geographic area China.
Seeking increased sales by improving Amazon just began offering its own
Product Development present products or services or line of baby diapers and wipes.
developing new ones

Alternative Strategies Defined and Recent Examples Given

Alternative Strategies Defined and
Exemplified
Strategy Definition Example
Adding new but related products or Facebook acquired the text-
Related
services messaging firm WhatsApp for $19
Diversification
billion.
Adding new, unrelated products or Kroger and Whole Foods Market
Unrelated
services are cooking meals, becoming
Diversification
restaurants.
Regrouping through cost and asset Staples closed 250 stores and
Retrenchment reduction to reverse declining sales reduced by 50% the size of other
and profit stores.
Selling a division or part of an Sears Holdings divested its Lands’
Divestiture organization End division to Sears’
shareholders.
Selling all of a company’s assets, in The Trump Taj Mahal in Atlantic
Liquidation parts, for their City, New Jersey, faces liquidation.
tangible worth
Integration Strategies
• Forward Integration
• involves gaining ownership or increased control over
distributors or retailers
• Backward Integration
• strategy of seeking ownership or increased control of a
firm's suppliers
• Horizontal Integration
• a strategy of seeking ownership of or increased control
over a firm's competitors
Intensive Strategies
• Market Penetration Strategy
• seeks to increase market share for present products or
services in present markets through greater marketing
efforts
• Market Development
• involves introducing present products or services into new
geographic areas
• Product Development Strategy
• seeks increased sales by improving or modifying present
products or services
Diversification Strategies
• Related Diversification
• value chains possess competitively valuable cross-business
strategic fits
• Unrelated Diversification
• value chains are so dissimilar that no competitively
valuable cross-business relationships exist
Synergies of Related Diversification
• Transferring competitively valuable expertise, technological
know-how, or other capabilities from one business to another
• Combining the related activities of separate businesses into a
single operation to achieve lower costs
• Exploiting common use of a known brand name
• Using cross-business collaboration to create strengths
Defensive Strategies
• Retrenchment
• Regroups through cost and asset reduction to reverse
declining sales and profits
• Divestiture
• Selling a division or part of an organization
• Often used to raise capital for further strategic acquisitions
or investments
• Liquidation
• Selling all of a company’s assets, in parts, for their tangible
worth
Types of Generic Competitive Strategies
1. A low-cost provider strategy – striving to achieve lower cost than rivals on
comparable products that attract a broad spectrum of buyers, usually by under-
pricing rivals;
2. A broad differentiation strategy – seeking to differentiate the company’s
product offering from rivals’ with attributes that will appeal to a broad spectrum
of buyers;
3. A Focused low-cost strategy – concerning on the needs and requirement of a
narrow buyer segment (or market niche) and striving to meet these need s at
lower costs than rivals;
Types of Generic Competitive Strategies
4. A focused differentiation strategy – concentrating on narrow buyer segment
(or market niche) and outcompeting rivals by offering niche members
customized attributes that meet their tastes and requirements bether than rivals’s
products;
5. A best-cost provider strategy – striving to incorporate upscale product
attributes at a lower cost than rivals
 When a Low-Cost Provider Strategy Works Best?

1. Price competition among rival sellers is vigorous;

2. The products of rival seller are essentially identical and readily available from
many eager sellers;
3. It is difficult to achieve product differentiation in ways that have value to buyers;
4. Most buyers use the product in the same ways;
5. Buyers incur low cost in switching their purchases from one seller to another
When a Differentiation Strategy Works Best?

1. Buyers needs and uses of the product are diverse;

2. There are many ways to differentiate the product or service that have value to
buy;
3. Few rival firms are following a similar differentiation approach;
4. Technological change is fast-paced and competition revolves around rapidly
evolving product features
When a Focus-Low Cost or Focus Differentiation
Strategy Works Best?
1.The target market niche is big enough to be profitable and offers good growth
potential;
2. Industry leaders have chosen not to compete in the niche;
3. It is costly or difficult for multisegment competitors to meet the specialized
needs of niche buyers and at the same time satisfy the expectations of their
mainstream customers;
When a Focus-Low Cost or Focus Differentiation
Strategy Works Best?
4. The industry has many different niches and segments, thereby allowing a focuser
to pick the niche best suited to its resources and capabilities;
5. Few if any rivals are attempting to specialize in the same target segment
When a Best-Cost Provider Strategy Works Best?

A Best-Cost Provider Strategy works best in market where product differentiation is

the norm and an attractively large number of value-conscious buyers can be
induced to purchase midrange products rather than cheap, basic products or
expensive, top-of-the-line products.
 TERIMA KASIH

SEMOGA SUKSES & SEHAT