Types of Strategies in Management
Strategic management refers to the process of utilizing a company’s resources to achieve desired objectives. It encompasses several key areas, including competitive environment analysis, strategy evaluation, and internal company assessment. Below, we outline various types of strategies in management:
Competitive Strategy
A competitive strategy is defined as a plan that combines external positioning with the internal interests of a company, aimed at securing a competitive advantage over rivals in the market. It is the company’s responsibility to attract customers and ensure their satisfaction through committed efforts and initiatives while enhancing its market position. Below are examples of competitive strategies:
- Differentiation Strategy
- Low-Cost Strategy
- Specialized Market Strategy
Corporate Strategy
This pertains to the highest level of management within a diversified company, which is a collection of businesses. Corporate strategy outlines long-term planning and significantly influences all aspects of the organization. The components of a corporate strategy include:
- Vision
- Goal Setting
- Resource Allocation
- Strategic Priority Setting
Business Strategy
Business strategy is also known as strategic business unit strategy and focuses on enhancing the company’s competitive advantage in its products or services. It involves a combination of competition and collaboration while prioritizing product development, innovation, market development, and diversification. Key components of business strategy include:
- Vision, Goals, and Values
- Long-term Plans
- Financial Objectives
- Operational Goals
- Creating Customer Value
- SWOT Analysis
Functional Strategy
Functional strategy targets specific functional areas within the company and aims to achieve goals by enhancing resource productivity. The organization is segmented into business units, each with its own functional strategy to generate competitive advantages. Examples of functional strategies include:
- Production Strategy
- Marketing Strategy
- Human Resource Strategy
- Financial Strategy
Operational Strategy
An operational strategy refers to the company’s operational units focused on achieving short-term objectives. The primary components of operational strategy include:
- Designing Production System Locations
- Product and Service Development
- Resource Distribution
- Technology Selection and Process Improvement
- Focus on Production or Manufacturing
Steps in Strategic Management
There are several steps involved in implementing effective strategic management, including:
Information Gathering
Collecting and analyzing as much relevant data and facts as possible to achieve objectives is crucial. The analysis should focus on identifying long-term business needs, as well as recognizing any external or internal concerns that may impact the company.
Strategy Formulation
Strategy formulation involves:
- Identifying necessary resources to achieve objectives.
- Acquiring external resources by pinpointing relevant areas.
- Prioritizing challenges the company faces.
Strategy Implementation
All employees within the organization must understand their roles and responsibilities to ensure the successful execution of the strategic plan. It may be necessary to establish a new structure in this phase if the current organizational framework does not align with the overarching strategy.
Evaluation
Performance metrics and ongoing examination of internal and external issues, as well as corrective actions, are integral to the strategic evaluation and monitoring process.