One definition of strategy says that it is the process of figuring out what a company’s main long-term goals are, as well as deciding what actions to take and how to use its resources to reach those goals. In response to the environment, strategies are made to set goals, focus efforts, define or clarify the organization, and provide continuity or direction. This article will go into types of strategic management in detail and provide some examples for your convenience.
Based on an analysis of the organization’s internal and external environments, strategic management is coming up with and carrying out the organization’s most important goals and projects on behalf of its stakeholders.
Strategic management is the process of setting long-term goals, coming up with plans to reach those goals, and allocating resources to put those plans into action. Experts in the academic and real-world domains have created many models and frameworks to assist in making strategic decisions amidst uncertainty and intense competition. Strategic management models may feature a feedback loop to evaluate results and inform subsequent planning. For a different perspective on nature of strategic management topic, read this insightful analysis.
Top 10 – Types of Strategic Management
Internet “startups” can undercut prices and steal customers from businesses that have been around for a while. This page discusses types of strategic management in detail.
Even industries that thought they were safe from online competitors before the Internet grew have seen their profits go down because of it. Warby-Parker is an online store that sells glasses and lenses for up to 70% less than an optician would. All the customer has to do is pick out their glasses, choose their lenses, and type in their prescription. You can be sure that you will get your money back. Even the most basic medical procedures are being done online more and more by both patients and doctors.
Low Price Leadership Strategy
Cost leadership strategy is another types of strategic management that involves offering products or services at a lower cost than competitors. A company with a low-price strategy competes on price and wants to become the standard in its field. The goal is to make (or buy) the same goods and services as competitors for less money. Customers will buy more because the price is lower, and the company will make more money overall because it will sell more.
Only one or two companies in an industry might really be in charge, so this strategy could work. Companies like Walmart and Costco were the first to offer low prices. IKEA is the undisputed leader in the low-cost goods industry because it has perfected a low-cost strategy that meets the needs of a certain group.
Strategic Surveillance Control
If a business doesn’t have a strategic monitoring and management system in place, it might miss internal and external factors that could be harmful. Small businesses use it to scan data quickly and gain industry insights and trends. There is a lot of room for growth and change during the implementation stage. To avoid unintended consequences, managers must learn about strategic control types.
Strategy for Competing
Another types of strategic management is called competitive strategy, which is focused on gaining a competitive advantage over rivals in the industry. The competitive strategy is a set of business methods and actions that are meant to give a company an edge over its competitors.
A business’s job is to bring in customers and satisfy their needs. Give them more value by figuring out what their future needs will be and meeting them, as well as by improving its market position.
Thompson and Strickland’s idea puts the focus on the “tactics and creativity” of the board of directors. The term refers to a competitive strategy that changes over time. The company’s leaders commit to growing the business by providing excellent service to their existing customers. In today’s market, it’s important to fight off competitors in the same industry.
Porter’s Strategies for Competing
Many different business strategies can use the strategic management method I just talked about. But most businesses make plans with their competitors in mind. Michael Porter is well-known for his research on the Five Forces Theory, the dynamics of industrial profitability, and four main types of competitive strategies.
(There is now a new fifth method.) In Porter’s model, differentiation and cost are the two main factors that give a business a competitive edge. Two ways to target the market: appeal to a certain group or all customers. This method creates targeted differentiation and focused low cost, as well as global differentiation and global low cost, which are both good ways to stand out from the competition. The fifth strategy is a mix of low-cost and unique parts. The name for this method is “integrated strategy.”
Strategy for Differentiating Leadership
Cost leadership strategy is another types of strategic management that involves offering products or services at a lower cost than competitors. Differentiation may come from features, their quality, support, and more. Using marketing to highlight a product’s unique selling points and build a strong personal connection between the buyer and the product can help justify a higher price tag.
Companies like Sony and Apple use a strategy that is different from everyone else to compete on the global market. They make a lot of high-quality items that can compete in the global market for consumer technology. Retailers of luxury goods in every market segment do things on purpose to set themselves apart from the competition. Prada, BMW, and Rolex all depend on a loyal customer base that believes their products are the best and most unique and is willing to pay more because of that.
Vertical Integration
Buying a majority stake in another company that works in the same value chain. Backward integration is exemplified by Tata Steel’s purchase of an Indonesian coal mine as a source of raw materials. Forward integration is when a company or activity closer to the end user is taken over (Reliance Industries, a petro refining company, also starting petrol pumps).
Functional Strategy
To start with, a company’s functional strategy should be based on how to help a certain business unit do well in its market. Additionally, each part of the company is set up and runs according to its own set of rules and procedures.
Therefore, rearranging operational tactics to make strategic competition stronger becomes crucial. In order to maintain competitiveness by reducing costs, a company must devise a production plan. This plan focuses on how to manage people and how to run a business well.
Corporate Strategy
One type of strategic management is a company’s business plan. The top executives of a company that does business all over the world make it. Bashundhara, Partex, Beximco, and Square Group are all companies that do business in our country.
This shows that American business is becoming more diverse. This document explains the overall business strategy of the company. The corporate strategy impacts all sub-units and outlines the company’s long-term goals. Bashundhara implemented a plan to acquire all tissue paper manufacturers in Bangladesh.
Business Strategy
Business unit strategies is that types of strategic management which focus on specific business units within the organization and how they can compete in their respective markets. The business strategy includes all of the planned activities and ways to cut into the market share of competitors. Because of this, behavior management deals with a wide range of strategic issues. Hill and Jones say that a company’s strategy should include specific steps for getting the results that the company wants.
Managers who think strategically know how to get the most out of what they have. Also, managers change the way they look at things to get an edge over their competitors. The corporate strategy builds the plan for a business. In its strategic plan, the company gives top priority to things like product development, innovation, integration, market expansion, diversification, and so on.
Operating Strategy
Strategic management uses the operating strategy as the fifth type of strategy. In this way, the functional units of an organization take shape. Any business can come up with an operational plan. In particular, for its sales regions. The commanders give the troops on the ground a plan of action to assist them in achieving short-term goals. For some businesses, the management comes up with an operational strategy for each group’s annual goals.
Frequently Asked Questions
What does Strategic Management Boil down To?
Simply put, strategic management means setting goals, researching the competition, analyzing the internal structure, weighing the pros and cons of different approaches, and making sure that those approaches are always used.
What are the Parts of Managing Strategically?
There are five steps to strategic management: 1) identifying and analyzing internal and external strengths and weaknesses; 2) making action plans; 3) putting those action plans into action; 4) judging how well those action plans worked; and 5) changing the approach if the desired results were not achieved.
Which Part of Strategic Management is the most Important?
Strategic management depends a lot on the idea of setting and understanding clear business goals. The first step is to come up with short-term goals that will help you reach your long-term goals.
Conclusion
Diversifying into an unrelated market is known as conglomerate diversification. Tata Sons is a conglomerate because it has businesses in many different fields, including steel, power, chemicals, hotels, education, publishing, beverages, and more. It calls for competition between competitors. It can come in the form of mergers and acquisitions (like when Tata Motors bought the Jaguar Land Rover plants in the UK), joint ventures (like when the Indian Oil Company teamed up with a local business owner to start an oil marketing company in Sri Lanka), or strategic alliances (the two cooperating firms remain independent but cooperate for synergy). In this post, we’ll examine the types of strategic management and grab extensive knowledge on the topics.
