Question

discuss types of strategies. Elaborate your answer by describing each in detail?

Answer 1

The Strategic Management Process

The strategic management process consists of three, four, or five steps depending upon how the different stages are labeled and grouped. But all of the approaches include the same basic actions in the same order. A brief description of these steps follows:

1. Strategic Objectives and Analysis. The first step is to define the vision, mission, and values statements of the organization. This is done in combination with the external analysis of the business environment (PESTEL) and internal analysis of the organization (SWOT). An organization’s statements may evolve as information is discovered that affects a company’s ability to operate in the external environment.
2. Strategic Formulation. The information from PESTEL and SWOT analyses should be used to set clear and realistic goals and objectives based on the strengths and weaknesses of the company. Identify if the organization needs to find additional resources and how to obtain them. Formulate targeted plans to achieve the goals. Prioritize the tactics most important to achieving the objectives. Continue to scan the external environment for changes that would affect the chances of achieving the strategic goals.
3. Strategic Implementation. Sometimes referred to as strategic execution, this stage is when the planning stops and the action begins. The best plans won’t make up for sloppy implementation. Everyone in the organization should be aware of his or her particular assignments, responsibilities and authority. Management should provide additional employee training to meet plan objectives during this stage, as well. It should also allocate resources, including funding. Success in this stage depends upon employees being given the tools needed to implement the plan and being motivated to make it work.
4. Strategic Evaluation and Control. Because external and internal conditions are always changing, this stage is extremely important. Performance measurements (determined by the nature of the goal) will help determine if key milestones are being met. If actual results vary from the strategic plan, corrective actions will need to be taken. If necessary, reexamine the goals or the measurement criteria. If it becomes apparent that the strategy is not working according to plan, then new plans need to be formulated (see Step 2) or organizational structures adjusted. Personnel may need to be retrained or shifted to other duties. You may even have to repeat the strategic management process from the beginning, including the information and knowledge gained from this first attempt.

Low Price Leadership Strategy

An organization seeking a low-cost strategy seeks to become a leader in providing low-cost products to its customers. The strategy is to produce (or purchase) comparable value goods or services at a lower cost than its competitors. The lower cost will attract the majority of customers and allow it to profit by the volume of goods sold. For this strategy to be successful, it requires that only one or two companies can be industry leaders in this position. For example, Walmart and Costco are leaders in the overall low-cost strategy. IKEA is a low-cost leader using a focused low-cost strategy, appealing to a particular segment of the overall market.

Differentiation Leadership Strategy

A strategy based on differentiation (distinction) calls for goods and services that offer unique features and that have high value for the target customer. The features must be perceived by the customer to be so much better than what the competition offers that they are worth an additional cost.

The differentiation may be based on the total number of features, quality of the features, customer service, or other criteria. Marketing campaigns are one way to differentiate a product and create a strong emotional attachment to it, supporting premium prices. Examples of companies in the overall market scope that pursue an overall differentiated strategy include Sony and Apple. They produce a large number of quality products that appeal to the wide technology consumer market. Businesses that sell luxury goods in any industry are employing a focused differentiation strategy. Prada, BMW, and Rolex are all companies whose strategy depends upon maintaining a loyal customer base convinced of the superior quality and uniqueness of their products—and who are also willing to pay a premium for the perceived quality value.