Types of Business Strategy

Types of Strategy

• Business Strategy: Focuses on strengthening a company's competitive position through product/service offerings. Includes competitive and cooperative strategies, encompassing activities for outperforming competitors and ensuring strategic alignment. Key areas: product development, innovation, integration, market development, and diversification.
• Corporate Strategy: Defines a long-term vision, aiming to create corporate value and motivate employees for customer satisfaction. A continuous process requiring regular review to enhance results and maintain investor confidence.
• Functional Strategy: Concentrates on a specific organizational functional area (e.g., marketing, production). Aims to maximize resource productivity and develop distinctive competencies for competitive advantage. Each department within a business unit typically has its own functional strategy aligned with the overall competitive strategy.
• Operating Strategy: Developed at the operational level to achieve immediate objectives. Often created for annual objectives within departments or divisions.

Triggering Events for Strategy Initiation (Internal & External)

• Internal Environment:*

• New Chief Operating Officer (COO): A new COO might challenge existing strategies and initiate change.

• Performance Measures: Underperformance (e.g., declining sales or profits) triggers strategic review and adjustments.

• Threat of Change in Ownership: A potential takeover attempt necessitates strategic changes to protect the company.

• External Environment:*

• External Intervention: Changes in the supply chain (demand, supply, or environmental factors) necessitate adjustments. Examples include unpredictable customer demand, supply disruptions, and economic/political/environmental risks (including terrorism).

• Strategic Inflection Point: Significant shifts (new technologies, regulations, customer values/preferences) require substantial strategic alterations.

Characteristics of Strategic Decision-Making

• Rare: Unusual and without direct precedent.
• Consequential: Significant resource commitment and widespread organizational impact.
• Directive: Establish precedents for future decisions and actions throughout the organization.

Types of Strategy

• Business Strategy: Focuses on strengthening a company's competitive position through product/service offerings. Involves competitive and cooperative strategies, encompassing activities like product development, innovation, and market diversification.

• Corporate Strategy: Long-term vision for creating corporate value and motivating employees. Requires continuous effort to build investor trust and increase equity via consistent customer value delivery and regular strategy review.

• Functional Strategy: Concentrates on a specific organizational area (e.g., marketing, production). Aims to maximize resource productivity within a business unit to achieve objectives and gain a competitive advantage. Supports the overall competitive strategy. Example: A low-cost strategy needs cost-reducing production and a minimal, highly skilled workforce.

• Operating Strategy: Created at the field level for immediate objectives. Developed within operating units and often tied to annual departmental/divisional goals.

Strategy Initiation: Triggering Events (Internal)

• New COO: A new Chief Operating Officer can prompt a strategic reassessment of the company's purpose.

• Performance Measures: Falling sales or profits, indicating a gap between expected and actual performance, may trigger strategic change.

• Threat of Ownership Change: A potential takeover attempt from another company can instigate a shift in strategy.

Strategy Initiation: Triggering Events (External)

• External Intervention: Changes in the supply chain (demand, supply, environmental risks), including economic, social, governmental, or climate factors (or even terrorism), necessitate strategic adjustments.

• Strategic Inflection Point: Major alterations from disruptive technologies, regulatory changes, shifting customer values, or changes in customer preferences require strategic responses.

Strategic Decision-Making Characteristics

• Rare: Unusual and lacking precedent.

• Consequential: Commits significant resources and demands widespread organizational commitment.

• Directive: Sets precedents for future actions and lower-level organizational problem-solving.