Organizational strategies are divided into two groups:
functioning;
development.
The first ones depend on the company's position and behavior in the market. American researcher M. Porter outlined the main elements of the strategic planning system: low-cost leadership, differentiation, and focusing.
Often you can find overseas chinese in usa data a low-cost leadership strategy . It is based on saving fixed costs in favor of obtaining greater profit. Entrepreneurs tend to refuse expensive investments in projects and programs and expand their market territories by reducing prices. This is a good option under several conditions:
the product is always the same;
the main competition is in price, otherwise everything is the same as others;
everyone uses the product in the same way;
diversification risks are reduced;
wholesale buyers who find it difficult to quickly and without losses find another seller.
Strategy options
Strategic differentiation is the selection of several unique areas and focusing on them in order to outperform competitors. There are many such options. Differentiation as a process is specific to each individual industry and can affect the product, its quality, etc. It is usually expensive and ends in success if the profit covers the costs incurred in its implementation.
The focus strategy is based on choosing one of the areas, services, goods and achieving positive competitive results on it. But here too there are considerable risks: the probability of losing advantages. Why can this happen? Firstly, because of exorbitant costs, investments, secondly, because of stronger competitors and unclear differentiation of the segment (service, product) offered to the market.
There is also a growth strategy. It is typical for young companies that want to occupy all key positions in the market in a short time, or those that are on the threshold of a scientific discovery. Their pace grows exponentially, and their scale increases rapidly.
Not young organizations, but those that have already firmly established themselves in the market, tend to use a moderate growth strategy , both external and internal. Mechanical engineering can be mentioned as an example. In this area, increasing profits by several percent per year is quite a success, because rapid turnover is sometimes dangerous for business. Any complications or unexpected manifestations of the external market can affect the possibility of a quick reorientation or overcoming crisis moments.
The reduction strategy is used in moments of stagnation, obsolescence, or restructuring of the business model. The goal is competitive advantages. How does the entrepreneur behave? He liquidates unnecessary divisions, non-profitable areas or part of the organization, refuses unpromising segments. Otherwise, this type of strategy is also called disinvestment.
In practice, market analysts observe a mixture of types of strategic planning, so a combined or selective strategy is encountered quite often.
The organization of the strategic planning system occurs in the following way: some areas develop and provide maximum income, others are in a stable position, some are gaining a moderate pace, and others are declining.