Strategic management experts develop and implement long-term plans to achieve vital organizational goals, advancing stakeholder interests. So, this involves assessing existing resources and reviewing internal and external environments. Strategic management guides an enterprise by defining goals, developing policies, strategies, and allocating resources. Various models aid in dynamic decision-making amid competitive complexities. Models may include a feedback loop to assess implementation results and inform future planning cycles. This article details types of strategic management with examples.
The mutually reinforcing processes of strategic thinking and strategic planning form strategic management. Both of these are components of strategic management. Analytical procedures are the core of strategic planning, producing the facts and conclusions that inform strategic decision-making. Following the collection and analysis of data, the strategy is developed using strategic thinking. After determining a strategy, “strategic planning” may also refer to the procedures used to put that strategy into effect. Alternatively, strategic planning encompasses the processes and activities connected with strategic thinking and strategy formulation. To understand more about disadvantages of strategic management, read beyond what seems evident.
Types of Strategic Management
“In today’s competitive market, buyers seek unique yet affordable products, leading many firms to adopt an integrated strategy. Initially skeptical, Porter termed it ‘stuck in the middle,’ but practical examples disproved this notion. Firms now target cost reduction and provide higher value to customers. Some, like Kia with the K900, use this strategy by recycling components to keep prices reasonable while expanding their product range to compete with luxury brands, introducing a level of risk. Explore various strategic management approaches to enhance your understanding.”
Porter’s Market Conquest
The previously described strategic management method can be effectively utilized across numerous business models. In reality, the majority of firms pursue goals that are oriented on competition. Michael Porter is well-known for his research on the four major classifications of competitive strategies, as well as his contribution to the Five Forces Theory, which examines the elements that impact industrial profit generating. Porter’s methodology focuses on two main elements for gaining a competitive edge: cost leadership and differentiation. It also examines two market-targeting approaches: targeting a specific segment of the market and appealing to the entire market. This approach generates four separate competitive strategies: targeted differentiation, focused low cost, overall differentiation, and overall low cost. The fifth strategy combines techniques for differentiation and cost-effectiveness. The term “integrated approach” is used to describe this way of functioning.
Business Tactics
Strategic management is the domain in which the term “corporate strategy” refers to a specific methodology. It is created by the most powerful people within a global organization. In the United States, the term “group of companies” refers to a multinational corporation with multiple divisions. Bashundhara, Partex, Beximco, and Square Group are all well-known names in this industry. This plan would outline the organization’s principal business approach. Beyond defining long-term objectives, corporate strategy has an impact on every aspect of the business. Bashundhara may consider implementing a business strategy that comprises purchasing the country’s other significant tissue paper makers in order to further strengthen its dominant position in the Bangladeshi tissue paper sector.
Approach to Competing
The internal strategies and actions of the organization are the constituent aspects of a corporate competitive strategy. It is a company’s obligation to attract customers and meet their needs. Deliver exceptional value by meeting their future needs and strengthening its market position. Thompson and Strickland’s notion stresses the “ingenuity and tactics” employed by directors during the strategy formulation process. Thompson and Strickland’s definition is available on this page. This demonstrates the importance of actions in competitive strategy. Management’s goal is to improve the company’s market position by satisfying consumers’ wants and demands. In today’s business environment, behaviors that are diametrically opposed to those of competitors are essential.
Corporate Tactics
Your business plan comprises everything you need to know to compete in a way that limits your competitors’ success. Behavior management entails a wide range of extra strategic issues. Also, a corporate strategy, according to Hill and Jones, consists of specific courses of action. So, it is the role of strategic-minded managers to execute changes that allow businesses to make the best use of their existing resources. Furthermore, managers will adapt their individual points of view in order to gain a competitive advantage in the marketplace. In most cases, the evolution of a company’s strategy coincides to the evolution of its corporate plan. The key goals of the company strategy are to establish unique products, integrations, and innovations; enter unexplored areas; and provide a broader range of services and goods.
Methodology for Operation
The fifth category of strategic management strategies is the operating strategy. It also provides a structural foundation that allows an organization’s various components to function efficiently. An organization may decide to create an operating plan. Consider the product’s various sales regions as an example. The squad receives a communicated field-level operational strategy, typically with short-term goals. Moreover, managers in certain businesses design operational strategies for each set of annual objectives within their respective divisions. Exploring different types of strategic management allows companies to adapt to diverse competitive contexts and make informed decisions for sustained success.
Effective Methodology
A functional strategy seeks to give a company unit with a competitive advantage over its competitors by acquiring the necessary resources. Every division of the business operates with its own set of departments and strategy to task completion. It is possible to adapt functional tactics to more effectively support a competitive strategy. A company that chooses to engage in price undercutting through the selling of its products, for example, will be required to design a production plan. A cost-cutting endeavor as well as a human resource allocation strategy are essential.
Low-Cost Competitive Edge
Businesses that use a low-price strategy compete to be the dominant source of low-cost products and services to their customers. This strategy is based on obtaining (or providing) identical items or services at a cheaper cost than competitors. The price drop will appeal to the majority of buyers, guaranteeing that the corporation profits regardless of the quality of the products offered. This technique is only viable if a small number of enterprises can maintain a dominant market position. Leading merchants such as Walmart and Costco have set the standard for low costs in all categories. IKEA maintains a leading position in the low-cost market by targeting a certain client category with its low-cost goods and services.
Management of Strategic Surveillance
Strategic surveillance control detects internal and external factors influencing a company’s strategy. Smaller firms often employ this strategy to understand an industry’s current and future trends thoroughly. Expect significant progress and adjustments throughout the implementation phase. Managers should become familiar with the various techniques of strategic control in order to avoid unintended consequences resulting from their strategies.
Differentiated Leadership Strategy
The pricing difference may be influenced by a service premium, feature count premium, or feature quality premium. Campaigns allow marketers to differentiate their products from those of their competitors while also developing a strong emotional attachment with their brands; both of these characteristics contribute to the rationale for premium pricing. Sony and Apple are two companies with global reach and an uncompromising commitment to differentiating themselves in every facet of the market. They produce a plethora of quality items with broad market appeal in the technology business. Organizations that offer premium items differentiate themselves from competition by emphasizing the specific attributes of their merchandise. Organizations such as Prada, BMW, and Rolex, to mention a few, rely on client loyalty to validate their convictions about the outstanding quality and distinctiveness of the merchandise they give.
Integrated Supply Chains
When one company buys another in the same value chain, this is referred to as an acquisition. Backward integration occurs when a company acquires a company that processes raw materials (for example, Tata Steel’s purchase of an Indonesian coal mine), whereas forward integration occurs when a company acquires a business or activity that brings it closer to the end consumer (for example, Reliance Industries’ decision to sell gasoline in addition to being a petroleum refiner). Various types of strategic management approaches help organizations navigate complex business landscapes and achieve long-term goals.
FAQ
To what Extent does Strategic Management Depend on what Factors?
Strategic management is divided into five distinct phases. The process consists of identifying and analyzing internal and external strengths and weaknesses, formulating action plans, executing those plans, evaluating their success, and making appropriate adjustments when they fail to produce the desired results.
What is the Role of Swot Analysis in Strategic Planning?
SWOT analysis is an acronym for an assessment of a company’s opportunities, threats, vulnerabilities, strengths, and opportunities. The SWOT analysis can help a corporation identify market opportunities, threats, weaknesses, and strengths. Using this simple method, one can identify the possibilities and threats that await their organization.
In Strategic Management, what Factor do you Think is the most Crucial?
The essential feature of strategic management is the concept of recognizing and appreciating the organization’s distinct objectives. Setting short-term goals is a great place to start since they serve as a roadmap to longer-term goals.
Summary
The term “concentric diversification” refers to a company’s expansion strategy of introducing new comparable offerings. Amul, a corporation that sells its products through the same channels, exemplifies concentric diversification in both technological and marketing terms. Along with milk, the enterprise sells butter, curd, buttermilk, and Shrikhand. A store that first catered to children but has later diversified to include women is an example of connected concentric diversification. Summing up, the topic of types of strategic management is of great importance in today’s digital age.
