Different Types of Business Strategies are available to any startup or a business which has to reevaluate its existing strategy.
Basic Approach to Strategic Planning
A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review and planning process include the following:
- Relate to the medium term i.e. 2/4 years
- Be undertaken by owners/directors
- Focus on matters of strategic importance
- Be separated from day-to-day work
- Be realistic, detached and critical
- Distinguish between cause and effect
- Be reviewed periodically
- Be written down.
As the precursor to developing a strategic plan, it is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Threats and Opportunities. This then leads to strategy development covering the following issues discussed in more detail below:
Strategic statements can be defined as broad indicators of the direction(s) in which a business should be driven in order to fulfil its vision/mission while taking realistic account of its resources, constraints and opportunities.
In the case of a start-up venture, organic and quantum approaches translate into soft or hard start-up strategies. An example of a soft start would be a software company which evolves from a part-time business into full-time service provider and then progresses into software products (classic “back room” start). Another example, would be an engineering company which starts in a shed and gradually moves into a proper premises (“garage” start).
Soft start strategies can be very effective as they allow entrepreneurs to learn the trade (and make mistakes) without incurring major, irrevocable (and maybe premature) commitments. Hard starts are obligatory where substantial investments (in R&D, market or assets) or resources (technology, manpower etc.) are needed from the outset. It may be possible to soften a hard start by renting (rather than buying) premises; leasing equipment (instead of purchasing); acquiring a franchise (in lieu of developing a new brand, systems etc.); entering into a joint venture; or subcontracting manufacturing, distribution, accountancy services and so on.
Before deciding on what type of strategy to adopt you will need to have the following statements if you are an existing company or you will need to work through what is posted here before you decide.
The preparation of a strategic plan is a multi-step process covering vision, mission, objectives, values, strategies, goals and programs you need to initiate to complete the strategy decide upon.
The nature of a business is often expressed in terms of its Mission which indicates the purposes of the business, for example, “to design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas”. A statement along these lines indicates what the business is about and is infinitely clearer than saying, for instance, “we’re in electronics” or worse still, “we are in business to make money” (assuming that the business is not a mint !)
Peter Drucker says “Mission: Why you do what you do; the
organization’s reason for being, its
purpose. Says what, in the end, you want
to be remembered”
There are many tools that you can use to define your strategic position in your market,and what sort of strategy you should adopt.
One of them is the GE matrix. The GE matrix helps a strategic business unit evaluate its overall strength. Each product, brand, service, or potential product is mapped in this industry attractiveness/business strength space. The GE multi factoral was first developed by Mckinsey for General Electric in the 1970s.In order to use the GE Matrix you need to understand the market you are in and you must have a very good grasp of strategy.
I have modified the GE And the GE McKinsey graph as seen below.
I addition to giving you two points on a square block i have added what type of strategy best fits each quadrant. This has been developed by me over 3 decades of in company research, as Africa Director responsible for growth and development. The Group I worked for was massive as it had more than 136 companies in its stable.
You are asked to identify percentages in a range of questions and give an indication of your strategic ability.
When Completed you will get a Graph as shown here. Careful consideration is needed when compiling the answers.
Click on this link to download the Free excel spreadsheet, which I modified to give You a better picture of what strategy you should follow. A Resulting graphic display will clearly tell you in which quadrant that you can
Different Types of Business Strategies, with thanks to
Any growth strategy entails introducing new products or adding new features to existing products.
Sometimes, a small company may be forced to modify or increase its product line to keep up with competitors. Otherwise, customers may start using the new technology of a competitive company.
For example, cell phone companies are constantly adding new features or discovering new technology. Cell phone companies that do not keep up with consumer demand will not stay in business very long.
A small company may also adopt a growth strategy by finding a new market for its products. Sometimes, companies find new markets for their products by accident. For example, a small consumer soap manufacturer may discover through marketing research that industrial workers like its products. Hence, in addition to selling soap in retail stores, the company could package the soap in larger containers for factory and plant workers.
Product Differentiation Strategy
Small companies will often use a product differentiation strategy when they have a competitive advantage, such as superior quality or service. For example, a small manufacturer or air purifiers may set themselves apart from competitors with their superior engineering design. Obviously, companies use a product differentiation strategy to set themselves apart from key competitors. However, a product differentiation strategy can also help a company build brand loyalty, according to the article “Porter’s Generic Strategies” at QuickMBA.com.
Different Types of Business Strategies
A price-skimming strategy involves charging high prices for a product, particularly during the introductory phase. A small company will use a price-skimming strategy to quickly recover its production and advertising costs. However, there must be something special about the product for consumers to pay the exorbitant price. An example would be the introduction of a new technology. A small company may be the first to introduce a new type of solar panel. Because the company is the only one selling the product, customers that really want the solar panels may pay the higher price. One disadvantage of a price-skimming is that it tends to attract competition relatively quickly, according to the Small Business Administration. Enterprising individuals may see the profits the company is reaping and produce their own products, provided they have the technological know-how.
A small company with extra capital may use an acquisition strategy to gain a competitive advantage. An acquisition strategy entails purchasing another company, or one or more product lines of that company. For example, a small grocery retailer on the east coast may purchase a comparable grocery chain in the Midwest to expand its operations.
Please contact us so we an assist you with a complete strategy and corresponding tactics needed to achieve your strategy chosen.