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Management - Vikhanskiy OS

1. Types of business strategies

The definition of a strategy for a firm fundamentally depends on the specific situation in which the firm is located. However, there are some common approaches to formulating a strategy and some general framework in which strategies are built.

1.1. Areas of strategy development

As it was said above, in its most general form, strategy is the general direction of the organization's action, the pursuit of which in the long term should lead to its goal. This understanding of the strategy is only valid when considered at the top level of the organization's management. For a lower level in the hierarchy, the top-level strategy turns into a goal, although for a higher level it was a means. So, for example, the market behavior strategies developed for the firm as a whole, for the marketing service of this firm act as targets. In order to avoid ambiguity in the interpretation of strategies, later in this chapter only the strategies of the organization as a whole, and not its separate units, will be considered.

When determining the company's strategy, management faces three main issues related to the company's position in the market:

• what business to stop;

• what business to continue;

• which business to move to.

This means that the strategy concentrates attention and is connected with the following:

• what the organization does and does not do;

• what is more important and what is less important in the organization's activities.

According to M. Porter, one of the leading theorists and experts in the field of strategic management, there are three main areas for developing a strategy of the firm's behavior in the market [2].

The first area is associated with leadership in minimizing production costs. This type of strategy is due to the fact that the company achieves the lowest production costs and sales of its products. As a result, it can achieve, through lower prices for similar products, a greater market share. Firms implementing this type of strategy should have a good production and supply organization, good technology and engineering and design base, as well as a good distribution system, that is, in order to achieve the lowest costs, all that is connected at a high level With the cost of production. Marketing with this strategy should not be highly developed.

The second area of strategy development is related to the specialization in the production of products. In this case, the firm must carry out highly specialized production and marketing in order to become a leader in the production of its products. This leads to the fact that buyers choose this brand, even if the price is high enough. Firms implementing this type of strategy should have a high potential for R & D, have excellent designers, an excellent system for ensuring high quality products, and an advanced marketing system.

The third area of strategy definition relates to fixing a certain segment of the market and concentrating the firm's efforts on the selected market segment. In this case, the firm does not seek to work in the whole market, but works on its clearly defined segment, thoroughly ascertaining the market needs for a certain type of product. In this case, the firm can seek to reduce costs, or to pursue a policy of specialization in the production of the product. It is also possible to combine these two approaches. However, it is absolutely imperative for the third type of strategy to be implemented that the firm should base its activity primarily on analyzing the needs of customers of a particular market segment, i.e. Should in its intentions proceed not from the needs of the market in general, but from the needs of well-defined or even specific customers.