If you want your business or organization to succeed, you need to be able to think strategically and generate unique insights about possible outcomes. It necessitates investigating the assumptions the company has made about its strategy and value proposition. It entails “synthesizing what the manager learns from all sources (both soft insights from personal experiences and the experiences of others in the organization and hard data from market research and other sources) into a vision for where the business should go.” Mintzberg argued that “strategic thinking” was more important than “strategic planning” throughout the process of formulating a strategy. This page discusses types of strategic management in detail.
Both strategic planning and strategic reasoning are essential components of strategic management. By definition, strategic planning is an analytical process that entails following a set of steps to collect relevant information and analyze it to build a coherent strategy. After deciding on a course of action, “strategic planning” also refers to its implementation process. Strategy creation and strategic thinking both involve strategic planning. To explore benefits of strategic management issue further, read this informative article.
Types of Strategic Management
Strategy not only lays out goals and ideas, but also details a plan of action for achieving them. The implication is that the organization has a strong performance culture with clearly established lines of duty and incentives tied to actual rather than perceived performance. Corporate plans are at the top, followed by those of individual business units, and finally those of individual departments. Management decides the company’s overall strategies, while the respective heads of individual strategic business units and functional departments make their plans and strategies. For your research and knowledge purposes, below is a list of types of strategic management.
Differentiated Leadership Strategy
The differentiation could be based on the breadth and depth of features, the quality of support, or something else entirely. One strategy to justify a higher price is to use marketing to set your product apart from the competition and to make an emotional connection with your target audience. Companies like Sony and Apple operate in a variety of markets, each with their own unique goals. They crank out a plethora of top-notch goods that may be enjoyed by people of all technological stripes. Luxury goods retailers, regardless of their sector, all use a similar method to set themselves apart from the competition. Prada, BMW, and Rolex all operate on the premise that they can charge higher prices because they have loyal customers who believe in the quality and uniqueness of their products.
Incorporation from below
Consolidation occurs when a company higher up the value chain buys out a lower one. When Tata Steel bought a coal mine in Indonesia, it engaged in backward integration by acquiring a raw materials company. As an example of forward integration, Reliance Industries built its own petrol stations, bringing its products and services directly to consumers.
Low-Price Advantage
A company with a low-cost strategy is one that actively promotes itself as the industry leader in terms of offering consumers with quality goods at affordable prices. The goal is to create (or acquire) goods and services that are competitive with the quality and price of the competition but at a lower cost to you. This tactic works best if only one or two companies in an industry are truly dominant. Market leaders in the low-price strategy include Walmart and Costco. IKEA’s low-price approach, which targets a specific demographic, has allowed the company to corner the low-price market. Different types of strategic management include corporate-level strategic management, which focuses on the overall direction and scope of the entire organization.
Strategic Surveillance
Strategic surveillance control takes into account both internal and external influences, as they can impact a company’s strategy. Smaller companies often use it to learn everything there is to know about a certain industry and how it is changing. There is a lot of development and evolution during the period of execution. Managers who want their plans to succeed need to learn about the different types of strategic planning.
Effective Tactics
The functional plan is focused on making the right products to give a company a leg up in its industry. A separate departmental structure and strategy is in place within each company. Functional strategies develop to support an existing strategy in competition. For instance, a production strategy is required to keep costs down and compete in the market. It is adamant about maintaining a lean business and a method of handling internal affairs.
Company Policy
Strategic managers use corporate strategy as one type of strategy. Executives from a multi-departmental company come up with it. A “group of companies” refers to a company in the United States with many branches. Some examples include Bashundhara, Partex, Beximco, and Square Group. The company’s whole business strategy is outlined here. Corporate strategy also affects all businesses that operate under it significantly because it sets long-term goals. Buying up the major tissue paper producers in Bangladesh could be part of Bashundhara’s plan to corner that market. International strategic management is a types that deals with strategies related to expanding operations and competing in global markets.
Methodology for Operation
The running strategy is the fifth type of strategy used in strategic management. It provides organizational structures for running a firm. A company can plan its activities by developing a strategy. Just think about its distribution channels for illustration purposes. An operations strategy is implemented at the field level to accomplish immediate goals. Managers in some companies develop an annual plan for each department’s operations.
Competitive Combat
The competitive strategy is made up of several operational procedures and endeavors. It is the responsibility of a business to win new clients and always deliver on their promises. Extraordinary worth for them as a result of meeting their needs and strengthening its market standing. Thompson and Strickland’s description exemplifies the directors’ use of “tactics and creativity” in formulating the plan. As such, one element of a winning plan is the implementation of said approach. The company’s management is committed to improving its standing in the market by prioritizing the happiness of its clientele. You must alter your company strategies from those of your rivals in order to thrive in today’s enlightened market.
Corporate Tactics
Your business strategy lays out everything you do and how you do it to beat the competition. Behavior management can address many strategic concerns. Hill and Jones argue that a corporate strategy is an action plan. Strategic managers make adjustments based on how a business utilizes its assets. Managers also change their ideas to get an edge in business. Business strategies and corporate strategies are often interchangeable but often coincide. Product development, innovation, integration, expanding into new markets, diversifying into complementary businesses, and similar ideas make up the bulk of the company’s strategy. Collaborative strategic management is a types that emphasizes strategic partnerships, alliances, and collaborations with other organizations.
Porter’s Market Strategies
The strategic management process that we covered previously can be applied to many different business approaches. However, most companies actually consider their rivals when formulating their plans. Michael Porter is famous for his studies on the “Five Forces Theory” and the “Four Competing Visions” of competitive strategy. (A fifth strategy is quite new.) The two main strategies in Porter’s plan are differentiation and cost reduction. It also argues that businesses can target the market in one of two ways: either by aiming their products at a certain subset of consumers or by trying to appeal to the market as a whole. Global differentiation, global low cost, targeted differentiation, and focused low cost are the four unique competitive strategies that this approach generates. The fifth approach combines cost-effective and unique aspects of the company. There is a term for this method: “integrated approach.”
FAQ
What’s key in Strategic Management?
Establishing and fully grasping distinct corporate goals is foundational to the practice of strategic management. Short-term goals are a great way to kick things off because they outline a path to your long-term targets.
What is the Role of Swot Analysis in Strategic Planning?
SWOT is an acronym that stands for “strengths, weaknesses, opportunities, and threats.” The SWOT analysis will help you identify your company’s strengths, opportunities for improvement, and potential threats to its continued success. This simple approach also makes it easier to spot potential threats and lucrative openings for your company.
Where does Strategic Management Actually Begin?
Setting goals, assessing the external environment, reviewing the internal structure, reevaluating methods, and monitoring their efficacy are all components of strategic management.
Summary
The stability method is used when an organization needs to progressively boost performance. The main goal of the stability strategy is to “stay on the same path: steady as she goes.” It could be a profit strategy (lying low and controlling profit by cutting costs, boosting prices, etc.) or a no-change strategy (not making a decision is still a decision). In times of crisis and recession, caution should exercised when entering non-core industries like the shoe market, as seen with Hindustan Unilever’s example. We sincerely hope that you learned something new and found this tutorial on types of strategic management to be useful.
