A business strategy is the process that identifies the
product market, the level of investment, the functional area strategies needed
to compete in the selected product market and the strategic assets that
underlie the strategy and provide the sustainable competitive advantage (SCA).
In the Multiple Businesses business strategy may
include the development of synergistic effects across the businesses—the
creation of value by having business units that support and complement each
other and the allocation of resources over the business units.
Differentiation versus
Low-Cost Strategies
A differentiation strategy is one in which the product
offering is differentiated from the competition by providing value to the
customer, perhaps by enhancing the performance, quality, prestige, features,
service backup, reliability, or convenience of the product.
A low-cost strategy is based on achieving a
sustainable cost advantage in some important element of the product or service.
I think the differentiation strategy is more efficient
in the high sector of the society and it loses its efficient by moving down to
reach the low sector.
But the low cost strategy is more efficient in the low
sector of the society and it loses its efficient by moving up to reach the high
sector.
Focus strategy
It is involves focusing the business on either a
relatively small buyer group or a restricted portion of the product line.
Preemptive move
You take "first-mover advantages", so competitors
must be inhibited or prevented from duplicating or countering it
Synergy
It is linked to another business within the same firm
or division. The two businesses may be able to share a sales force, office, or
warehouse and thus reduce costs or investment.
A
STRATEGIC BUSINESS UNIT
SBU is any organizational unit that has a defined business strategy and a manager with sales and profit responsibility. The
concept was formulated by firms as a way to help develop an entrepreneurial
thrust in a diversified firm by making business units more autonomous and
strategy development less centralized.
Strategic Market Management
Process of developing and implementing strategies:
·
Budgeting: The basic
assumption is that the past will repeat itself.
·
Long-Range Planning: Past
trends will continue
·
Strategic Planning:
New trends and discontinuities are predictable
·
Strategic Market Management: Planning cycles are inadequate to deal with rapid changes
Now we are going to talk
about the strategic market management which contains several distinct
characteristics and trends.
External, Market Orientation
Organizations need to be oriented externally—toward
customers, competitors, the market, and the market's environment.
Proactive Strategies
A proactive strategy attempts to influence events in
the environment rather than simply react to environmental forces as they occur
Importance of the Information System
The determination of what information is needed, how
it can be obtained efficiently and effectively, and how it should best be
analyzed, processed, and stored can be 1cey to an effective strategy
development process.
On-Line Analysis and Decision Making
It is the system must be structured enough to provide
assistance in an inherently complex decision context, sensitive enough to
detect the need to precipitate a strategic choice, and flexible enough to be
applied in a variety of situations.
Entrepreneurial Thrust
There is a need for the development of organizational
forms and strategic market management support systems that allow the firm to be
responsive to opportunities
Implementation
Implementation of strategy is critical. There needs to
be concern about whether the strategy fits the organization—its structure,
systems, people, and culture—or whether the organization can be changed to make
the strategy fit
Global Realities
Global markets are extremely relevant to many
businesses, and it is a rare firm that is not affected by competitors either
based in or with operations in other countries.
Marketing
Marketing is by its very nature concerned with the
interaction between the firm and the marketplace.
Tools and concepts such as product positioning, the
product life cycle, brand equity, brand loyalty, and customer-need analysis all
have the potential to improve strategic decision making.
Organizational Behavior
It is the link between strategy and other elements of
the organization, such as systems and the management of people.
Finance and Accounting
It is a rich research tradition relating to
diversification efforts, acquisitions, and mergers.
Finance has also contributed to an understanding of
the concept of risk and its management.
Economics
The concept of transaction costs has been developed
and applied to the issue of vertical integration. Economists have contributed to the experience curve
concept, which has considerable strategic implications.
