STRATEGIC AND ITS TYPES

Strategy begins with the concept of how to use the resource of the firm most effectively in a changing environment.It is similar to the concept in sports of a “game play” so we can say that;

“A strategy is a unified comprehensive and integrated plan that relates the strategy advantages of the firm to the changes of environment and that is to ensure the basic objectives of proper execution by the organization”

STRATEGIC MANAGEMENT

FRED R. DAVID

“Strategic management is the art and science of formulating implementing and evaluating cross functional decisions that enable an organization to achieve its objectives”

Strategic management is used at many colleges and universities as the title for the capstone course in business administration, business policy which integrates material from all business courses.

WILLIAM F. FLUECK

“Strategic management is a steam of decision and actions which leads to the development of an effective strategy or strategies to keep which in achieving corporate objectives”

TYPES OF STRATEGIES

Here is the chart of strategies, which are adopted by the organizations keeping in view the changing environment in business world.

INTEGRATION STRATEGIES

These refer to the association or combination or mixing up the various activities or business units such a manner that such work provides benefits in short and long run time period while achieving the organizational goals. These include forward integration, backward integration, and horizontal integration.

FARWARD INTEGRATION

It involves gaining ownership or increased control over the distribution of products. Might be possible that other people are not distributing the products in a standardized manner and by gain more control over Distribution Company will also expand its activities which will be beneficial such as BATA shoes & SERVICE shoes organization have more control on distributing. You may say that employed forward integration strategy.

BACKWARD INTEGRATION

Each an every organization required inputs which are provided by the supplier and backward integration is a strategy which is seeking owner ship or increase control over supplier and is adopted when firm’s current supplier are unreliable, material is too casting supplied, and inputs cannot meet the firm’s needs.

Such as MICHELS Company has its own farm and do all process and providing standard products.

HORIZONTAL INTEGRATION

Today mostly horizontal integration is used for growth strategy. In horizontal integration organization seek ownership and more control over the currently firm’s competitor. So that by minimizing the competitor organization growth can be possible, increase in profit as WALL’S ICE CREAM COMPANY purchase POLKA ICE CREAM COMPANY.

INTENSIVE STRATEGIES

The efforts to improve a firm’s competitive possible with existing products. These are made by the top management are called intensive strategies it include market penetration, market development, and product development.

MARKET PENETRATION

The penetration strategy seeks to increase the market share of products and services. Which are currently offered without change in products but by aggressive selling approach?

Market penetration includes increasing numbers of salespeople increasing advertisement expenses, offering extensive sales promotion items such as COCA COLA & PEPSI used today penetration strategies.

MARKET DEVELOPMENT

It includes introducing present products and service to new geographic areas. The climate for international market development is becoming more favorable at present and in near future.

To have and maintain competitive edge while staying close to home is becoming too hard. On the other hand, while you are expanding your activities to international market even then, there is no guarantee for success.

Therefore, companies should expand. Their products market by providing better quality which customers like such as TAZA Tea Company firstly just servicing in Pakistan but now the are servicing and try to expand to product market on international level.

PRODUCT DEVELOPMENT

Product development is a top management strategy seeks to increase sale by improving and modifying the present product or service. In product development changed may be in clear, design, shape& size, quality, and packing.

In product development, products may be modified as to markets segment and as well as same for all markets such as UNI LEVER Company soap, life Buoy, New Life Buoy, and Life Buoy Gold.

DIVERSIFICATION STRATEGIES

In 1960s and 1970s there was a general trend of diversifying so as not to be dependent of any one or single industry. But in 1980s there was a general reversal of that thinking, MICHAEL PORTER of the Harvard business school says:

“Management found they loved not manage the beast”

Following are the main diversification strategies.

CONCENTRIC DEVERSIFICATION

Under such strategy new but relate product line, by adoption of such strategy business and market share of firm will be increased. Such as insurance companies firstly insure, business’s stocks, property but now a day they are insuring every thing.

HORIZONTAL DIVERSIFICATION

Adding new unrelated products or services for present customers is called horizontal diversification. This strategy is not as risky as compare to conglomerate because already familiar with present customers. Such as sugar industry to mobile industry.

CONGOLOMERATE DIVERSIFICATION

Adding new but unrelated product and services in company’s product line is called conglomerate diversification. Such as if ICS starts a new business of carrying goods from one place to another. We shall say that it is a conglomerate strategy.

DEFENSIVE STRATEGIES

As the name is implied making defensive or avoiding competition. These strategies includes

JOINT VENTURE

It is most popular defensive strategy when two or more companies enter in to temporary contract or partner ship for a specific project. It is called venture. In which firm separate identity remain unaffected. Under such responsibility and equity shared.

RETRENCHMENT

Retrenchment occurs when an organization regroups through costs and Asses reduction due to decline sales and profit. It is sometimes called organization strategy, if you are dealing in 5 products and now comes down to 3 than it will be called retrenchment.

DIVESTITURE

Selling a part or division of an organization is called divestiture. It is often used to raise funds for further strategies or investment.

As ICI dealing in Agri industry producer’s product consumer products. If ICI sell one division of suppose Agri then it will be divestiture strategy.

LIQUIDATION

Selling all the parts of the company’s assets is called liquidation. Liquidation is recognition of defeat and consequently can emotionally difficult strategy. How ever is better then to lose large money in loss.

CONCLUSION

Many ‘ if not most, try or adopt combination strategy. They combine business in order to avoid losses and in order to remain the world.