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| What
is Strategy?
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Company’s strategy is a set of answers to the questions
"how". These questions can be different and depend
on their situation and business objectives. In any business
market conditions allow even the competitors to avoid close-twins
strategies: some choose the way of lowering costs, others
- differentiating of products or services, the third ones
- market niches servicing or needs’ satisfaction of
narrow-specific buyers. Some companies compete locally or
regionally, others - globally. There are many ways of doing
business and positioning, so the description of the strategy
must be very detailed, reflect the specifics of the company.
The main purpose of the company is receiving steady dividends
per high invested capital. In order the profitability of investments
was higher than those of the competitors, a competitive advantage
over them must be steady and stable, in other words, the quality
of consumer goods and services should be higher. In order
the profitability to become resistant, you need to invest
in the development of productive capacities, guaranteeing
the conservation of competitive superiority for the future.
Thus the strategy depends on the definition of competitive
advantage, development of resources and production opportunities
that provide stable superiority in this changing world.
In fact, the strategy is the definition of how the company
participates in the competition. The strategy creates industry
position of the company and provides internal co-ordination
of its policies for achieving these positions. The strategy
is not a detailed plan describing what the company will do.
The strategy defines the direction of development and fixes
what exactly the company will not do.
The strategy consists in establishing of the position, in
the rejection of certain activities and harmonization of the
selected activities. It is the creation of the unique and
advantageous position, including a number of areas, renunciation
of certain activities. The strategy is determined by the decisions
about what the company does not intend to do.
All in all the strategy is the harmonization of the selected
areas.
In the process of developing a strategy, the notion about
how to achieve sustainable competitive superiority arises
constantly. The task of the strategic planning is to give
managers a new vision of the reality, existing risks and opportunities,
develop a new understanding of the essential factors of competition.
In such a way it is possible to mark three levels of the strategy:
corporate or the strategy of business direction totality,
competitive or the strategy for individual business areas
and functional or strategy of any business direction.
The corporate strategy is the definition of company’s
values at the expression in financial and other purposes.
It rests on the identification, creation or acquisition of
key resources and production capabilities and entails the
decisions about how the company intends industries to compete
and how different business directions will be linked. The
corporate strategy sets out the allocation of resources between
different areas of business, and therefore there is clarity
that should be done and what must be abandoned.
The competitive strategy defines the way in which the company
intends to compete in a particular industry. The competitive
strategy consists in how the company creates a favorable position
in the industry. It includes the definition (evident and non-evident)
of consumer groups, on which the company aims, and methods
to move goods and services. But the competitive strategy is
more than a vision of consumer and marketing techniques. It
is also a combination of certain activities and processes
that will enable the company to attract and retain the planned
group of customers. In such a way, the strategy entails and
harmonization of the various business directions of the company,
through which all efforts serve for strengthening of the potential
benefits of the company in the market.
Functional strategy - marketing strategy, financial, manufacturing,
technology and the strategy of research and development –
increase the company's competitive strategy and determine
the types of activities and processes, allowing having benefits
from them. A detailed description and analysis of the functional
strategies help to determine how and to what extent they correspond
to the competition strategy, and offer an opportunity to focus
on the coordination of various functions.
In practice, different approaches to the development of strategies
are used, such as schemes of industry profitability analysis,
competitive positioning, identifying of the basic productive
capacity, resources, strategic intentions and developing of
scenarios for the future development. Each of these approaches
helps in understanding of critical issues, but no one responds.
Responses are caused by the processes of analysis and appear
like the discernment. Effective use of any of the approaches
is a skill, so that different managers will inevitably prefer
to work with one approach and avoid others.
Prudence will not inhibit in a collision with the latest fashionable
approaches to the comprehension of strategies. They may prove
to be very useful, but there is a danger that the modern idea
will result in a situation when the competitors will choose
a similar style of competition and forget the need to keep
their own style. The essence of competitive superiority is
to compete differently, to be aimed at specific consumer groups,
using unique methods of production, marketing, etc.
The completed development of the strategy involves the creative
use of several methods of analysis. So, there are seven stages
of the process, covering the extremely important questions
of strategy development. They are:
Industry Analysis - the profitability of today and tomorrow.
Positioning - a source of competitive superiority.
An analysis of past activities of competitors and forecast
for the future.
Analysis of the company – the valuation of its relative
strength and sustainability.
Analysis of possibilities – the review of new consumer
groups and areas for development.
The assessment of future possibilities.
The choice of strategy - positioning, cutting off variants,
coordination of the selected areas.
Summing everything up, it is necessary to underline once more
that competent, well-planed company’s strategy is the
great motive for its development and what is more it a real
success for the company.
Works cited
Brand Strategy Company. Brand Identity Guru Inc. 2008. 1 July,
2008. http://www.brandidentityguru.com/branding_strategy_company.htm
Strategy. 25 June 2008. Wikipedia, the free encyclopedia.
1 July, 2008. http://en.wikipedia.org/wiki/Strategy
Strategy - what is strategy? 2008. Tutor2u. 1 July, 2008.
http://tutor2u.net/business/strategy/what_is_strategy.htm
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